California Ballot Measures Test Local Public Support for Cannabis Businesses as Six Years After State-Wide Cannabis Legalization, 61% Of California Cities And Counties Continue To Ban Retail Sales

California Ballot Vote

An important provision of Proposition 64 was the right for local jurisdictions to determine whether to ban, tax, and/or regulate cannabis within their local jurisdiction. This power extends to what kind of cannabis businesses will be permitted, how many will be permitted, when it will be permitted, and how the operators of the cannabis businesses will be selected. Because of this freedom, each jurisdiction can be completely unique to their own community. In fact, according to the California Department of Cannabis Control, over 60% of the 539 cities and counties in the State continue to prohibit the retail sale of cannabis within their jurisdiction six years after legalization of cannabis at a State level by the voters.

On November 8, 2022, more than twenty California cities and four counties have some form of cannabis taxation and/or regulation on the ballot. Whether by voter initiative, or City Council or Board of Supervisors action, many voters will be making a statement about cannabis in their local jurisdiction.

A popular method of testing the waters of citizen support for commercial cannabis is to place a cannabis tax measure on the ballot. If the tax is adopted, then the City or County elected officials will likely pursue cannabis regulation. If the tax fails, the City or County will not pursue cannabis regulation and it is likely a voter initiative will be required to make cannabis businesses legal in that jurisdiction.

Regulation by voter initiative is not in the local jurisdiction’s best interest as it usually removes the elected officials from any future decision-making even if a local jurisdiction wants to increase the number of cannabis businesses or provide for additional locations for cannabis businesses. As has happened in several cities, both the Cities of Huntington Beach and El Segundo began discussions of cannabis regulations and taxation in direct response to the threat of a voter initiative.

In 2022, the voter initiative process placed cannabis regulations on the ballot in at least four cities in Los Angeles County: Hermosa Beach, Manhattan Beach, Redondo Beach, and South El Monte. The City Council of Manhattan Beach placed a competing ballot measure which would continue the current ban on all cannabis businesses. The City Council of Redondo Beach scheduled a special election in advance of the November 8, 2022, election day and that voter initiative recently failed by a wide margin. The City Councils of Hermosa Beach and South El Monte placed a detailed cannabis tax structure on the ballot to take effect if the initiative is successful.

Three counties have placed a general commercial cannabis tax on the ballot without any potential regulatory provisions. Both the counties of Los Angeles and Sacramento are asking the voters if they support a general cannabis tax without any specific rate or formula, whereas San Diego County has placed on the ballot a very detailed tax structure for voter approval. In all three counties, there are several incorporated cities that have already established regulatory processes for licensed cannabis businesses. In addition, Lassen County has placed a measure on the ballot to permit indoor cultivation on unincorporated county property.

In contrast, most cities have placed a very specific tax structure on the ballot in advance of establishing a regulatory framework. In the largest County in the state, the County of Los Angeles, which includes the largest regulated cannabis market in the state in the City of Los Angeles, several cities have placed cannabis taxes and/or regulations on the ballot. The Cities of Claremont, Baldwin Park, Lynwood City, and Santa Monica have all placed structured cannabis taxes on the ballot, while Cudahy City and El Segundo have separate tax and regulatory measures.

Two cities in Orange County, Huntington Beach and Laguna Woods, have placed a specific cannabis tax structure on the ballot for voter approval. In addition, Avenal (King County), Healdsburg (Sonoma County), Montclair (San Bernardino County), Monterey (Monterey County), Tulare (Tulare County), Woodland (Yolo County), McFarland (Kern County), Corona (Riverside County), Encinitas (San Diego County), and Burlingame (San Mateo County) all have structured cannabis taxes on the ballot. Pacific Grove (Monterey County) has separate tax and regulatory ballot measures. Sausalito (Marin County) has a ballot measure to permit one retail storefront and one delivery-only business. Red Bluff (Tehama County) has a specific regulatory ballot measure placed on the ballot by voter initiative to change the existing cannabis regulation adopted by the Red Bluff City Council. While South Lake Tahoe (El Dorado County) voters will consider replacing the existing cannabis community benefit fee with a tax structure, the Susanville City Council (Lassen County) placed a previously adopted cannabis ordinance on the ballot based on a successful referendum effort by the residents.

In short, County residents and City residents will have an opportunity to weigh in on the cannabis issue and educate their elected Supervisors and Councilmembers in 2022. Unfortunately, these ballot measures only represent a small number of residents in the State of California. However, if the ballot measures pass, the State will be one step closer to meeting the voter’s will in adopting Proposition 64.

Contact us by phone or email to learn more about California cannabis law including state, county or city cannabis licensing and cannabis regulations, cannabis regulatory compliance, and cannabis litigation.

You may also be interested in reading about the various cannabis bills introduced in the California State Legislature in 2022 which have now been signed by Governor Gavin Newsom.

California Cannabis Business County Update

California Counties Cannabis

57% of the voters of California adopted Proposition 64 on November 8, 2016.  (See Vote Results for California 2016, pages 74-76.)  Recent legislation, Assembly Bill 1356, sponsored by Assembly member Phil Ting would have mandated that local jurisdictions in which the voters adopted Proposition 64 (The Adult Use of Marijuana Act – AUMA) by a majority vote must license a limited number of retail medical cannabis businesses.  

