CITY COUNCIL STAFF REPORT
DATE: JULY 8, 2026 BUSINESS & LEGISLATIVE
SUBJECT: REINTRODUCTION AND FIRST READING OF AN ORDINANCE OF THE
CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA,
AMENDING CHAPTER 5.55 OF THE PALM SPRINGS MUNICIPAL
CODE REGARDING CANNABIS CONSUMPTION LOUNGES
FROM: Scott C. Stiles, City Manager
BY: Special Program Compliance
SUMMARY:
This agenda item is for the reintroduction and first reading of an Ordinance amending Chapter 5.55 of the Palm Springs Municipal Code (“PSMC”) related to cannabis consumption lounges consistent with Assembly Bill 1775 (“AB 1775”).
AB 1775 amended Section 26200 of the California Business and Professions Code and authorizes local jurisdictions to permit licensed cannabis retailers and microbusinesses to prepare and sell non-cannabis infused food and nonalcoholic beverages within approved cannabis consumption lounges, subject to compliance with State law and local regulations.
Following introduction of the prior Ordinance and subsequent public comment, staff conducted additional review of the proposed operational standards and recommended revisions. The revised Ordinance clarifies allowable activities, refines operational requirements, and maintains safeguards related to public health, employee safety, nuisance prevention, security, and neighborhood compatibility. The revised Ordinance also incorporates operational modifications in response to stakeholder feedback while preserving the City’s local regulatory authority under AB 1775.
RECOMMENDATION:
Waive the reading of text in its entirety, read by title only, and introduce for first reading Ordinance entitled, “AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING CHAPTER 5.55 OF THE PALM
SPRINGS MUNICIPAL CODE REGARDING CANNABIS CONSUMPTION
LOUNGES”.
City Council Staff Report
July 8, 2026 -- Page 2
Reintroduction and First Reading of an Ordinance Amending Chapter 5.55 of the Municipal Code 1 0
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BACKGROUND:
On September 30, 2024, Governor Gavin Newsom signed Assembly Bill 1775 into law.
AB 1775 amended Section 26200 of the California Business and Professions Code and expanded the activities that local jurisdictions may authorize within licensed cannabis consumption lounges.
Specifically, AB 1775 allows local jurisdictions to permit:
Preparation and sale of non-cannabis-infused food and nonalcoholic beverages within cannabis consumption areas;
Live musical performances, entertainment activities and tickets to both; and Additional operational activities subject to local regulation and permitting requirements.
Importantly, AB 1775 is permissive legislation and does not require local jurisdictions to authorize any expanded cannabis lounge activities. The statute expressly preserves local authority to impose operational standards, permitting requirements, land use controls, and public safety regulations.
Palm Springs has historically been a leader in the regulation of cannabis businesses and currently permits cannabis consumption lounges pursuant to Chapter 5.55 of the Palm Springs Municipal Code. There are currently six operational cannabis lounges within the City, with additional approved facilities pending completion.
On November 26, 2025, the City Council introduced an ordinance implementing portions of AB 1775. Following introduction, public comments and operational concerns were reviewed by staff. Staff subsequently reviewed the proposed Ordinance and recommended revisions intended to provide operational flexibility while maintaining reasonable public health, safety, and nuisance-prevention standards.
STAFF ANALYSIS:
The revised Ordinance maintains the City’s existing regulatory framework while implementing limited operational expansions authorized by State law.
The proposed amendments are intended to:
Support existing licensed cannabis businesses;
Provide operational clarity; and
Ensure continued compliance with State cannabis regulations and public health standards.
City Council Staff Report
July 8, 2026 -- Page 3
Reintroduction and First Reading of an Ordinance Amending Chapter 5.55 of the Municipal Code 1 0
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Under AB 1775 and the proposed Ordinance:
Cannabis consumption areas remain restricted to individuals 21 years of age and older;
Cannabis consumption may not be visible from any public place; Alcohol and tobacco products remain prohibited;
Food and beverage operations must comply with the California Retail Food Code; Cannabis consumption remains prohibited within food preparation, storage, and warewashing areas; and
Operators must comply with all applicable health, ventilation, odor control, and employee safety requirements.
The Ordinance also maintains operational requirements related to:
Ventilation and odor mitigation systems;
Licensed security personnel;
Employee health and safety protections;
Security and loitering prevention;
Age verification requirements; and
Compliance with all applicable California Department of Cannabis Control regulations.
Summary of Requested Changes and Staff Response
Staff reviewed stakeholder comments and requested revisions in conjunction with AB 1775 and applicable State cannabis regulations. While AB 1775 authorizes local jurisdictions to permit expanded cannabis lounge activities, the legislation expressly preserves local discretion to establish operational limitations and public safety standards.
