Los Angeles city authorities passed an ordinance restricting the number of medical marijuana outlets, which have grown to almost 1,000 since the drug was authorized for sale for medicinal purposes in 1996.
The city council said on Tuesday 137 dispensaries would remain open for now, but it intends to reduce the number to no more than 70 over time.
The council will also enact a series of new restrictions in the sale of marijuana, it said.
The ordinance will close down hundreds of dispensaries, which since 1996 have grown to between 800 and 1,000 in the city, thanks to legal loopholes in the sale and distribution of marijuana.
California law stipulates physicians must have no relation with dispensaries and can only prescribe marijuana as a therapy, allowing patients to apply for a license to purchase and sell the drug.
The ordinance comes one year after California Governor Arnold Schwarzenegger called for a tax on marijuana to help recession-hit state finances.