Objectives. California’s Proposition 36 offers nonviolent drug offenders community-based treatment as an alternative to incarceration or probation without treatment. We examined how treatment capacity changed to accommodate Proposition 36 clients and whether displacement of other clients was an unintended consequence. Methods. Treatment admissions were compared for the year before and 2 years after the law was enacted. Surveys of county administrators and treatment providers were conducted in Kern, Riverside, Sacramento, San Diego, and San Francisco counties. Results. The number of Proposition 36 offenders admitted to treatment continued to increase in the state (approximately 32000 in Year 1 and 48000 in Year 2) and in the 5 counties; total treatment admissions stabilized in Year 2 after increasing in Year 1. Voluntary clients decreased by 8000 each year statewide, but the change varied across counties. One third of treatment providers reported decreased treatment availability for non–Proposition 36 clients in Year 2. Conclusion. Despite expanded treatment capacity (mostly in outpatient treatment), indirect evidence suggests that displacement of voluntary clients may have occurred in part because of the demand for treatment by Proposition 36 clients.