California governor rejects marijuana marketing curbs, consumption cafes

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Image of California state Capitol building at sunset

(Photo by Adriana/stock.adobe.com)

California’s latest legislative session is shaping up as a mixed bag for the state’s marijuana industry.

Cannabis businesses scored a key victory after Gov. Gavin Newsom over the weekend spiked a bill that would have imposed new marketing and packaging restrictions on marijuana products.

But the governor also nixed an industry-backed measure that would have permitted marijuana cafes, dealing a major setback to retailers and consumption-lounge operators.

Meanwhile, social equity applicants, licensees and advocates are celebrating the passage of Senate Bill 51, which provides social equity operators more time to get their businesses up and running.

Newsom has until midnight Oct. 14 to sign or veto any other bills.

Assembly Bill 1207

California cannabis companies and advocacy groups fiercely opposed Assembly Bill 1207, sponsored by Democratic Assembly Member Jacqui Irwin.

The legislation would have added several new product labeling and packaging restrictions, including banning images of:

  • Cartoons, toys or robots.
  • Real or fictional humans.
  • Fictional animals or creatures.
  • Fruits or vegetables, “except when used to accurately describe ingredients or flavorings.”

In his veto letter, Newsom expressed concern the term “attractive to children” was overly broad.

“By prohibiting entire categories of images, this bill would sweep in commonplace designs, and I am not convinced that these additional limits will meaningfully protect children beyond what is required under existing law,” he wrote.

The California Cannabis Industry Association (CCIA) lauded the veto and Newsom’s approval of a much less stringent proposal, SB 540, which mandates the state’s Department of Cannabis Control (DCC) to routinely review cannabis labeling standards and develop brochures highlighting certain risks of marijuana use.

“AB 1207 posed a significant threat to the industry with excessive restrictions, inadvertently favoring the illegal market and depleting critical tax revenues earmarked for youth deterrence programs,” CCIA President Pamela Epstein said in a news release.

Assembly Bill 374

Industry officials and companies had expected Newsom would approve Assembly Bill 374, which would have allowed California marijuana retailers to operate traditional kitchens and host events on their premises – much like the cannabis cafes in the Dutch city of Amsterdam.

The proposal – by Assembly Member Matt Haney of San Francisco – also would have ushered in major operational changes and potential new revenue streams, while serving as a possible template for other states that have struggled to establish consumption lounges.

In the end, Newsom vetoed the legislation, citing concerns over smoke in the workplace.

But he encouraged Haney to address that issue in follow-up legislation next year.

“I am concerned this bill could undermine California’s long-standing smoke-free workplace protections,” he wrote.

Some industry officials viewed the governor’s position as a double standard, since outside beer gardens, bar patios and other venues across the state often allow cigarette and other forms of non-cannabis smoking.

Also, California marijuana consumers routinely smoke in public, particularly in its largest cities.

“Anti-tobacco forces have conflated the harms of cannabis smoke with cigarette smoke with little evidence, and this bill was one of the victims,” Ellen Komp, deputy director of California NORML, told MJBizDaily.

Senate Bill 51

Industry officials said social equity operators in California needed relief and SB 51 is intended to provide it.

The proposal, sponsored by prominent Los Angeles Democrat and marijuana advocate Sen. Steven Brandford, will extend the DCC’s provisional-license program and allow retail equity applicants or licensees to obtain or renew provisional licenses for up to five years under certain conditions.

Provisional licenses essentially provide a path for businesses to continue operations and maintain state compliance while they apply for permanent annual permits.

The state closed its provisional license application window in March and issued its last batch of provisional licenses in June.

The difficulty of transitioning to annual state licenses is particularly prevalent in Los Angeles, home to hundreds of social equity marijuana businesses.

The bill will bring potential relief to more than 300 social equity applicants throughout the state, industry officials told MJBizDaily.

“With the signing of SB 51, California reaffirms its commitment to championing equity and justice in the cannabis industry,” Yvette McDowell, CCIA board member and co-chair of its diversity, inclusion and social equity committee, said in a statement.

“Extending the provisional licensing program will continue to help remove barriers, level the playing field, and ensure that the promise of Prop. 64 is realized for every Californian.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.