At $5.1 billion dollars in total cannabis sales in 2023, California is still considered the world’s largest and most lucrative cannabis market with the same revenue streams as a small nation’s GDP. However, that has belied some of the challenges that cannabis businesses in the State have been facing, including a high local and State excise tax structure that impacts profitability and a powerful illegal market. In fact, when viewed not based on total market size but on a per capita rate, California is actually outperformed by several other markets, such as Michigan’s, which saw per capita sales at approximately 3x California’s in that same year.

Yet California is still a central player in the cannabis industry, with some of the nation’s largest cannabis company’s calling it home and with some of the most successful brands in the State still seeing huge revenues and profits. So the question becomes, is the opportunity in California already exhausted or is there still a chance for entrepreneurs to grab ahold of some of that $5Billon+ market share? The answer is yes – but only if you find the right niche on the wholesale side, or the right location on the retail side. And it’s on the retail side that the State still has plenty of organic opportunities to provide.

California Market News

The State of California recently allowed Amsterdam style cafes, which would sell non-cannabis infused food and non-alcoholic beverages in a more open, social setting than what is currently allowed. Assembly Bill 1775 was signed into law by Gov. Newsom son Sept. 30th, 2024. The State see this as a major step in fighting the State’s unregulated black market which, aside from not being taxed, is able to provide similar settings for their customers. By allowing such open venues for adults 21 years and up, the hope is to stimulate both canna tourism and to help regulated dispensaries and consumption lounges to offer entertainment venues for groups that include non-cannabis users.

New Cities Allowing Cannabis Retailers

As many know, more than half of the California’s municipality’s passed moratoriums when the State legalized adult-use cannabis in 2018. Since then, municipalities have been slowly opening up in many of the underserved areas of the State, creating an immediate lucrative retail opportunity and, eventually, bringing wholesale demand back to initial per capita levels. The current CA Cities to watch are:

1. Petaluma – This beautiful California city of roughly 60K people sits in Sonoma County, just north of San Francisco. The City is currently accepting license applications for up to three cannabis retail storefront locations and up to two delivery-only retailers through a competitive licensing process. The application window is currently open and final applications are due by 5 p.m. PST on November 7, 2024. Items that are needed include:

a. Applicant background and experience

b. A description of the organization, including the business’ philosophy and experience of the business’ principals and management team

c. The company’s track record running a cannabis business or similar business, including past notices of violation from government agencies and contributions to community organizations

d. A business plan, including target customers, a marketing plan, product sourcing, and an employee hiring and training plan

e. An operations plan, including management of the business, security measures, community education about safe cannabis use, and employee compensation

f. Landlord approval for the proposed retail location

g. Financial information, including a pro forma, description of investment needed, operating capital, cash management system, and access to sufficient funds.

Please reach out to Global Go for more information on the immediate opportunity.

2. Santee – Just west of San Diego, the City of Santee has a population of just under 60,000 people. On March 28th, 2024, the City approved the application process for cannabis businesses, which opened Tuesday, September 10, at 3:00 pm (PDT) and will close Thursday, October 24, 2024 at 3:00 pm (PDT). The City will allow for up to 4 adult-use retail dispensaries. Please reach out to Global Go for information on licensing availability.

3. West Sacramento – As the name implies, West Sacramento is a small City that borders the State’s capital just to its West. While the City itself only has a population of about 54,000, it is within easy driving distance of the 519,000 people who live in the Capital, including a large number of college students. While originally the City only allowed wholesale distribution, testing labs, manufacturing, and indoor cultivation, an ordinance allowing both storefront and non-storefront retail cannabis licensing has been passed. The City is currently undergoing a social equity only round for retail licensing, which closes on Oct. 31st, 2024. Applicants must have a household income ≤80% of Yolo or Sacramento County median income figures. If the owner has had a cannabis arrest or conviction in Yolo and/or Sacramento Counties between 1980-2016, a 5% weighting factor may be applied. Additionally, if the owner meets the income requirements and has resided in West Sacramento for at leave five (5) years, an additional 5% weighting factor may be applied. Please reach out to Global Go for updates on this process.

4. Baldwin Park – A city of over 75,000 people in Los Angeles County, is currently accepting license applications. The City permits indoor commercial cultivation, manufacturing, distribution, and laboratory testing of cannabis and cannabis products and limited retail. However, only cannabis business with a license from the City prior to July 1, 2021, and are in good standing can apply for a retail cannabis license. There is no deadline but there is a limit on the number of licenses that will be approved. The City will issue a maximum of 25 cannabis permits including the exclusive distribution permit that has already been issued. Please contact Global Go to confirm the number of available licenses and if you qualify.

5. Clairmont – A city of over 36,000 people in Los Angeles County, currently prohibits commercial cannabis businesses but allows the delivery of cannabis from businesses outside of City limits. However, on November 8, 2022, Claremont voters approved Measure CT, establishing tax rate ranges for commercial cannabis businesses, and on January 24, 2023, the City Council approved tax rates for commercial cannabis businesses based on the tax rate ranges approved by voters. The Council approved a 6% tax rate for retail, 6% tax rate on deliveries, 4% rate for manufacturing, 3% for distribution, 3% tax on cultivation, and 2% for testing and laboratory. To allow cannabis businesses in Claremont, the City Council would need to approve an amendment to the Claremont Zoning Code. This would require the City Council and City Planning Commission to conduct noticed public hearings to determine which types of cannabis businesses, if any, would be allowed in Claremont and where they would be permitted to operate. The most recent of these sessions occurred on Sept. 21st, 2024 is the first City Commission meeting in a series of public meetings and hearings on this topic that will take place this year.

