San Francisco will allow cannabis consumption lounges to serve food and nonalcoholic drinks, making the city the first in the Bay Area to permit the “Amsterdam-style” model for cannabis cafes.
The measure is required to implement a state law passed in 2024 that allows cities to license cannabis cafes. The establishments may sell cannabis only for on-site use, and for a year, only existing storefront retailers and their equity partners can apply to open a cannabis cafe, according to KQED.
Backers hope the additional business model available will help resurrect a sagging retail sector.
“San Francisco just gave our legal cannabis community a real tool to compete and grow,” Board of Supervisors President Rafael Mandelman said in a statement, according to KQED.
“There’s no reason our operators shouldn’t have the same tools to compete and help bring people back into our neighborhoods.”
Will cannabis cafes help retailers?
Supporters framed the cafes as a relief for retailers hit by falling sales and rising costs. Statewide cannabis sales dropped below $4 billion in 2025 amid price compression and continued competition from the illicit market.
The state estimates that California’s illicit market accounts for roughly 60% of cannabis sold, KQED reported.
California’s excise tax rose from 15% to 19% last summer before a tax cut last fall. However, retailers said the hike pushed cost-conscious shoppers toward unlicensed sellers.
San Francisco placed a moratorium on new cannabis retail licenses in 2023, citing oversaturation.
At least 23 storefront retailers have closed since adult-use marijuana legalization, according to David Goldman, president of the Brownie Mary club’s San Francisco chapter, as reported by KQED.
Is there opposition to serving food in cannabis cafes?
Not every operator welcomed the decision to allow food and beverages to be served in cannabis cafes.
Kevin Reed, founder of The Green Cross and a veteran of city cannabis politics, urged the board to slow expansion until the market recovers.
“This is the first time in my cannabis career that I have felt compelled to ask the city to slow the expansion of cannabis businesses,” Reed wrote in a letter to the board.
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What other cities offer food at cannabis cafes?
San Francisco isn’t the only U.S. city that allows cannabis cafes to serve food.
Some of Denver’s on-site consumption venues also offer food and nonalcoholic drinks, according to The Denver Post.
Cirrus Social Club serves cannabis products alongside snacks and desserts.
Supporters say that cannabis consumption lounges, which exist in some states while others struggle to permit the license category, represent “the next frontier” for legal marijuana retail. However, that vision has largely not yet come to pass amid burdensome rules and regulators who are “overthinking” the concept, critics have said.
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