HomeMy WebLinkAbout011326-03.1
STUDY STUDY SESSION MEMORANDUM 3.1
TO: Mayor and Town Council January 13, 2026
SUBJECT: Impacts of AB 8 and state regulations on the sale of hemp products and
cannabis retailers
BACKGROUND
America’s Finest Hemp Company (AFHC) has operated as a retailer in Downtown
Danville for several years. As their name says, they have specialized in selling products
derived from what is referred to as “industrial hemp.” Under federal law and, until
recently, state law, hemp products containing less than 0.03% THC have been classified
as hemp and not cannabis. Based on that, there were no specific regulations applicable
to the use and they could operate in any retail zoning district within Town.
Regulations adopted by the California Department of Public Health in 2024 and
legislation (AB 8) signed into law in October by Governor Newsom have changed the
treatment of hemp, effectively classifying almost all hemp products in the same category
as cannabis for regulatory purposes. Because the Town prohibits all commercial cannabis
uses within Danville, this means AFHC may no longer legally operate in Town. Given
this change in the law, the Town Council has requested information regarding the change
in state law and any potential changes in Town regulations to allow AFHC to resume
operating in Danville as a cannabis retailer. This report attempts to provide answers to
those questions.
DISCUSSION
Effect of new laws on sales of hemp products
As stated in the background section of this report, both AB 8 and the 2024 regulations
adopted by the state Department of Public Health have the effect of treating the sale of
most consumable or inhalable products derived from hemp as cannabis. What this means
in practice, is that AFHC or any similar business will need to operate as a cannabis
retailer, whether they continue to sell hemp-based products or cannabis products. In
order to do so, both local and state permits would be required. The remainder of this
report outlines the legal/regulatory issues that would need to be addressed to allow this
use in Danville.
Cannabis retail regulations 2 January 13, 2026
History of Cannabis Regulation in Danville
Before discussing potential changes going forward, it is worth briefly reviewing the
Town’s history with cannabis regulation to understand the current municipal code.
While California’s voters first approved the use of medical marijuana in 1996, the Council
did not address the issue until 2009, when the Town’s planning division received several
inquiries about opening medical marijuana dispensaries. Because the Town, like many
local agencies at that time, did not have any zoning regulations either permitting or
prohibiting dispensaries, the Council adopted an urgency moratorium prohibiting
dispensaries. The moratorium was extended until 2011, when the Council adopted a
zoning amendment prohibiting medical cannabis dispensaries in Town. In 2016, in
response to state legislation, the Council adopted another ordinance prohibiting all
medical cannabis uses in Town.
In November 2016, voters approved Proposition 64, which allows for adult use of
cannabis for non-medical uses. In response, the Council adopted an ordinance in January
2017 banning all commercial cannabis uses in Town. Finally, in 2023, the Council adopted
an ordinance allowing for retail delivery of medical cannabis, as required by a change in
state law. As a result, with the narrow exception of medical cannabis delivery, no
commercial cannabis uses are currently allowed in Town.
Legal and Regulatory Issues associated with cannabis retail
After a review of a number of local ordinances, it is clear that the current model for
permitting and regulating storefront cannabis retail involves a two-step process: 1)
requiring a cannabis retail permit; and 2) determining in which zoning districts cannabis
retail would be allowed. In addition to local regulation, any commercial cannabis use
must obtain a state license. All three of these steps would need to occur in order to allow
this use in Danville. Each of these steps is discussed below.
1. Cannabis Permits
While the details and terminology differ from city to city, all of the recent ordinances
reviewed by Town staff require a potential cannabis retailer to obtain a non-land use
permit. These ordinances all contain the following elements in some form:
• A maximum number of permits for the city, 2-3 being typical, but the city
is not obligated to issue the maximum number of permits.
• A detailed application/RFP process. The application typically calls for
detailed information such as: financial information; proposed location;
background on proposed owners and employees; detailed security plans;
odor control plans; insurance; operational plans. There is a time frame to
apply, leading to a panel (typically staff including chief of police) reviewing
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and scoring/ranking the applications. Using those rankings, council can
approve applications after holding a public hearing.
• These permits are typically for a fixed period ranging from one to three
years and specifically state that do not create a vested right for renewal.
They are not transferable. Each renewal requires resubmitting the same
information as the initial application.
• While state law contains some operational standards (such as security
requirements and hours of operation), most of the local ordinances contain
operational standards in addition to or more strict than those set in state
law. Examples can include more stringent security requirements, limits on
amount of product on site, shorter hours of operation, etc. (Note that these
operational standards may be tied to the retail permit or the zoning permit).
• The permit approval is conditional on obtaining the necessary state license
(see below).
2. Land Use/Zoning Regulations
In addition to licensing the business, zoning changes must be adopted:
• As with all uses, the zoning ordinance must specify in which zoning
districts the use is allowed. The ordinances reviewed do not allow cannabis
uses in all commercial districts.
• As mentioned above, all of the ordinances reviewed by Town staff include
a number of land use requirements, sometimes in the permitting ordinance,
sometimes in zoning. Examples of such requirements include:
o Buffer requirements from specified uses. State law requires a
minimum of 600’ from K-12 schools, day care and youth centers.
Individual cities may increase that distance and add other sensitive
uses such as libraries, parks, etc. As a local example, the Town
requires tobacco retailers to be a minimum of 1,000 feet from schools,
parks or playgrounds.
o Buffer requirements from other cannabis uses. The typical distance
appears to be 1,000’.
o Signage. Many of the ordinances have specific standards over and
above their base sign ordinance. As an example, Martinez prohibits
any “graphics depicting cannabis or cannabis products” to be visible
from the exterior of the building.
3. State Licensure Requirements
Town staff was able to meet with staff from the Department of Cannabis Control to get a
better understanding of their process. They were clear that when they receive an
application for a state license, their first step is to reach out to the local jurisdiction to
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ensure that all local permitting requirements have been successfully completed. Once a
city is contacted, they have 60 days to respond. The state also looks to see that CEQA has
been completed at the local level, even if a categorical exemption was used. Assuming
everything was done at the local level, it would typically take 4-6 weeks to obtain the
state permit.
DCC staff also highlighted several points:
• There are two different retail licenses available: the A or Adult license requires that
all customers be at least 21. The M or Medicinal license allows customers as young
as 18 so long as they have a valid doctors recommendation. Local jurisdictions can
specify in their local ordinance which of these state licenses are permissible.
• The state license will incorporate any local regulations into the state license. As an
example, if the local ordinance has more restrictive hours of operation or requires
a more extensive buffer than the state minimum, the state will incorporate those.
• They encourage local jurisdictions to report violations of local standards or
regulations to the state and they will take the lead on enforcing those.
What are other jurisdictions in Contra Costa doing?
At this time, Contra Costa County and the cities of Concord, El Cerrito, Martinez,
Pittsburg, Richmond and San Pablo allow storefront cannabis retail. In November, the
Pinole City Council directed their staff to draft an ordinance allowing for cannabis uses.
All of the local ordinances contain the elements described above.
RECOMMENDATION
Provide direction to Town staff regarding whether to move forward with drafting
ordinances to address the changes in state law and allow storefront cannabis retail uses
in Danville.
Prepared by:
Robert B. Ewing
City Attorney