San Francisco’s moratorium on new cannabis businesses through 2027 set to begin

SAN FRANCISCO – An oversaturated market has pushed the cannabis industry and city leaders in San Francisco to try to slow down the number of businesses opening up over the next four years.

An ordinance approved by the board of supervisors and signed by the mayor will create a moratorium on new businesses beginning July 23.

“The moratorium is just one lever now that cannabis policy has, and I have as a prospective business owner, to try and seek investors and say, ‘Hey look, this is still something special,’” said Malcolm Joshua Weitz, the owner of Mirage Medicinal.

Weitz hoped to open a new business in 2021 but investors pulled out and left the project unfinished in the SoMa neighborhood. He said the moratorium is a start to getting the market in a place where new money could come in to help him complete construction.

“Come through here you would have been in the consumption lounge,” he said while giving KPIX a tour of the property this month. “I wanted to maybe make these floor to ceiling windows.”

“I think the most important thing is having the cannabis available to the people who want to get it,” said Adam Hayes, the co-owner of SENSE, a cultivation brand in the city. “There’s a lot of companies that are not making it at this point and they’re saving you a lot of time and heartache by not allowing for you to even apply at this point.”

Hayes’ company cultivates cannabis and then sells it in a packaged form to dispensaries throughout the state. He started working in 2008 and says in addition to the moratorium, the industry still needs more support to prosper all these years later.

“We want to be here, a lot of us have been here for a long time, and they need to help keep us safe,” Hayes told KPIX. “There’s a lot of hardworking individuals that have great products and great companies here in San Francisco and it’s really important to support them.”

He says break-ins at marijuana businesses are an ongoing concern and more growth can be achieved if the industry can see legalization in other states that allow for more access to new customers.

“We felt like it was a good time to put a pause on and allow the market to adjust,” said Supervisor Ahsha Safai, who authored the ordinance. “We also didn’t want to see the industry completely implode and have all of the, a rash of businesses go out of business.”

Safai said 60% of marijuana sales are through the illicit market and San Francisco is the most saturated market in the country compared to other urban areas. Applicants who made it far enough in the process will still get to open their new business after the ordinance has taken effect.

“We’ll get to the right balance and I think that’s fair,” Safai told KPIX. “This is something that we’ve put a lot of time, effort, and energy into, we want it to be successful but we want it to be the done the right way.”

The supervisor said the city will check with the industry to see how this move has helped them. There will also be a larger economic study in the third year. Supervisors have the option to review the decision at the end of 2027.

“I think it will be beneficial to all of the businesses, allow them an opportunity to stabilize and get a foothold in the market to see whether or not they’re able to succeed or not,” Safai said. “The industry was asking for this itself, they really wanted this pause to protect the businesses that have put their entire live savings on the line to actually open up a business.”

Weitz said the industry has struggled to some extent since 2017. Even with additional steps to assist it, they are going to need more of a recovery coming out of the pandemic. He estimates another $1 million in new investments will be crucial to complete his business in SoMa.

“I need all the conventions in the world to come here to San Francisco,” he said. “So when investors see a turnaround on that side of things, combined with the moratorium, I think that, you know, that’s when I’ll be able to wrestle up some interest.”