New Bill Could Bring Amsterdam-Style Cannabis Cafes to California

Assemblymember Matt Haney thinks he might have a new way to lure visitors to San Francisco and other places in California: cannabis cafes, like the ones that draw thousands of tourists to Amsterdam each year.

On Friday, Haney introduced legislation to make it easier for cannabis dispensaries to sell food and beverages.

“If an authorized cannabis retail store wants to sell someone cannabis, a cup of tea and a sandwich, we should allow cities to make that possible and stop holding back our economy and a service that people want. Those things are all illegal under state law now,” Haney told KQED.

The bill comes as California’s cannabis industry is struggling — some say collapsing — under the weight of high taxation and other factors that make buying pot on the illegal market more attractive than walking into a dispensary.

Haney's legislation would simply change state law to allow licensed cannabis stores to also sell food, nonalcoholic beverages and tickets for entertainment events — if local governments want that.

“Many people want to consume cannabis legally while socializing with others, and many want to do it while drinking coffee, eating a muffin or listening to music,” Haney said. “And there is absolutely no good reason from an economic, health, safety or fairness standpoint that the state should make those things illegal.”

Haney sees the diversification of cannabis businesses as a way to shore up struggling dispensaries by luring visitors for a unique experience they can’t find at home, while also helping to fill vacant storefronts and downtown corridors hollowed out by the pandemic.

Haney’s bill wouldn't require this — it would simply allow local governments to decide whether to expand the range of products existing operators could offer. In San Francisco, Supervisor Rafael Mandelman is already on board.

On Tuesday, he plans to introduce local legislation to allow cannabis lounges — where using pot is currently permitted — to also sell food, beverages and tickets to events, such as music or comedy.

“I think those (current) restrictions don't make sense and they're not helpful to the lounges,” Mandelman said. “And I think that in terms of making those more enjoyable spaces and building out our local cannabis industry, tourism and economic developments — for all those reasons, it makes sense to take advantage of what Assemblyman Haney is putting forward.”

West Hollywood and desert towns like Palm Springs and Cathedral City have already written local ordinances to allow cannabis cafes if the state permits them, according to Haney's office.

Despite the proliferation of dispensaries, the current economic and regulatory environments pose serious hurdles for them.

“We hear from our operators that it's a very challenging time to be in the cannabis space,” said Nikesh Patel, director of San Francisco’s Office of Cannabis. “And some of the reasons are reduced foot traffic on the streets and higher tax burdens on cannabis businesses.

“There is still competition with the illicit market, and the cost of flower (the unprocessed cannabis “bud”) as a whole has gone down, and that's had a trickle effect on the entire supply chain.”

Patel would not take a position on Haney’s legislation, but he emphasized that, in the current market, cannabis businesses need some kind of help if they are to survive competition from illegal sellers.

By passing Proposition 64 in 2016, California voters legalized recreational use of marijuana in the state. More than a dozen other states have done the same.

But Prop. 64 left licensing up to local governments. California has more than 700 legally permitted dispensaries. San Francisco alone has more than 40, while Oakland has at least 15.

But more than half of California cities and counties haven’t allowed cannabis businesses to operate in their jurisdictions — and taxation and competition from cheaper marijuana on the illegal market has pushed some operators out of business.

Haney’s bill could help address some of those challenges by opening up new opportunities for revenue generation by cannabis sellers.

Using Amsterdam as a model for San Francisco could be somewhat problematic. While the Netherlands officially “tolerates” personal use of marijuana, the mayor of Amsterdam is reportedly tired of tourists on a “moral vacation” and wants to at least temporarily ban nonresidents from using its pot cafes.

Haney’s office noted that his bill would do nothing to interfere with local law enforcement or other agencies monitoring the operation of these establishments — if they in fact open. If the bill passes the Legislature, the Assemblymember does not know whether Gov. Gavin Newsom would sign it.

“I hope that the governor, as a small-business owner himself in the past who has been involved in the hospitality industry, can now see this as an opportunity,” Haney said.