California Cannabis Countdown: San Francisco

San Francisco cannabis lawyersCalifornia has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we plan to cover who is banning, who is waiting, and who is embracing California’s change to legalizing marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law to give you a clearer picture of where to locate your cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was an update on Sonoma County and before that the City of Davis, the City of Santa RosaCounty and City of San BernardinoMarin CountyNevada County, the City of Lynwood, the City of CoachellaLos Angeles County, the City of Los Angeles, the City of Desert Hot SpringsSonoma County, the City of Sacramento, the City of BerkeleyCalaveras CountyMonterey County and the City of Emeryville.

Welcome to the California Cannabis Countdown, where today I write about my home city and the location of our Northern California office: San Francisco.

LocationSan Francisco is one of the most beautiful cities in the world and home to many iconic landmarks. In the span of a couple of hours you can cross the Golden Gate Bridge, check out the Palace of Fine Arts, grab a cheesy shirt at Fisherman’s Wharf, ride a cable car, and tour Alcatraz. Fans of late of 80’s sitcoms can (and too often do) take selfies in front of The Full House home. And If you’ve found yourself in the financial district lately, there’s no way to miss the construction boom going on. San Francisco, my kind of town.

History with Cannabis and Current Cannabis Laws. Though San Francisco (the city and county) is known for its progressive and forward thinking policies, San Francisco’s Medical Cannabis Act (“MCA”) didn’t come into effect until December of 2005. Initially the MCA (regulated by San Francisco’s Department of Public Health) was not an aggressive push by the city of San Francisco to embrace the multifaceted benefits of all aspects of California’s medical cannabis industry. Most people would be surprised to find that San Francisco lags behind Oakland, Sonoma, and Sacramento when it comes to progressive cannabis regulations. Instead of taking the lead and being a beacon for the rest of California, the MCA focused solely on medical cannabis dispensary collectives. As it stands now, San Francisco does not currently issue stand-alone licenses or permits for cannabis cultivators or manufactures (or any other non-dispensary operator) but instead allows dispensaries to manufacture and cultivate cannabis subject to certain regulations. Here’s a list of some of the MCA’s requirements:

  • Medical cannabis dispensaries shall be operated only as non-profit collectives or cooperatives.
  • Dispensaries can maintain up to 99 cannabis plants in up to 100 square feet of total garden canopy area at the dispensary site and their cultivation must be conducted indoors.
  • Dispensaries can cultivate at an offsite location so long as they get approval from the San Francisco Planning Department and the Department of Building Inspection.
  • You cannot combine booze and bud. A medical cannabis dispensary shall not hold or maintain a license from the State Department of Alcohol Beverage Control to sell alcoholic beverages or operate a business that sells alcoholic beverages. Nor shall alcoholic beverages be consumed on dispensary premises or in the public right-of-way within fifty feet of a medical cannabis dispensary.
  • No edible cannabis products requiring refrigeration or hot-holding shall be manufactured for sale or distribution due to the potential for food-borne illness (you can apply for an exemption though); and
  • Packaging that makes cannabis product attractive to children or imitates candy is not allowed. Any edible cannabis product made to resemble a typical food product must be in a properly labeled opaque (non see-through) package before it leaves the dispensary.

In 2015, the San Francisco Board of Supervisors created the Cannabis State Legalization Task Force (“Task Force”) to advise the city’s Board of Supervisors and other city agencies on matters relating to legalization of adult use cannabis. The Task Force held its first meeting in January of 2016 and has held a number of meetings since, covering everything from social justice initiatives to land use requirements. A complete list of the Task Force’s meetings can be found here.

Proposed Cannabis Laws: Just last week San Francisco’s Board of Supervisors approved an ordinance to create an Office of Cannabis whose director can issue permits to cannabis related businesses. The director of San Francisco’s Office of Cannabis must propose to the Board of Supervisors a schedule for cannabis permit applications and annual license fees. Though this ordinance is strictly administrative in nature, our San Francisco cannabis lawyers foresee substantive (and helpful) regulations on the horizon. The Task Force has also made the following draft recommendations to the San Francisco Board of Supervisors (which is not a complete list):

  • San Francisco should allow cannabis sales as an accessory use — where selling selling cannabis is not the location’s primary use — and should develop regulations specifying how cannabis products should be separated from non-cannabis products and how accessory cannabis should be defined;
  • San Francisco should establish a cannabis “restaurant/food” license, with guidelines to prevent cross contamination;
  • San Francisco should reduce the distance new cannabis retailers can operate in proximity to sensitive uses to less than the MAUCRSA-required 600 feet; and
  • San Francisco should allow existing permitted medical cannabis businesses and cannabis businesses that have been closed (as long as they closed in good standing with the city) to have priority consideration in the adult use cannabis approval process.

We’ve had a number of medical cannabis manufacturers locate their cannabis businesses in the cities and counties around San Francisco and our California cannabis lawyers (like these cannabis manufacturers) are confident the San Francisco Board of Supervisors will address and formulate a cannabis licensing regime relatively soon. Our San Francisco office is also seeing a large  increase in interest from existing cannabis businesses as well as new entrants into the field in anticipation of San Francisco granting licenses to cannabis business beyond just dispensaries.

Cannabis businesses that have their corporate structure in order will be well positioned to succeed in the lucrative San Francisco market and this is, in most cases, the first thing you should do to get ready. We’re still in a period of massive transition in California with the passage of MAUCRSA, but San Francisco will not be left behind when it comes to comprehensive local regulation, so stay tuned to be sure you’re up-to-date on where the city is headed.

To help you better understand what is going on with cannabis in San Francisco and the rest of California, with a focus on what MAUCRSA means for your cannabis business, three of our California attorneys will be hosting a free webinar on August 8, 2017 from 12 pm to 1 pm PT. Hilary Bricken from our Los Angeles office will moderate two of our San Francisco-based attorneys (Alison Malsbury and me) in a discussion on the major changes between the MCRSA and MAUCRSA, including on vertical integration and ownership of multiple licenses, revised distributorship standards, and what California cannabis license applicants can expect more generally from California’s Bureau of Cannabis Control as rule-making continues through the remainder of the year. We will also address questions from the audience both during and at the end of the webinar.

To register for this free webinar, please click here. We look forward to your joining us!

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