(This story was updated at 2:32 p.m. ET to include more comments and information about the cannabis cafe bill.)
The day after California Gov. Gavin Newsom vetoed a bill that would have allowed small farmers to sell their cannabis products directly to consumers, he signed a separate measure to legalize marijuana cafes akin to those in the Netherlands.
“Lots of people want to enjoy legal cannabis in the company of others and many people want to do that while sipping coffee, eating a sandwich or listening to music,” the bill’s author, Assembly Member Matt Haney, said in a Monday statement.
“That is now finally legal in California, and there’s no doubt that cannabis cafes will bring massive economic, cultural and creative opportunities and benefits to our state.”
The cannabis cafe law takes effect Jan. 1, “pending approvals from local governments,” according to San Diego TV station KNSD.
Last year, Newsom vetoed a similar bill proposed by Haney that would have allowed California marijuana retailers to operate traditional kitchens and host events on their premises, saying it did not do enough to offer workplace protections.
In his Monday signing message, Newsom wrote, “I commend the author for incorporating additional safeguards, such as expressly protecting employees discretion to wear a mask for respiration, paid for at the expense of the employer, and requiring employees to receive additional guidance on the risks of secondhand cannabis smoke.”
Businesses that diverge from that approach, Newsom said, “will not be looked upon favorably.”
Governor vetoes cannabis event sales licenses
The cannabis cafe bill Newsom signed into law Monday might be the only relief California operators get from the state for some time.
Newsom’s initial $291 billion budget proposal for the 2024-25 fiscal year does not include any cuts in taxes or fees as the state faces a $38 billion budget deficit.
Assembly Member Gail Pellerin of Santa Cruz introduced Assembly Bill 1111, which would have created a new license to permit small cannabis producers to sell state-regulated marijuana products at temporary, municipality-approved events and venues.
In a statement announcing his veto of Pellerin’s bill, Newsom wrote on Sunday that, “while I appreciate the author’s intent to support small and equity cannabis cultivators, I am concerned that the bill’s broad eligibility, which extends to the vast majority of licensed cultivators, would undermine the existing retail licensing framework and place significant strain on the Department of Cannabis Control’s ability to regulate and enforce compliance.”
The Origins Council, which serves about 800 members from the state’s famed Emerald Triangle of legacy growers, voiced disappointment in the governor’s decision, which was followed closely in other regulated markets.
“This veto is a setback for everyone that believes in the vision for a sustainable and equitable California cannabis market,” Executive Director Genine Coleman told MJBizDaily via email.
“There is no sustainability without small business viability, which AB 1111 would have laid important groundwork for in California and beyond.”
Newsom had until midnight on Monday to veto or sign the legislation, which would have allowed small cannabis producers to sell up to $175,000 worth of marijuana products at approved venues beginning Jan. 1, 2026.
Cannabis sales events
Assembly Bill 1111 would have allowed farmers to obtain a license to sell marijuana products directly to consumers at licensed cannabis events in government-sanctioned jurisdictions, expanding on legislation that allowed marijuana retailers and brands to sell products at the California State Fair in Sacramento for the first time this year.
For the past few weeks, cannabis advocates and industry trade groups, including The Origins Council, Supernova Women and the Equity Trade Network, initiated online, in-person and letter-writing campaigns urging Newsom to sign the legislation into law.
“I remain open to considering a more flexible and narrowly focused version of this bill next year that can better respond to market dynamics, without imposing a rigid monitoring and compliance framework,” Newsom wrote in his veto message.
“Such policies must be considered within the broader context of efforts that are necessary to address the fundamental issues straining the legal cannabis market, such as competition from unregulated sources and improving access to regulated products.
“It is essential that we prioritize solutions that strengthen, rather than further burden, the existing regulated market.”
‘Industry needs relief’
Coastal Sun Farms executive Darren Story told MJBizDaily he feared Newsom would veto the bill.
“I really hope he doesn’t screw this one up,” Story, chief financial officer of the Santa Cruz-based cultivator and brand, said ahead of the veto.
“The industry needs any relief they can get right now – especially with the illicit market and all these psychoactive hemp shops.”
Emergency regulations issued by Newsom a few weeks ago limiting the sale and production of intoxicating hemp products went into effect Sept. 23.
Naia Hall, operations manager for DenCob Farms in Northern California, had called AB 1111 important to the survival of small growers.
“Right now, all of our prices are controlled by what the dispensaries want to pay us, and it’s never enough for us to break even on our grows,” she said.
Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.
