By The Law Office of Shay Aaron Gilmore | shaygilmorelaw.com
The past few weeks have produced a striking cluster of cannabis compliance news from across California — from the North Coast to the Central Coast to San Diego, and from small agricultural counties to major cities. Taken together, these stories send a clear message: regulatory compliance is a defining challenge for every cannabis and hemp operator in the state right now. Whether you are a cultivator in Carpinteria, a retailer in Redding, a license applicant in Pacific Grove, a social equity entrepreneur in Sacramento or San Diego, or a hemp grower looking to transition to cannabis in Oceanside, the pace of local and state regulatory change is accelerating — and the consequences of non-compliance have never been steeper.
At the Law Office of Shay Aaron Gilmore, we track these developments so that our clients don’t have to do it alone. Here is what the headlines are telling us — and what California operators need to understand right now.
1. Hard Deadlines Are Real: The Carpinteria Odor Scrubber Saga
Perhaps no recent story better illustrates the meaning of a hard regulatory deadline than the odor scrubber saga playing out in the Carpinteria Valley on California’s Central Coast.
The Santa Barbara County Board of Supervisors gave all of its indoor cannabis greenhouse operators until March 18, 2026, to install carbon filtration systems — commonly known as scrubbers — designed to eliminate cannabis odor. By one study’s estimate, these systems reduce cannabis smells by 84%. Eight operators requested time extensions. On March 10, the Board voted 4-1 to deny all eight requests.
The preferred Envinity Group scrubbers cost roughly $22,000 each, with 10 recommended per acre — a significant capital expense at a moment when cannabis market revenues are under serious pressure. The Board’s message was unambiguous: “The neighbors don’t get extensions,” said 1st District Supervisor Roy Lee. Farms that failed to install the equipment by the deadline now face Notices of Violation from County Planning and Development, and after March 31, the County Executive Office has the authority to revoke business licenses entirely.
The odor compliance issue is not unique to Santa Barbara County. In Cathedral City in the Inland Empire, residents living near cannabis cultivation and manufacturing facilities began lodging odor complaints in 2024. The City responded by imposing a moratorium on new cannabis permits, then in October 2025 adopted a new ordinance requiring all cannabis businesses to submit formal odor control plans, with clearer enforcement procedures and greater fines for violations. As of this writing, the City was hosting a virtual town hall on April 2 to brief residents and operators on enforcement progress — a model of proactive community engagement that more jurisdictions should consider.
The lesson for operators across California is stark: regulatory deadlines are not suggestions. Operators who fail to engage early — both with the necessary technology and with experienced regulatory compliance counsel — risk the most severe penalty available: loss of licensure.
2. The Tax Burden Is Climbing — And It Is Destabilizing Legal Markets
Two of the most closely watched stories from March 2026 involve cannabis tax increases that have triggered significant industry concern: one in Redding, and one in Santa Barbara.
Redding: The Redding City Council raised the cannabis cultivation tax from $3 to $5 per square foot, the manufacturing rate to 4%, and the retail sales tax to 6%. The increases were driven by a looming $5 million city budget deficit — and yet, even after the hike, the tax revenue impact is expected to bring in only a few hundred thousand dollars more per year. For operators like A Golden State, the 66% increase in cultivation taxes caused the company to cancel expansion plans entirely. Cannabis sales were already declining before the increase took effect. The fear shared by operators: higher taxes drive legal consumers to the illicit market.
Santa Barbara: The Santa Barbara City Council voted 5-2 to raise its cannabis retail tax from 6% to 8%, effective July 1, 2026. When layered on top of the 9.25% sales tax and the state’s 15% excise tax, consumers in Santa Barbara now face a total effective tax rate approaching 36% at the register. Revenue from cannabis taxes in Santa Barbara has already declined from a high of roughly $2 million in 2021 to approximately $979,000 in 2025. Opponents warned that Santa Barbara would now have the highest cannabis retail tax in the area — further incentivizing consumers to shop in neighboring cities or the unregulated market.
