SACRAMENTO, Calif. (May 31, 2021) – Last week, the California Assembly passed a bill that would expand the market for licensed cannabis lounges, authorizing to also sell non-marijuana foods and drinks despite ongoing federal prohibition on the entire industry.

Asm. Richard Bloom (D-Santa Monica) introduced Assembly Bill 1034 (AB1034) on Feb. 18. Under current law, licensed businesses can allow marijuana use on their premises, but they are prohibited from selling other food or beverages. Under the proposed law, local jurisdictions could allow for the preparation and sale of non-cannabis food or beverage products by a licensed cannabis retailer or microbusiness in an area where the consumption of cannabis is allowed.

On May 27, the Assembly passed AB1034 by a 52-5 vote with 21 assembly members not voting.

The enactment of AB1034 would further expand the marijuana marketplace in California despite continued federal prohibition efforts.

One such business already operates in southern California. According to Marijuana Moment, West Hollywood approved a local ordinance in 2017 that allowed a first-of-its-kind retailer to open that serves both marijuana and non-infused foods. The business currently operates in a grey area under emergency regulations. However, according to an analysis of the Assembly-passed bill, final regulations from the state Bureau of Cannabis Control “expressly prohibit” such activity.

“Rather than advocating for the BCC to reopen its regulations and allow for locally authorized consumption lounges to offer non-cannabis products, the City of West Hollywood is sponsoring this bill to accommodate what that jurisdiction and others are aiming to do through local ordinances,” it says. “The bill would allow a local government to grant approval to operate to consumption cafes/lounges where adults could consume cannabis and cannabis products, in addition to the existing authorization for consumption in licensed retail settings.”

In November 2016, voters in California approved a ballot measure legalizing marijuana for general use by adults and the law went into effect on Jan. 1, 2018. Since then, the California legislature has passed numerous laws intended to expand the state’s marijuana market despite federal prohibition. For instance, in 2019, Gov. Gavin Newsom signed a bill that severed a link between state and federal tax law, allowing individuals to deduct expenses from legal marijuana businesses. More recently, the state relaxed baking rules for marijuana businesses. The enactment of AB1034 would knock down yet another barrier to growing the state’s cannabis market. It would further mainstream marijuana, incentivize the market, and allow it to expand despite continued federal prohibition efforts.

EFFECT ON FEDERAL PROHIBITION

Under the federal Controlled Substances Act (CSA) passed in 1970, the federal government maintains complete prohibition of marijuana. Of course, the federal government lacks any constitutional authority to ban or regulate cannabis within the borders of a state, despite the opinion of the politically connected lawyers on the Supreme Court. If you doubt this, ask yourself why it took a constitutional amendment to institute federal alcohol prohibition.

The legalization of marijuana in California removed a huge layer of laws prohibiting the possession and use of marijuana, but federal prohibition remains in effect. This is significant because FBI statistics show that law enforcement makes approximately 99 of 100 marijuana arrests under state, not federal law. When states stop enforcing marijuana laws, they sweep away most of the basis for 99 percent of marijuana arrests.

Furthermore, figures indicate it would take 40 percent of the DEA’s yearly budget just to investigate and raid all of the dispensaries in Los Angeles – a single city in a single state. That doesn’t include the cost of prosecution. The lesson? The feds lack the resources to enforce marijuana prohibition without state assistance.

A GROWING MOVEMENT

Colorado, Washington state, Oregon and Alaska were the first states to legalize recreational cannabis, and California, Nevada, Maine and Massachusetts joined them after ballot initiatives in favor of legalization passed in November 2016. Michigan followed suit when voters legalized cannabis for general use in 2018. Vermont became the first state to legalize marijuana through a legislative act in 2018. Illinois followed suit in 2019. New Jersey, Montana and Arizona all legalized recreational marijuana through ballot measures in the 2020 election. Earlier this year, New YorkNew Mexico and Virginia legalized marijuana through legislative action.

With 36 states allowing cannabis for medical use, and 17 legalizing for adult recreational use, the feds find themselves in a position where they simply can’t enforce prohibition anymore.

The lesson here is pretty straightforward. When enough people say, ‘No!’ to the federal government, and enough states pass laws backing those people up, there’s not much the feds can do to shove their so-called laws, regulations, or mandates down our throats.

AB1034 highlights another important strategic reality. Once a state legalizes marijuana – even if only in a very limited way – the law tends to eventually expand. As the state tears down some barriers, markets develop and demand expands. That creates pressure to further relax state law. These new laws represent a further erosion of unconstitutional federal marijuana prohibition.

WHAT’S NEXT

AB1034 will move to the Senate for further consideration. At the time of this report, it has not been referred to a Senate committee. Once it receives a committee assignment, it must pass by a majority vote before moving forward in the legislative process.


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