Will Sacramento allow cannabis lounges? City council set to discuss proposal this week
A debate over a proposal to allow cannabis lounges in the city of Sacramento resumes this week, with council members set to weigh the issue again at a special meeting Tuesday.
Local dispensary owners are already preparing for the possibility that the ordinance will pass, and argue that there are potential benefits.
Kimberly Cargile, CEO of A Therapeutic Alternative, said a lounge would offer consumers a safe, legal place to use cannabis. Some, she noted, can’t use cannabis at home because they are renters, and public places often aren’t ideal.
Mindy Galloway, CEO and owner of The Pocket Dispensary, said a lounge would allow her staff to offer customers more education about the products they’re using, compared to what limited advice they may have time to provide at the register.
Still, the proposed ordinance has received pushback from public health groups, which argue that lounges would pose health concerns for patrons, employees and passersby.
During a council discussion in October, representatives from the American Heart Association and American Cancer Society spoke out against the ordinance. And on Monday Sacramento City Councilman Eric Guerra held a news conference in council chambers to voice concerns about secondhand smoke, drawing comparisons to California’s restrictions on public tobacco consumption.
“We cannot give a false sense of safety to consumers,” Guerra said.
Business owners who plan to seek permits to open lounges, if the ordinance passes, said there are means of reducing the potential health risks.
“I think that there is risk in anything,” Cargile said. “There is risk in driving to work… I think education helps mitigate that risk.”
Experts said they expect lounges would provide some measure of economic boost to dispensaries. But it may be limited.
Daniel Sumner, professor of agricultural economics at UC Davis, said it’s unlikely that the advent of lounges would be a significant enough change to reverse recent declines in the industry.
The state’s sales and excise tax revenues from the cannabis industry grew dramatically after recreational use was legalized. But over the past three years, the numbers have flattened, and even decreased some.
When cannabis was legalized for recreational use, Sumner said, people who were able and willing to pay higher prices began to buy it. But eventually, that pool of customers ran out. Plus, the industry faces layers of state and local taxes and fees.
“People leaped into these products… where they just layered expense upon expense upon expense over what’s a basic commodity industry, really,” he said.
Cargile said her business saw rising sales every year up until 2021, and declining sales every year since.
Business owners said they suspect that customers have less disposable income to spend at dispensaries, as living costs have risen. Cargile noted that her storefront is downtown, where the rise of remote work has slackened the usual foot traffic from downtown employees.
The industry also competes with the illegal market. During a news conference last month, State Attorney General Rob Bonta said the illegal marketplace undercuts the regulated industry by selling products two to three times cheaper than regulated cannabis sellers.
“The Illicit marketplace is larger than the legal marketplace,” Bonta said, adding that the state is likely missing out on millions of dollars in tax revenues.
Guerra, the councilmember who opposes the lounge ordinance, said he would support lowering state taxes on cannabis businesses.
“I think the state needs to make a significant change in the tax structure — and increase its enforcement on the illegal market,” Guerra said.
The city council has a special meeting scheduled Tuesday afternoon to discuss the proposed ordinance establishing a pilot program for cannabis lounges. Guerra said he expects members will vote on the ordinance during that meeting.
This story was originally published November 19, 2024 at 5:00 AM.