At the state level, the Governor’s 2026-27 budget proposes a $5.6 million augmentation to CDTFA’s cannabis tax compliance and enforcement program — meaning the state is investing significantly in its ability to catch operators who don’t pay what they owe. And in Sacramento, the City’s Office of Cannabis Management continues to develop its regulatory framework, recently awarding a $2.5 million state grant to support its CORE equity program that includes tax compliance guidance for participants (more on that below).
For cannabis operators, navigating the patchwork of local, state, and federal tax obligations is itself a compliance matter. Working with knowledgeable regulatory compliance counsel who tracks local ordinance and tax changes is essential for businesses operating in multiple jurisdictions — including in our Sacramento, San Diego, and Los Angeles service areas.
3. Local Ordinances Are in Constant Motion: Lake County, Pacific Grove, Long Beach, and Oceanside
Stories from across California underscore just how actively local governments are reshaping the rules governing cannabis operations — often with little warning to existing permit-holders.
Lake County: Located on California’s North Coast, Lake County is in the midst of a broad cannabis ordinance overhaul. Staff have previewed amendments that would increase setbacks from residences, refine how canopy is measured, standardize permit expiration and opt-out rules, and add new enforcement provisions and restoration-bond requirements. Earlier efforts had already temporarily halted the acceptance of new commercial cannabis cultivation applications and suspended processing of incomplete applications — a direct response to declining permitted cultivation and a growing backlog of unresolved files.
Pacific Grove: On the Central Coast, the City of Pacific Grove’s planned March 30 cannabis retail lottery was thrown into doubt by “application stacking” concerns. Of ten eligible applications, eight appear to share common ownership — with nine applications submitted for a single location on Forest Avenue. An attorney representing a competing applicant urged the city to investigate whether common-parent relationships were improperly handled under the city’s ordinance and state law. The City Council ultimately paused the permit-award process and moved to agendize an ordinance to prevent application stacking going forward.
Long Beach: The Long Beach City Council voted 6-2 to advance a new ordinance that would allow specially permitted cannabis sales and on-site consumption at festivals and special events within city limits. Under the plan, state-licensed event organizers could receive up to 12 permits, each covering events of up to four days. Events would require age verification (21+), must be located at least 1,000 feet from schools and sensitive sites, and organizers must promote rideshare options. Critically, every organizer must also submit an equity plan as part of their permit application — outlining how they will support verified equity applicants and businesses through reduced vendor fees, product display, or mentorship. This integration of equity compliance into event permitting is a model other California cities may follow.
Oceanside: In San Diego County, the Oceanside Planning Commission unanimously recommended approval for a proposal by South Morro Hills 47, LLC to convert a 2-acre hemp-growing operation to licensed cannabis cultivation in 25 existing hoop houses. The applicant originally received a local cannabis cultivation license through Oceanside’s merit-based selection process in 2019 and has been growing commercial hemp for the past two years. The Oceanside story is a vivid illustration of a compliance challenge unique to hemp operators: the regulatory transition from hemp to cannabis is not automatic. Converting a hemp facility to cannabis cultivation requires new local conditional use permits, state licensing, security upgrades, and compliance with track-and-trace and other cannabis-specific requirements. If you are a hemp operator considering this transition, our hemp registration and license application practices can guide you through every step.
These developments are a reminder that California cannabis operators cannot treat their licenses as static assets. Local governments retain broad authority to amend, restrict, or restructure cannabis ordinances at any time. Regulatory compliance counsel who tracks local ordinance changes and can represent clients in public comment processes, administrative hearings, and local permitting proceedings is a necessity, not a luxury.
4. Social Equity Compliance Getting Woven Into the Regulatory Fabric
California’s cannabis licensing framework increasingly incorporates social equity requirements — not merely as policy aspirations, but as enforceable conditions of licensure and new pathways for business development.
