Will another SLO County city get brick-and-mortar cannabis stores?

The Atascadero City Council considered a policy change on Tuesday night that would’ve legalized brick-and-mortar cannabis dispensaries in the city limits — but it was shot down in a split vote.

Atascadero currently only allows for two commercial cannabis land uses, for testing facilities and non-storefront delivery services, and city municipal code prohibits commercial cannabis activities within 600 feet of schools, parks, youth centers or day care centers. If approved, storefronts would’ve been restricted to a few locations along El Camino Real.

Changing city policy to allow retail cannabis businesses within allowed areas would’ve generated up to half a million dollars in annual tax revenue for the city, according to the staff report.

That is with the current 4% tax rate on cannabis sales, which Atascadero could raise to a maximum of 6%. Those revenue estimates are comparable to the other San Luis Obispo County cities that allow brick-and-mortar stores.

However, after a nearly two-hour discussion with substantial community input, the City Council decided not to move forward with the changes for now.

Opponents mostly focused on the need to protect Atascadero’s youth from further exposure to recreational drugs, while supporters argued the tax revenue from legal retail operations would generate profit that could be poured back into the community.

“Allowing retail cannabis is not about promoting usage,” Atascadero Chamber of Commerce CEO Josh Cross said during public comment. “It’s about recognizing a legitimate business sector, ensuring local control and keeping Atascadero competitive.”

Cross was among multiple speakers who said that the absence of retail cannabis dispensaries in Atascadero wouldn’t stop consumption and would only move tax dollars outside the city — an issue that Cross said would only compound if other North County communities legalize retail storefronts before Atascadero.

Morro Bay and San Luis Obispo are currently the closest cities that allow brick-and-mortar cannabis businesses.

“Atascadero residents already purchase cannabis, just not here,” Cross said.

The owner of Megan’s Organic Market, a brick-and-mortar cannabis dispensary in San Luis Obispo, said that nearly 8,752 Atascadero residents shop at her store — almost a third of the city’s population. That makes up 15% of the store’s total sales, according to the staff report, with 40% of her sales coming from North County in general.

“Atascadero does use cannabis at a high rate, possibly higher than other places in the county, definitely higher than the state average,” Megan Souza said at the meeting.

She also noted studies that showed that both cannabis consumption by youth and opioid deaths decreased when licensed cannabis dispensaries were present in an area.

“I see it as a choice,” 27-year-old Atascadero resident Jamie Jones said. “It’s a legal product that I think our residents should have the ability to choose to spend their tax dollars (on) in our community.”

However, other speakers maintained tax revenue should not be the sole consideration when it comes to the issue of cannabis, which many called a “gateway drug.”

“There are many avenues for drugs to find their way into our adolescent population, into our community,” one longtime Atascadero resident said during public comment. “We can’t stop them all, we never will, but we should limit the possibilities whenever we can, and we should not provide one more opportunity by allowing a cannabis dispensary in our town. Consider doing what’s best for kids.”

How did the City Council vote?

With the community and council both largely split over the issue, there was discussion of putting it to vote on the November 2026 ballot or conducting a formal community survey.

“This is an important enough issue that the five of us should not be deciding whether or not a cannabis shop is allowed in Atascadero,” Councilmember Mark Dariz said.

However, with estimates for either an election or survey in the tens of thousands of dollars, the council ultimately decided both ideas were too expensive.

The council ultimately ended up voting 3-2 to abandon the issue and keep the city’s cannabis policy the same, with Councilmembers Heather Newsom, Seth Peek and Dariz in support. Councilmember Susan Funk and Mayor Charles Bourbeau voted against the decision.

In conversation, Dariz spoke to drug and alcohol addiction within his own family and friends that informed his position on the issue.

“This has been a very difficult thing for me to see so many people in my life, family and friends that have been affected by it,” he said. “To me, it’s a nasty drug.”

Newsom agreed that cannabis was a “gateway drug,” and said the tax profits did not outweigh the community risks.

“I don’t think that we need to be doing something just because it generates money, just because Grover, Morro Bay or San Luis chooses to do it,” Newsom said.

“We need to protect our children,” she said. “That’s where I stand on it.”

Chloe Shrager

The Tribune

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Chloe Shrager is the courts and crimes reporter for The Tribune. She grew up in Palo Alto, California, and graduated from Stanford with a B.A. in Political Science. When not writing, she enjoys surfing, backpacking, skiing and hanging out with her cat, Billy Goat.