Next Year’s 4/20 Celebrations In California Will Look A Lot More Legal

Next to the lemonade and gyros, California festival goers will soon be able to buy legal pot—a potential sales bonanza for local dispensaries and a boost to state tax revenues. But they’ll have to wait until next year’s 4/20, the informal holiday for cannabis enthusiasts, to buy weed outdoors.

In September, former Governor Jerry Brown signed into law AB 2020, which allows event producers to obtain a license from the local Office of Cannabis to sell marijuana from licensed distributors at outdoor events. The law means that at large music festivals such as Indio’s Coachella and San Francisco’s Outside Lands, adults over the age of 21 will be able to purchase legal cannabis to smoke on-site. According to San Francisco-based cannabis delivery service Eaze, the day marked its second highest day of sales last year, after Green Wednesday (the day before Thanksgiving).

The state bill allowing cannabis dispensaries at outdoor events was spurred by public health problems. Last year, several festivity-goers during San Francisco’s April 20 celebrations were taken to the hospital for overdose due to cannabis laced with fentanyl sold through the illicit market, according to local news reports.

This incident is what San Francisco District Supervisor Rafael Mandelman says led to a push to pass Assembly Bill 2020 at the local level. The bill didn’t pass in time for event producers to apply for the permit for Saturday's festivities, they will be able to do so next year. “When you are purchasing a cannabis product you’re not purchasing it from a kid selling it out of a backpack, you’re purchasing it from a booth from an operator known to sell safe products,” said Mandelman.

California collected $345 million in tax revenue from recreational cannabis, short of the  $1 billion analysts had predicted for 2018. The largest cannabis market in the U.S. hit major road bumps including licensing challenges, regulation shifts and changes to lab testing and packaging requirements, which impacted the supply chain.

While the government won’t get a cut from sales at events, local jurisdictions and the state can expect more tax revenue from licensed dispensaries selling at events. The supervisor says the main goal of the law is to give attendees access to legal lab tested cannabis in an effort to steer business away from illicit dealers. Other California counties could use this opportunity as a way to add revenues from events, Coachella, which hosts one of the largest music festivals in North America, grossed $114.6 million in 2017.

Being able to have a physical presence at events is vital for cannabis companies trying to market their brand since they are essentially locked out of key digital marketing avenues. Google lists marijuana in their ban on ads “for substances that alter mental state for the purpose of recreation or otherwise induce ‘highs". On social media, many cannabis-related accounts have been shut down sometimes more than once with Facebook and Instagram’s guidelines prohibit the promotion of cannabis for sale.

Starting in March, only recurring well-established events qualify for licenses, with the expansion to all event applicants starting in January 2020.

For an event like Outside Lands, one of San Francisco’s largest multi-day music festivals held in Golden Gate Park, event producers would be required to get a flurry of permits but will be authorized by the city’s Recreation & Parks Department to waive an otherwise applicable ban on smoking in the park.

In San Francisco, permits for events with 500 attendees or fewer will cost $500 and events with 2,500 people or more will go up to $3,000 —around the same cost as Denver's special event license, which is a flat $1,000 processing fee. The fees are meant to cover the cost of processing the application, but Mandelman says there are potential revenue opportunities for the city with taxation. “I think over time there’s an opportunity to have more cannabis events to develop what is essentially an interesting economic and cultural space.”