San Diego County: The San Diego County Board of Supervisors voted 3-2 in January 2026 to advance its Socially Equitable Cannabis Program (SECP), releasing its Program Environmental Impact Report (PEIR) and directing staff to finalize Zoning Ordinance amendments for spring 2026. Social equity applicants will receive priority access during the initial application period, and allowed uses include retail, cultivation, manufacturing, distribution, testing, microbusinesses, delivery, and onsite consumption lounges.
Sacramento: The City of Sacramento received a $2.5 million state grant — the second largest allocation from a $15 million statewide funding pool administered by GO-Biz — to support its Cannabis Opportunity Reinvestment and Equity (CORE) program. This funding will provide technical assistance to CORE participants including guidance on legal and regulatory compliance, accounting and taxes, construction planning, security measures, marketing, and commercial real estate.
Long Beach: As noted above, Long Beach’s new cannabis event ordinance requires every event organizer to submit an equity plan — reflecting the integration of social equity obligations directly into the permitting process for new business activities.
For equity applicants and established operators alike, social equity compliance is increasingly the gateway to opportunity. Our San Diego, Sacramento, and Los Angeles practices include deep experience in social equity program navigation and cannabis license applications.
5. Enforcement Against Illegal Operators Is Intensifying
Near Edwards Air Force Base in Kern County, a multi-agency enforcement operation led by the 412th Security Forces Squadron and the DEA resulted in the closure of four illicit dispensaries in Rosamond, nine arrests, and the seizure of approximately 330 pounds of processed marijuana, 211 pounds of marijuana edibles, 324 pounds of marijuana concentrate, 3,072 cannabis vapes, and 46 pounds of psilocybin mushrooms. The investigation was triggered when active-duty service members tested positive for psilocybin mushrooms purchased from dispensaries operating illegally near a federal military installation.
At the state level, the Governor’s 2026-27 budget proposes a $5.6 million increase to CDTFA’s cannabis tax compliance and enforcement capacity — bringing total Cannabis Tax Fund appropriations to $17.9 million annually. This investment signals that the state is ramping up its ability to pursue both unlicensed operators and licensed operators who fall behind on their tax obligations.
For any operator who has questions about their compliance posture — or who is navigating the line between licensed and unlicensed activity — our regulatory compliance practice is here to help.
6. San Francisco: A New Era for Cannabis Cafés and Market Revitalization
On the San Francisco front, Supervisor Rafael Mandelman and Assemblymember Matt Haney unveiled a new Cannabis Café Ordinance that would bring AB 1775 to life on the local level — allowing cannabis, prepared food, beverages, and live entertainment to operate under one roof. The sale of cannabis combined with prepared food and entertainment has been legal under California law since AB 1775 was signed, but municipalities must still enact local frameworks to authorize it. The proposed ordinance requires clear signage, staff training on second-hand smoke and ventilation, and prohibits loitering.
San Francisco has also already suspended its local cannabis business tax through December 31, 2035 — one of the most business-friendly tax relief measures in the state. Combined with the café ordinance, San Francisco is positioning itself as one of the most innovative environments for cannabis businesses anywhere in California.
Shay Aaron Gilmore has served as an appointee to the San Francisco Cannabis Oversight Committee and has deep roots in the City’s cannabis regulatory environment. If you are exploring a cannabis café concept — or any retail, manufacturing, or delivery business in San Francisco — our firm offers the local knowledge and regulatory compliance expertise to help you bring your vision to fruition. Learn more about our public commentary and media appearances on our Media page.
7. The Legislature Is Acting: 2026 Bills Every Operator Should Watch
Alongside the local stories, the California Legislature is advancing a raft of bills in 2026 that directly affect cannabis regulatory compliance. Here are the key measures to watch — with particular focus on two bills that have drawn significant industry concern.