Recommended Revisions Incorporated Into the Ordinance
Operating Hours – Section 5.55.550 (A)
The prior Ordinance proposed lounge operating hours for events commencing at 10:00 a.m. and concluding at midnight. One stakeholder requested consistency with State retail cannabis operating hours.
The revised Ordinance modifies lounge operating hours to permit operation beginning at 6:00 a.m. until 10:00 p.m., consistent with State cannabis retail regulations1.
1 California Code of Regulations, Title 4, Section 15403 City Council Staff Report
July 8, 2026 -- Page 4
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Manager Presence Requirement – Section 5.55.570 (D)
The prior Ordinance required a manager to be physically present inside the lounge whenever customers were present.
Following operational review, the revised Ordinance modifies this requirement to allow operational flexibility while still requiring:
Adequate onsite staffing;
Continuous security monitoring;
Manager availability on the licensed premises; and
Compliance with all applicable security and operational requirements.
Ticketed Events – Section 5.55.500 (B)
The prior Ordinance limited ticketed events to lounges greater than 600 square feet as a local operational, crowd-control, and life-safety standard.
Following review, the Ordinance removes the square-footage restriction and allows all lounges to host ticketed events, subject to:
Occupancy limitations; and
Security and operational plans.
Requested Changes Not Recommended
Outdoor Events Adjacent to Alcohol or Tobacco Retail Establishments – Section
5.55.500 (C)
A stakeholder requested removal of restrictions prohibiting outdoor events adjacent to alcohol or tobacco retail establishments.
Staff does not recommend removal of this provision. State law prohibits alcohol and tobacco sales and consumption on cannabis lounge premises, and the restriction provides an additional operational safeguard intended to minimize enforcement conflicts, nuisance conditions, and potential commingling concerns associated with outdoor events.
Extended Midnight Operating Hours – Section 5.55.550 (A)
A stakeholder requested expanded operating hours until midnight for all lounges.
Staff does not recommend extending lounge operating hours. All lounges will be required to cease operations at 10:00 p.m. to help minimize enforcement conflicts, nuisance conditions, and safety concerns.
City Council Staff Report
July 8, 2026 -- Page 5
Reintroduction and First Reading of an Ordinance Amending Chapter 5.55 of the Municipal Code 1 0
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Food and Cannabis Storage/Display Restrictions – Section 5.55.585 (C)
Stakeholders requested removal of restrictions prohibiting food or beverage products from being stored or commingled with cannabis products.
AB 1775 requires that non-cannabis food and beverages not be contaminated by, or commingled with cannabis products, and prohibits cannabis consumption in food preparation, storage, or warewashing areas.
The specific requirement regarding contamination and commingling means lounges must enforce several strict operational guidelines:
Separation of Products: All non-cannabis food and beverages must be stored, displayed, and prepared in areas completely separate and distinct from where cannabis and cannabis products are kept.
No Cross-Contamination: Kitchen staff, serving areas, and ventilation systems must be structured to shield non-cannabis food items from airborne cannabis smoke, vapor, or residue.
Strict Public Health Standards: Food preparation and sales must fully comply with the rigorous requirements of the California Retail Food Code, ensuring standard restaurant sanitation standards are maintained.
The proposed Ordinance’s language is broad because it prohibits storing, displaying, contaminating, or commingling food or beverages with cannabis products anywhere on site. While not recommended to remove, Staff has clarified the language, so it does not unintentionally prohibit lawful cannabis display or storage in approved dispensary areas, while still prohibiting commingling.
Additional Ordinance Cleanup
The revised Ordinance also corrects inconsistencies identified during staff review, including clarifying language in Section 5.55.590 regarding impaired customers to expressly prohibit the provision of cannabis products to obviously impaired individuals.
Staff believes the revised Ordinance provides a balanced regulatory approach that supports existing cannabis businesses while preserving the City’s ability to regulate impacts related to public health, safety, and neighborhood compatibility.
ENVIRONMENTAL ASSESSMENT:
This action is exempt from the California Environmental Quality Act (CEQA) because it is the adoption of an ordinance, rule, or regulation that requires discretionary review, including environmental review, and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity (CEQA Guidelines section 15061(B)(1), City Council Staff Report
July 8, 2026 -- Page 6
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California Business and Professions Code section 26055(h)) and because it does not have the potential for causing a significant effect on the environment (CEQA Guidelines section 15061(b)(3)).
ALIGNMENT WITH STRATEGIC PLANNING:
This item aligns with the following City Council Strategic Plan Broad Goal: Economic Development.
FISCAL IMPACT:
There is no immediate fiscal impact associated with the adoption of the proposed Ordinance. Over time, expanded operational opportunities for licensed cannabis lounges may result in increased sales tax and cannabis tax revenue.
REVIEWED BY:
Department Director: Veronica Goedhart
Assistant City Manager: Teresa Gallavan
City Manager: Teresa Gallavan for Scott Stiles
ATTACHMENTS:
A. Proposed Ordinance