The Santa Monica City Council has approved a new program to expand adult-use cannabis retail opportunities throughout the city’s non-residential districts. This not only expands the commercial cannabis landscape but also embeds a strong social equity component. The aim is to repair past harms from cannabis criminalization. This move builds upon an interim ordinance from 2023. This ordinance first allowed the city’s two existing medicinal cannabis retailers to begin selling adult-use products.
The new, comprehensive program opens the door for new retailers to enter the market. This creates a more inclusive and competitive industry within Santa Monica. It’s a significant step forward in the city’s approach to cannabis. It balances economic growth with a commitment to social justice.
A New Era for Cannabis in Santa Monica
Under the newly approved program, adult-use cannabis retailers can now operate in several key non-residential areas. These designated zones include the Downtown, Mixed-Use and Commercial, Bergamot, Employment, and Oceanfront districts. By permitting cannabis businesses in these commercial hubs, the city aims to integrate them into the local economy.
This expansion follows a 2023 interim ordinance that served as a pilot. It allowed Santa Monica’s two medicinal cannabis dispensaries on Wilshire Boulevard to offer adult-use products to customers aged 21 and over. The success of this initial phase, which reportedly received significant resident support and no major complaints, paved the way for the expanded program.
To maintain community standards, the ordinance includes specific location restrictions. All cannabis businesses must adhere to state law. The law prohibits them from operating within 600 feet of schools, youth centers, and state-licensed daycare facilities.
Additionally, the city has implemented a 300-foot buffer between individual cannabis retailers to prevent oversaturation in any single area.
Social Equity at the Forefront
A central pillar of the new cannabis program is its social equity initiative. Developed with community input and supported by data-driven analysis, the initiative is designed to lower barriers to entry. This focuses on individuals and communities disproportionately impacted by the War on Drugs.
The social equity program prioritizes applicants who meet specific criteria. This includes individuals with past cannabis-related arrests or convictions, those with a household income below 80% of the Area Median Income. It also includes residents of Santa Monica or other disproportionately impacted areas.
These qualifications are intended to ensure that those who suffered most from previous cannabis laws have a fair chance to participate in the legal market.
Qualifying social equity applicants will receive several benefits to help them establish their businesses. These advantages include priority processing for permits, potential waivers for application fees, and exemptions from certain location restrictions.
The city also plans to connect equity applicants with business development resources. Additionally, they require cannabis businesses to hire a percentage of their employees from equity-eligible populations.
Economic Impact and Taxation
The expansion of cannabis retail is also expected to have a notable financial impact on the city. All sales of adult-use cannabis products are subject to a 4% cannabis business tax on gross receipts. This tax rate was established by Measure HMP, which Santa Monica voters approved with 66% support in 2022. The tax rate was later increased by a City Council resolution. It can be adjusted by the council up to a maximum of 10% without another voter-approved measure.
The revenue generated from this tax is a key component of the program’s long-term vision. The city has indicated that a portion of these funds may be directed toward community reinvestment initiatives. This is pending council budget decisions.
These initiatives would further support the communities most affected by past cannabis criminalization. This creates a cycle of restorative justice funded by the legal cannabis industry itself. City staff will monitor permit issuance and tax revenue to assess the program’s ongoing financial impact.
What Comes Next for Santa Monica
With the City Council’s approval, Santa Monica is now preparing to roll out the application process for new cannabis retail permits. Aspiring entrepreneurs and social equity applicants should monitor the city’s official cannabis program webpage. Application timelines and requirements will be posted there.
Allowing cannabis retail as a permitted use in designated non-residential districts, instead of requiring a discretionary review process like liquor stores, will streamline the process for opening a business.
According to Planning Manager Jing Yeo, the council’s direction was clear: “They do not want any discretion review. So it’d be essentially a permitted use, you know, that needs to meet certain standards.”
Santa Monica’s decision to expand its cannabis retail market with a strong social equity focus is a big moment for the city. By creating a regulated and inclusive industry, the program aims to generate economic opportunities while actively addressing historical injustices.
The ordinance provides a framework that balances business growth with community well-being. It potentially serves as a model for other municipalities navigating the complexities of cannabis legalization. As the program unfolds, it will offer valuable insights. It shows how a city can cultivate a thriving cannabis market that is both profitable and just.
