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Last fall, California Governor Gavin Newsom signed Assembly Bill 1775 (AB 1775) into law, and it officially took effect on January 1, 2025. This law allows licensed cannabis retailers and microbusinesses to operate cannabis cafes where customers can legally consume cannabis on-site while also purchasing non-cannabis-infused food and beverages.
AB 1775 amended Section 26200 of the California Business and Professions Code. It removes previous restrictions that required cannabis lounges to partner with external vendors to offer food and drinks.
Now, cannabis may be consumed on-site at the licensed premises of a retailer, microbusiness, or authorized temporary event. Both fresh and pre-packaged non-cannabis food or beverage products may be prepared or sold in a designated consumption area. It also allows live performances at cannabis cafes, creating an Amsterdam-style experience that integrates social consumption with entertainment.
However, the law still prohibits alcohol and tobacco sales on the premises, ensuring that cannabis cafes remain distinct from traditional bars and restaurants.
While AB 1775 expands opportunities for cannabis businesses, it comes with strict regulatory requirements to ensure public safety and compliance. To operate legally, businesses must obtain a valid cannabis retail or microbusiness license from the California Department of Cannabis Control (DCC). Individual jurisdictions have the final say in whether cannabis cafes can operate in their areas, and local governments can set zoning restrictions in San Diego, California and limit the number of cannabis cafes allowed in their area.
Alcohol and tobacco sales are strictly prohibited, ensuring that cannabis cafes do not operate like traditional bars. The consumption of cannabis must not be visible from a public area, or area that is not age-restricted. Cannabis products may not be stored or displayed with non-cannabis products.
Businesses must also install proper ventilation systems to minimize smoke exposure, both for customers and employees, and may impose limitations on how much cannabis a patron can consume on-site.
A major concern for cannabis cafes is employee health and safety, given the risk of prolonged exposure to secondhand cannabis smoke. To address this, California lawmakers require businesses to implement protective measures. Employees must be provided with respirator masks to reduce smoke inhalation and undergo regular health screenings to monitor any effects of exposure.
Additionally, proper ventilation systems must be installed to meet California Occupational Safety and Health Administration (Cal/OSHA) standards. Employers are expected to stay up-to-date on workplace safety regulations, ensuring their staff is properly trained in handling cannabis and working in a smoke-heavy environment. Business owners who fail to provide adequate workplace protections risk fines or even license revocation, making compliance a top priority.
The legalization of cannabis cafes unlocks new revenue streams and presents significant economic benefits for both business owners and local communities. Current cannabis retailers can expand their business models by integrating food, beverages, and entertainment, creating a more immersive and social experience for customers.
Establishments can attract a broader demographic, including tourists and casual consumers who prefer a social, low-pressure environment for cannabis consumption.
Business owners interested in opening a cannabis cafe must obtain both state and local permits and ensure their location complies with zoning laws that dictate where cannabis establishments can operate. Additionally, advertising restrictions are in place to prevent marketing that targets minors, requiring cannabis cafes to carefully craft promotional materials that comply with California cannabis regulations.
Operational challenges must also be considered. Businesses need robust security protocols to prevent unauthorized sales and ensure customer safety. Given the unique risks associated with on-site consumption, cannabis cafes must also invest in liability insurance to cover potential issues related to cannabis intoxication.
Establishing clear responsible consumption policies will be key to preventing overuse while maintaining a safe and enjoyable customer experience. Seeking legal guidance from a cannabis business attorney can help entrepreneurs navigate these complexities and ensure compliance with state and local laws.
The legalization of cannabis cafes in California represents an exciting new opportunity for the state’s cannabis industry. If you are an entrepreneur looking to enter this emerging industry, now is the time to start planning. From licensing and compliance to business structuring and regulatory approvals, having the right legal guidance can make all the difference in your success.
Our firm specializes in California cannabis business law and can help you navigate the complexities of starting and operating a cannabis cafe.
Contact us today or call 858-756-7107 to schedule a consultation and get expert legal advice tailored to your business needs.
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