San Francisco's cannabis cafes are law now. The first one still has to pass inspection.

Mayor Daniel Lurie signed San Francisco's cannabis cafe ordinance on July 23, eight days after the Board of Supervisors passed it 7-4. It lets qualified cannabis retailers serve food, nonalcoholic drinks and live entertainment alongside on-site consumption. No alcohol, no tobacco, no takeout — whatever gets sold has to be consumed on the premises. The law takes effect August 23.

The fee structure tells you who it is for: $2,000 nonrefundable to apply, $3,000 for the first year of licensing, $5,000 annually after that. For the first year, only San Francisco's existing cannabis retailers can get a permit before the market opens to new entrants. That is a deliberate protection, and the city's numbers explain why — 79 retail permits issued, only 66 currently active, with 23 storefronts and 21 delivery services already closed citywide.

Two things remain unsettled. Public-health groups still dispute whether the required ventilation actually protects staff; American Lung Association advocacy director Kesa Bruce argued no worker should have to choose between earning a paycheck and protecting their health, and the city's economic-impact report isn't due until mid-2027. And the effective date guarantees nothing operationally. Every cafe needs city permits and inspections before it can open a door, so August 23 is when the paperwork can start, not when anyone is serving.

The ordinance implements AB 1775, the 2024 state law giving California cities the option to license consumption cafes; Sacramento approved a five-year pilot in June, and San Francisco is the first Bay Area city to move. For retailers this is the first genuinely new revenue line California has handed them in years, arriving at a moment when roughly 60% of the state's cannabis sales still run through the illicit market. Whether a room where people can legally smoke pulls any of that back is the real experiment.