The Most Consequential Regulatory Compliance Bills Right Now: AB-2249 and AB-2532
AB-2249 and AB-2532 — both authored by Assemblymember Jacqui Irwin — are companion bills addressing cannabis labels, packaging, and manufacturing. Both have had amendments dropped, were re-referred to the Assembly Committee on Business and Professions, and are set for hearing on April 14, 2026.
AB-2532 is the bill drawing the most urgent attention from Cal NORML and industry observers. Its central provision would prohibit any cannabis beverage container from containing more than 10 milligrams of THC. This mirrors a trend in other states — but it raises serious concerns for California’s growing cannabis beverage sector, which has seen low-dose THC drinks (typically 2.5–5 mg per serving) become the fastest-growing product segment in the industry as consumers increasingly use them as alcohol alternatives.
The concern is not simply the 10 mg per-container cap in isolation — it is that the cap would apply to the entire container, not just a single serving. A 12-oz can containing multiple servings would be limited to the same 10 mg as a single-serving product. For medical cannabis patients who may require significantly higher doses, and for licensed consumption lounges where higher-dose products are already legally consumed on-premises, the bill as written would create serious practical limitations. Cal NORML has proposed targeted amendments: (1) allowing higher THC amounts for medical patients; (2) allowing higher-dose beverages at licensed consumption lounges; (3) requiring better overall labeling of edibles and drinks; and (4) requiring a dosage cup or eyedropper to help consumers measure out smaller doses from any container with elevated THC levels.
AB-2249, the companion bill, addresses cannabis labels, packaging, and manufacturing more broadly. It would amend Sections 26001 and 26120 of the Business and Professions Code and add new Sections 26123 and 26124. While amendments were dropped before re-referral — suggesting the bill may evolve significantly before its April 14 hearing — the pairing of AB-2249 and AB-2532 signals a sustained legislative push to tighten packaging standards in response to public health pressure, particularly around youth access and youth-appeal concerns. In February 2026, a joint legislative hearing examined the DCC’s enforcement record on cannabis packaging that could be attractive to children — and found it lacking.
These bills deserve close attention from every cannabis manufacturer, processor, and retailer in California. If AB-2532 passes in its current form, operators selling cannabis beverages would face a major reformulation and repackaging burden. Packaging inventory would need to be revised, SKUs potentially retired, and labeling updated — all within whatever compliance window the Legislature establishes. The compliance cost could be substantial for companies that have built product lines around higher-dose beverages. Operators should be engaging now with their trade associations and legal counsel to participate in the April 14 hearing process.
It is also worth noting that these bills arise in the context of a broader federal regulatory tightening around hemp-derived THC beverages. A federal law taking effect in November 2026 imposes a 0.4 mg per-container cap on hemp-derived THC products in final consumer form, effectively outlawing most of the existing hemp-derived THC beverage market at the federal level. California’s AB-2532 must therefore be read in this broader context: both state and federal governments are moving to impose dose limits on cannabis and hemp beverages simultaneously, creating a dual compliance challenge for operators in both markets.
Additional Bills to Watch
- AB 1826 (Lackey) — Would improve due process protections around the recall, embargo, and destruction of cannabis products. A critical protection for operators who receive a product-related enforcement action. Cal NORML has signed on in support. Hearing: April 7.
- AB 1965 (Sharp-Collins) — Cannabis testing and quality assurance improvements. Operators should track this bill as it may change testing compliance obligations. Hearing: April 7.
- AB 2537 (Chen) — The Cannabis Enforcement Accountability and Public Health Prioritization Act of 2026, which would require the DCC to prioritize enforcement based on a risk-based framework, applying less punitive measures for minor technical or administrative violations. This is a potentially significant protection for licensed operators who face enforcement action for paperwork or technical non-compliance rather than genuine public safety threats.
- AB 2697 (Pellerin) — Would authorize local jurisdictions to allow licensed cannabis retailers to conduct sales or deliveries at a drive-through, pass-out window, or slide-out tray through a fixed-pane security window with a security drawer. This would be a transformative expansion of retail access — and would require new local ordinance adoption by cities and counties to take effect.
