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On Nov. 8, 2016, a new California law went into effect legalizing the recreational use of cannabis by people 21 and older and creating a state regulatory and licensing system for cannabis businesses.

Under the state law, cities are allowed to create their own regulations and licensing process, which the City of San Luis Obispo did on May 22, 2018.


City staff worked with the community to create a thoughtful, transparent and fair process for granting permits to cannabis businesses. This approach was designed to protect the community’s character and quality of life while ensuring cannabis businesses operating here are well run and sustainable, including:

  • A commitment to local hiring and community support.
  • Equity ownership and competitive employee compensation.
  • A solid financial plan and the resources needed to support a successful business.
  • A commitment to sustainable business and environmental practices.


Permitting Process


Steps in the Process:

Cannabis Fee Schedule

Evaluation Criteria


Word Version

PDF Version 

Applications submitted are reviewed and scored according to the adopted Evaluation Criteria. Top scorers meeting a determined threshold will be issued Contingent Operator Permits and can then begin to work with the City's Community Development Department on their use and building permits. Following the successful completion of an extensive background investigation of all principals and partners which includes LiveScan fingerprint screening, applicants will be issued a final Cannabis Business Operator Permit.


Nov. 8, 2016:  New state law allowing recreational cannabis use

May 22, 2018 City passes the Cannabis Ordinance allowing commercial cannabis businesses to operate in the City

Nov. 6, 2018:  City of San Luis Obispo voters adopt the Cannabis Business Tax Measure

Jan. 1-29, 2019:  Initial Commercial Cannabis Business Operator Permit Application process opened

March 28, 2019: Five Contingent Operator Permits granted

April-Present: Background investigation process underway for applicants that received Contingent Operator Permits

Sept. 5, 2019: First two Operator Permits granted


Next Steps

Three additional permits are expected to be granted in Fall 2019 as the City completes the background investigation process for the remaining applicants that received Contingent Operator Permits.

A maximum of three retail storefront businesses will be allowed. The City does not have a limit on the number of delivery, cultivation, manufacturing and other small businesses that can operate in San Luis Obispo.

The next application period will open in January, 2020.


Related Information

Cannabis Ordinance (Municipal Code Chapter 9.10 and Chapter 17.99)

Cannabis Business Tax (Municipal Code Chapter 5.10)

  • Gross receipts, or excise taxes, are assessed at every stage of cannabis production within the City including testing, retail sales, distribution and manufacturing. Cultivation taxes are based on the size of the canopy or license issued by the State. The current gross receipts tax is 6%.

Allowed Zones for Cannabis Businesses

City Map Cannabis Zones

Cannabis Business Zones (CBZ) Overlay Area Maps

Mobile Delivery Businesses:

For cannabis delivery businesses operating and delivering products within the City of San Luis Obispo, a Business License and Cannabis Tax Certificate is required.


Agency Links

City of San Luis Obispo Police Department - Cannabis Regulations Unit 

Bureau of Cannabis Control

California Cannabis Portal 

CalCannabis Cultivation Licensing

California Department of Public Health

California Office of Traffic Safety

Manufactured Cannabis Safety Branch (MCSB)

#Weedwise Campaign 


For more information, contact Charlene Rosales, Economic Development Manager, at (805) 781-7164.