6. Pacific Grove – A small beach town in Santa Barbra County (population just over 15,000 but a median income above $50K), the City is looking to hold a round of retail applications later this year, having unanimously passed an ordinance allowing one retail location, as well as delivery services, on Nov. 1st, 2023. The council is currently considering hiring a cannabis consultant to help the City determine who will receive the single retail license. Due to the city’s small size and the State’s 1,000-foot School zone distance requirement, cannabis retail dispensary locations are likely limited to either the upper Forest Hill business district or the industrial area near Asilomar.

7. San Diego County – After deliberating for nearly three years, the County has finally adopted a new cannabis social equity program. Currently, the City of San Diego allows for cannabis within their jurisdiction, but not the county and its unincorporated areas. In their May meeting, County Supervisors approved direction on social equity eligibility criteria, an ordinance to implement it and setting up a nine-member group called the Cannabis Oversight Community Collaborative. That group will now look into creating a commercial cannabis ordinance, so owners can prepare for licensing. The board also set the following rules for cannabis businesses licensed in the county:

A 3-year window to start their licensing process once it becomes available.
A minimum of 51% equity share in a cannabis business.
A limit of 25 licenses for cannabis retail storefront businesses that could be raised in the future, although the process of how that number will change has not yet been decided.
Reserving at least half of all new storefront retailer licenses for social equity applicants. If the retailer decides not to start their business within the three-year timeframe, the license will then go on to the next applicant.

8. Redondo Beach – A decent sized city of -over 70,000 people in Los Angeles County, Redondo Beach citizens have a median income of $63,700 (2020). The City has been attempting to begin their application process for over a year but has seen several setbacks due to issues with a former contractor. Most recently, in Sept., the City Council concluded a discussion about how to license two cannabis stores, including that (1) city staff will select the two companies to open stores; (2) city council will act as the appellate body; (3) no community benefit plan is required (donations from gross sales to community non-profits or the city); (4) some of the criteria for choosing a store will be pass/fail and some scored, such as quality of management and security and safety plans.

Mayor Jim Light also went on the record, saying “I’m hoping that by late 2025, early 2026 to have our first store open,” Discussion resumes Oct. 8. While much of the process has yet to be released, what is known is that an applicant will be required to have a leased or owned property within the City’s zoning requirements in order to apply. Please contact Global Go for further information about zoning and other requirements.

9. Santa Monica – The City of Santa Monica is perhaps one of the most famous areas of Los Angeles County, sporting a famous beach and Board walk, as well as a dense population that includes some of the wealthiest in Los Angeles. Currently, the City only allows for 2 medical cannabis dispensaries, but at a City meeting in June 2023 the City Council indicated their interest in expanding the number of licensees and in allowing for adult-use cannabis retail dispensaries. This is important not only to allow for expanded cannabis access, but also to allow the City to capture tax dollars from the large number of tourists visiting their pier. Then, in October 2023, the Council approved changes allowing for adult-use cannabis sales and delivery for the two currently licensed medicinal cannabis retailers, and approved an Interim Zoning Ordinance that would remove certain requirements and permit retailers within the city to deliver, cultivate, and sell adult-use cannabis or adult-use cannabis products to persons 21 years of age and over. The Council also directed the creation of an ordinance permitting adult-use cannabis in more areas of the City. At the most recent council meeting on April 23rd, the Council moved forward the development of the city’s ordinance on adult-use cannabis, giving additional direction on business locational restrictions and the cannabis social equity component. As part of their social equity component, the city was granted $40,000 to complete an equity study, which is anticipated to be completed by the end of 2024, at which time staff will return to the City Council to present the findings and recommendations. The city’s equity assessment will analyze both quantitative data, including cannabis criminal arrests and demographics, along with qualitative data from surveys and community engagement to develop key findings and recommendations. Please contact Global Go for further information.

10. Winters – The City of Winters, CA, sits just between Sacramento and San Francisco, just east of the Napa Valley. While having a small population of around 8,000 people, it’s a picturesque area that sees tourism from local wineries and National Parks. In April of 2023 the City approved grant funding to explore commercial cannabis and discussed efforts to update the city’s General Plan. Over the course of the last year, the City Manager has held multiple Public Workshops on the cannabis industry and to discuss what license types would be allowed, with a specific emphasis on retail cannabis dispensaries, the most recent of which was in August. Please reach out to Global Go for updates on this process.

While the above Cities are those that are most recently looking to open themselves for new local cannabis licensing, several other cities and counties, such as Riverside County, allow for open licensing or have not yet reached their licensing caps. Further, the other closed municipalities are continuing to slowly open their doors to new opportunities for cannabis entrepreneurs. So California, the largest cannabis market in the world, continues to be a dynamic market with multiple opportunities, though anyone looking to get into the space should analyze each jurisdiction carefully to avoid the pitfall of so many in the space – entering an already saturated market with a sound plan to capture market share.

Ready to Become a Licensed Cannabis Business Owner in California?

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