It’s signing season in California, and Gov. Gavin Newsom ended September with a bang by signing Assembly Bill 1775. The law goes into effect on January 1, 2025, and allows licensed dispensaries and cannabis lounges to operate like Amsterdam cannabis cafes by making and selling non-psychoactive food and nonalcoholic drinks, and hosting live music events and performances.

San Francisco assemblyman Matt Haney introduced Assembly Bill 374 in February 2023 to help boost revenue for legal dispensaries and lounges. Though it had ample support in the State Assembly and Senate, Newsom vetoed the bill in September 2023, citing smoke-free workplace protections. Following Haney’s adjustments, the amended AB 1775 advanced from California’s Assembly to the Senate in May 2024.

Though adult cannabis use has been legal in California since 2017, dispensaries have struggled to compete with the black market due to the state’s tightly regulated cannabis industry. At present, California dispensaries can only sell prepackaged snacks and drinks. Legal cannabis dispensaries, especially in Palm Springs, reported underwhelming revenues, high taxes resulting in higher-than-street prices, and market oversaturation.

AB 1775 remedies two main problems faced by existing cannabis lounges: preparing hot food and nonalcoholic drinks on-site, and hosting live performances. Existing state law forces lounges serving food to split into separate businesses to comply with state law. Artist Tree co-owner Lauren Fontein, who recently opened Artist Tree’s second lounge and dispensary, finds the existing system challenging.

“At our new Hawthorne location, [AB 1775] is going to make a huge difference,” she says. “We originally planned to have an on-site restaurant. When [AB 374] got vetoed last year, we didn’t move forward with the kitchen portion because it would’ve been difficult with separate ownership and transactions. Now we can move forward with building the kitchen.”

Artist Tree

When West Hollywood’s Cannabis Cafe opened in 2019, the owners devised a workaround. Patrons are presented with two separate checks when they order food with a pre-rolled joint; one from the cannabis side of the business, the other from the restaurant. Lounges like Cannabis Cafe and PleasureMed — which owns the cannabis lounge Irie, and a non-cannabis restaurant Hind — are required to pay two different taxes and payroll as a restaurant and a cannabis lounge. AB 1775 will help remove those costly restraints. According to the New York Times, Woody Harrelson’s West Hollywood lounge the Woods plans to serve cappuccino and pastries when the law takes effect.

The City of Los Angeles does not allow dispensaries to have live entertainment or DJs. AB 1775 could shift the practices at any dispensary and lounge in the state. “[AB 1775] is a great way for the state to recognize lounges as an entertainment venue, a social space for people, and an alternative to alcohol-focused venues,” says Fontein.

Public health groups lobbied against AB 1775, reports the Los Angeles Times. The American Cancer Society argued that secondhand smoke can cause health issues and threaten progress related to smoke-free workplaces. The bill requires local governments to ensure that lounges and dispensaries comply with protections including obtaining a ventilation standards permit. Employers also have to pay for respirator masks and develop secondhand smoke illness prevention plans.

Newsom’s signing message included a warning for those not following the law:

“While I am signing this bill, any future measure that diverges from this tailored approach will not be looked upon favorably. If adequate protections are not established at the local level, it could necessitate reconsideration of this limited expansion.”