No, it is not "less clear cut" than you thought and there is not an argument on both sides.

On one side you have the guy who actually owns the Paneras in question, saying they would not even be attempting to use this exemption because it does not apply to them.

On the other side, you have the Newsom administration and the California labor agency BOTH saying that Panera could not benefit from this exemption because it does not apply to them.

That's the only "side".

This is to whom the "bakery exception" applies:

Restaurants that operate a bakery that "produces" and sells "bread" as a as of September 15, 2023, and continue to do so are exempt from the new law.

“Bread” is defined as a single unit item that weighs at least ½ pound after cooling and must be sold as a stand-alone item.

The following types of fast food restaurants do not come under the exemption:

• Restaurants that sell bread only as part of a sandwich or hamburger, but not as a stand-alone menu item;
• Restaurants that sell stand-alone items weighing less than one-half pound after cooling, such as most muffins, croissants, scones, rolls, or buns, but do not sell bread weighing at least one-half pound after cooling; and
• Restaurants that do not “produce” bread on the premises of the restaurant location where customers purchase the bread. Producing bread includes making the dough (typically, flour, water, and yeast) and baking it. Baking pre-made dough, i.e., dough that was mixed or prepared at another location, does not constitute “producing” bread at the establishment where the bread is sold.

This exemption applies only to restaurant establishments that produced and sold bread as stand-alone menu items as of September 15, 2023, and have continued to do so.

This exemption does not require that the restaurant be primarily engaged in the sale of bread as a stand-alone item. The exemption may apply even when the sale of bread as a stand-alone menu item constitutes a small portion of the restaurant’s total food sales.

That third bullet point disqualifies Panera from the exemption, and moreover it seems to be specifically targeted to disqualify a chain faux-bakery like Panera from the exemption. It has been there from the beginning.

The only "side" that is spreading the argument that this was a corrupt political favor is the right wing disinformation campaign using it to attack Newsom specifically and pro-labor policies in general, and those in the media who failed to do basic dilligence to discredit the complete nonsense that this story was.

Even on places that seem as progressive-leaning as lemmy.world, we dance to their tunes.