Supporters pointed out that over 76% of cities ban medical cannabis storefronts, as do nearly 69% of counties and increasing the availability of cannabis commercial activity through retail licenses would increase availability and access for medicinal cannabis.  Detractors considered this an improper erosion of local control of cannabis permit regulation.  Under Proposition 64, it was determined that the bill needed a 2/3 vote for adoption before it could be presented to the Senate.  (See AB 1356 Local Cannabis Licenses California Assembly Analysis.)  On May 30, 2019, as the bill was scheduled for a third reading, Assembly Member Ting moved the bill to inactive status.  (See the California Cannabis Law Legislative Update for more info about this and other California cannabis bills.)

As a result, California cannabis businesses remain subject to strict local control.  The State of California is organized into 58 Counties.  In turn, the Counties are divided between unincorporated areas and incorporated Cities.  There are 482 incorporated Cities.  The Counties are responsible for regulation in the unincorporated areas.

Almost 70% of the Counties in California voted in favor of Proposition 64 (see Vote Results for California 2016, pages 74-76).  However, of the largest counties by population, cannabis businesses remain banned.  Of the five largest Counties in California, by population, representing over 50% of the population of the State, only Riverside County has established a licensing procedure for commercial cannabis.

Los Angeles County, the largest County in California by population with over 10 million people maintains a ban on all cannabis businesses.  (See California County Populations.)  Los Angeles County represents approximately 25% of the population of the State of California.  The voters of Los Angeles County adopted Proposition 64 by nearly a 20% margin (see Vote Results for California 2016, pages 74-76), yet Los Angeles County has banned all cannabis businesses.

San Diego County, with a population of over 3.3 million, maintains a ban on commercial cannabis businesses.  (See San Diego County Cannabis Regulations.)  The voters of San Diego County adopted Proposition 64 by over a 10% margin.  (See Vote Results for California 2016, pages 74-76.) 

Orange County, with a population of over 3.1 million, maintains a ban on commercial cannabis businesses.  (See Cannabis Regulations Orange County.)  The voters of Orange County adopted Proposition 64 by a 4% margin.  (See Vote Results for California 2016, pages 74-76.) 

San Bernardino County, with a population of over 2.1 million, maintains a ban on commercial cannabis businesses.  (See Cannabis Regulations San Bernardino County.)  The voters of San Bernardino County adopted Proposition 64 by a 5% margin.  (See Vote Results for California 2016, pages 74-76.) 

In comparison, as early as May 1, 2018, Santa Barbara County adopted cannabis business regulations to permit cultivation, manufacturing, retail, distribution, microbusiness and testing labs.  (See Cannabis Regulations Santa Barbara County.)  Outdoor cultivation was specifically prohibited in the coastal zone except for those medical cannabis cultivation sites subject to amortization which expired on June 15, 2019.  (See Medical Marijuana Regulations Santa Barbara County.)  Cannabis businesses must obtain land use approval as well.  The voters of Santa Barbara County adopted Proposition 64 by greater than a 20% margin.  (See Vote Results for California 2016, pages 74-76.) 

On April 9, 2019, the Santa Barbara County Board of Supervisors amended the law regarding retail cannabis businesses.  (See Cannabis Licensing Santa Barbara County.)  Retail storefront cannabis businesses will be limited to one per each of the six defined community plan areas and two in the non-community planned area.  Applicants for retail storefront cannabis businesses must submit a Pre-Qualification Application between July 1, 2019 and August 16, 2019 with no fee.  The Pre-Qualification Application is not available yet.  On August 26, 2019, a list of the Pre-Qualified Applicants will be published and a random drawing from the Pre-Qualified Applicants will take place on September 3, 2019.  (See Cannabis Licenses Retail Storefront Santa Barbara County.)

Also, Monterey County adopted commercial cannabis regulations for all businesses as early as December 5, 2017, with an operative date of December 13, 2016.  The adopted ordinance prohibited outdoor cannabis cultivation and limited indoor cannabis cultivation to greenhouses or industrial building structures that had been permitted or legally established prior to January 1, 2016.  (See Cannabis Regulations Monterey County.)

However, on June 18, 2019, Monterey County will consider an Outdoor Cannabis Cultivation Pilot Program.  The proposed laws will provide outdoor cannabis cultivation opportunities for both the inland and coastal areas of Monterey County, specifically, the Big Sur Land Use Plan area, Carmel Valley Master Plan area, and Cachagua Planning areas.  (See Cannabis Cultivation Monterey County Staff Report.)

Other California Counties have adopted some level of a regulated cannabis market. Notably, Alameda County established its cannabis regulations in 2017.  And Humboldt County began issuing medical cannabis permits as early as 2016.  However, the fact remains that less than one third of California Counties have entered the regulated cannabis marketplace.

Contact us by phone or email to learn more about California cannabis law including state, county or city cannabis licensing and cannabis regulations, cannabis regulatory compliance, and cannabis litigation.