San Diego’s cannabis dispensaries have faced strict operating hours, closing their doors at 9 p.m. each night, while the demand for later service has pushed customers toward illegal sources or neighboring cities with more accommodating hours.
However, a potential change is on the horizon following a significant move by a San Diego City Council committee on Wednesday afternoon.
The committee unanimously backed a proposal that would allow dispensaries in San Diego to operate between 6 a.m. and 10 p.m., aligning their hours with those of many nearby cities and the maximum allowed under California state law.
Currently, the city enforces tighter restrictions, permitting dispensaries to remain open from 7 a.m. to 9 p.m. only.
The proposed extended hours aim to revitalize a local cannabis industry that has seen dwindling sales, consequently impacting the city’s tax revenues.
As San Diego confronts a $258 million budget shortfall, the addition of these operating hours would not only bolster dispensary revenue but also provide nearly $1.9 million to the municipal budget for the upcoming fiscal year beginning July 1.
The underlying financial incentives hinge largely on anticipated taxes from dispensaries, with $1.7 million expected from the businesses and the rest generated through sales taxes from customers.
Phil Rath, a lobbyist for medical marijuana dispensaries, emphasized that the restrictive operational hours have driven potential customers towards late-night options in adjacent areas or to illegal dealers who evade taxes.
Rath described this scenario as detrimental, arguing that “all those sales are untaxed and unregulated and really frankly, dangerous,” framing the proposal as a practical solution to equalize competition for legal businesses.
The city’s shift towards accommodating longer operating hours has not been without contention.
During discussions, some community members voiced concerns regarding the potential implications of increasing dispensary access.
Solana Beach resident Peggy Walker urged the committee to consider alternative solutions for budget deficits rather than “exploiting people’s weakness for addictive drugs.”
Despite the opposition, committee members, including Chair Raul Campillo and Vice Chair Henry Foster III, supported the rationale behind extending dispensary hours, labeling it as “common sense.”
Councilmember Campillo remarked, “Making sure that these retail businesses are open and are equally competitive with nearby locations is something that is just common sense.”
He emphasized that allowing dispensaries to operate longer would not only support local businesses but also contribute positively to city revenue and create broader economic benefits.
Lt. Michael Swanson from the San Diego Police Department provided reassurance to the committee that there had not been notable increases in crime or 911 calls around existing dispensaries.
As the city contemplates various strategies to address its significant budget shortfall, cannabis dispensaries have emerged as a potential contributor, alongside initiatives like new trash fees and proposed parking charges at notable attractions like the San Diego Zoo and Balboa Park.
Rath pointed out that calls for longer hours have been a persistent demand from dispensaries, but it appears the city’s current fiscal challenges are accelerating the discussion.
“This is exactly why it’s being considered now,” Rath noted, highlighting the increased focus on alternative revenue sources during financially challenging times.
Although the proposal has not yet been formally authorized by the city council, it has already been incorporated into the finalized budget projections for the upcoming fiscal year.
The introduction of extended operating hours comes shortly after the city enacted an increase in business taxes for marijuana dispensaries on May 1.
This marked the first tax hike for dispensaries in six years.
Despite collecting millions in taxes from the burgeoning number of dispensaries since 2015, recent years have seen a stark decline in business activity and, thus, tax contributions.
After revenues from dispensary taxes fell short by $1.5 million in the 2024 fiscal year compared to the previous year, the city responded by increasing the taxation rate by 25%.
Now, dispensaries contribute one dime from every dollar they earn in taxes to the city—a notable figure that ranks among the highest dispensary taxes in California.
Nevertheless, sales at dispensaries are still in decline, influenced by competition from neighboring areas and illicit dealers.
This downward trend in business revenue has continued to disappoint city expectations, with projections revealing anticipated tax revenues falling short by almost $3 million this year.
This situation contrasts sharply with the success experienced by dispensaries in neighboring cities, which have seen increased revenue streams from cannabis taxation and business growth.
Notably, Vista has benefitted from a dispensary tax established in 2018, and National City recently welcomed the county’s first cannabis cafe in April.
Rakesh Goyal, an owner of a local dispensary in San Diego, expressed optimism, viewing the extended hours as a vital tool to help legal dispensaries remain competitive against the illicit market.
The city council plans to hold a public hearing on June 23, allowing community members to voice their opinions regarding the proposed operating hours ahead of a final vote expected later this summer.
Should the proposal be officially adopted, it could reshape the landscape for San Diego’s cannabis market and contribute significantly to the city’s finances.
image source from：https://timesofsandiego.com/business/2025/06/12/san-diego-cannabis-dispensaries-new-opening-hours-city-council/