- AB 2250 (Aguiar-Curry) — Would modify AB 8 to exclude CBN from the definition of cannabis concentrate — a technical but potentially significant change for hemp and cannabis product manufacturers navigating the definition of regulated versus non-regulated cannabinoids.
- AB 2420 (Caloza) — Would authorize cannabis retailers to donate cannabis or cannabis products to seniors age 65 and older. Hearing: April 14.
- AB 2506 (Hart) — Would establish a cannabis tribal government licensure framework, opening new commercial cannabis pathways for California’s tribal nations. Hearing: April 7.
- AB 2667 (Hadwick) — Would prohibit cannabis vapes using branding that appeals to minors, packaging that conceals the nature of their use, or interactive video game capabilities. Vaping product manufacturers and retailers should review their current packaging and marketing now to assess exposure.
At the state agency level, the DCC is also advancing new rulemakings that operators must track, including proposed rules on cultivation sanitation standards, pesticide testing action levels, and a new multipack cannabis goods category. Each of these rulemakings opens a public comment window — and operators who fail to engage are often surprised by new requirements when final rules take effect. Our regulatory compliance and administrative law practices are available to guide operators through both the legislative and rulemaking comment processes.
What These Stories Mean for Your Cannabis or Hemp Business
Reading these stories together — from Carpinteria to Long Beach, from Oceanside to Sacramento, from Pacific Grove to the State Capitol — the following urgent compliance themes emerge:
- Know your local deadlines. Whether it is an odor abatement system, a license renewal, a lottery application, or a new permit, deadlines in cannabis regulation are rarely negotiable once set. Engage regulatory compliance counsel early — not when the clock is running out.
- Monitor local tax ordinances. Cannabis tax rates are in flux across California. Operators must track current rates, pending proposals, effective dates, and the state’s evolving tax enforcement posture — particularly with the state’s $5.6 million investment in CDTFA enforcement.
- Understand the hemp-to-cannabis transition. If you are a hemp grower considering cannabis cultivation, the regulatory transition requires new local permits, state licensing, and full compliance with cannabis-specific frameworks. Our hemp registration and license application practices can guide you through this process.
- Engage with equity programs. From Sacramento’s CORE grant to San Diego’s SECP to Long Beach’s equity plan requirements, social equity compliance is increasingly the gateway to licensing and new business opportunities.
- Track local ordinance changes in real time. Lake County, Pacific Grove, Long Beach, Oceanside, and Cathedral City all made significant regulatory moves within the past 30 days alone. Operators on the North Coast, Central Coast, in San Diego, and in Los Angeles must maintain active awareness of local regulatory developments.
- Watch the Legislature — especially AB-2532. If AB-2532 passes in its current form, cannabis beverage operators face a significant reformulation and repackaging burden. The April 14 hearing is the critical intervention point. Operators should engage now.
About the Law Office of Shay Aaron Gilmore
The Law Office of Shay Aaron Gilmore is a California cannabis and hemp business law firm based in San Francisco, serving operators and investors from the North Coast to the Central Coast, and from Oakland and Sacramento to San Diego and Los Angeles. Named one of the Top 20 Cannabis Lawyers in California by the Los Angeles/San Francisco Daily Journal and one of the Top 100 Northern California Super Lawyers by Super Lawyers® Magazine, Shay Aaron Gilmore has successfully guided dozens of cannabis businesses through local and state licensing processes.
Learn more about Shay and the firm’s full range of regulatory compliance services, including cannabis license applications, license renewals, ownership changes, and hemp registration in California. For prior media appearances and commentary on California cannabis regulation, visit our Media page.
Ready to talk? Contact The Law Office of Shay Aaron Gilmore at (415) 846-6397 or visit shaygilmorelaw.com to schedule a consultation.