San Francisco Approves Bay Area’s First Cannabis Cafes

San Francisco is poised to become the first Bay Area city to license cannabis cafes, after its Board of Supervisors gave final approval to an ordinance that lets licensed retailers serve food and non-alcoholic drinks alongside on-site marijuana use. The measure cleared the board on a 7-4 vote on July 14, 2026, and now sits with Mayor Daniel Lurie, whose signature is the last step before it becomes law.

For the city’s licensed operators, the vote opens a business model California has allowed since the start of 2025 but that no Bay Area jurisdiction had yet written into local code.

What the ordinance would allow

The ordinance creates a distinct cannabis cafe permit, run by San Francisco’s Office of Cannabis, and treats it as its own license category rather than a bolt-on to an existing storefront. Cafes could prepare and sell food and non-alcoholic beverages, host live entertainment, and let patrons smoke, vape, or eat cannabis on the premises. What they cannot do is sell anything to go: a cafe’s cannabis sales are limited to on-site use, and no alcohol or tobacco is allowed. That is a real shift from current rules, under which a permitted dispensary can let customers consume packaged edibles on site but cannot sell them a soda or a pastry to go alongside.

Operators would still have to meet the same food-safety standards as any restaurant, follow ventilation and signage rules, and check that everyone entering the consumption area is at least 21. The ordinance also exempts cafes from the city’s ban on indoor smoking in workplaces and, in some cases, waives the 600-foot buffer from schools that applies to cannabis retail — the exemptions that drew the sharpest pushback.

For the first year, only businesses that already hold a storefront retailer permit, or share owners with one, can apply. The head start is meant to steer the new revenue toward operators already in the market; equity applicants face a $2,000 application fee and a $3,000 first-year license fee.

A 2024 state law, finally taking local shape

The city measure puts flesh on AB 1775, the state law Gov. Gavin Newsom signed on September 30, 2024, which took effect January 1, 2025. Authored by Assemblymember Matt Haney, a San Francisco Democrat and former supervisor, it let local governments authorize licensed retailers and microbusinesses to prepare and sell non-cannabis food and drinks in their consumption areas and to sell tickets to live performances — the pieces that move a consumption lounge closer to an Amsterdam coffeeshop. Haney, who has promoted nightlife as a fix for hollowed-out downtowns, has pitched the cafes as a way to draw tourism and foot traffic back to city cores.

Before that, state rules let those lounges sell only prepackaged, non-infused snacks, and only in cities that already permitted on-site use; the 2016 voter initiative legalizing adult use had allowed just limited consumption on site. The state law changes nothing by itself — it hands the decision to cities and counties, each of which must write the model into its own code. That local-control design is why legal cannabis in the U.S. still looks so different from one place to the next; Virginia, for its part, only enacted a framework for retail sales this year. San Francisco is the first large Bay Area city to adopt the cafes, after other California cities moved first.

Newsom had vetoed an earlier version in 2023 over worker safety. The bill he ultimately signed added secondhand-smoke protections: employees can wear a respirator mask at the employer’s expense and must be given written state guidance on the risks of secondhand cannabis smoke.

Why the vote was close

Supporters framed the cafes as a lifeline for a legal industry under strain. “San Francisco just gave our legal cannabis industry a real tool to compete and grow,” board President Rafael Mandelman, the ordinance’s author, said in a statement, tying the cafes to the city’s broader economic recovery. Statewide, licensed sales have slid while the illicit market still accounts for roughly 60% of the cannabis Californians buy, by the state’s own estimate. In San Francisco, the Office of Cannabis has issued 79 retailer permits, 66 of them still active, the San Francisco Examiner reported.

The opposition came from two directions. Public health groups, including the American Lung Association and the American Cancer Society Cancer Action Network, urged a no vote, warning that the smoking exemptions would expose cafe workers to hours of secondhand smoke and erode workplace protections California has built since the 1990s. Supervisor Myrna Melgar, one of four no votes, said indoor smoke — whether cannabis or tobacco — is a serious public health issue. From inside the industry, some veteran operators argued the city was expanding a market it has not stabilized and pressed the board to cap new competition or wait for an economic study due in 2027.

The fight echoes one playing out wherever social-use spaces are taking shape, from Los Angeles lounges to Minnesota’s first tribal cannabis lounge. For now, the next move is the mayor’s: if Lurie signs, the Office of Cannabis will stand up the permit program and start the one-year clock for the city’s existing retailers.