Welcome to the next installment in the series of educational articles from technical writer Curt Robbins at Higher Learning LV and MJNews Network. This collection is intended for cannabis and hemp industry professionals who wish to gain a better understanding of the nuanced biochemistry, often confusing business environment, and dynamic regulation of this special—and newly legal—herb.
This week readers learn about the increasingly popular trend of cannabis consumption lounges. While not permitted in most of North America (including, surprisingly, the majority of adult-use legal states), some jurisdictions are beginning to warm to the idea of what might materialize as something similar to alcohol bars, except for cannabis (and probably featuring fewer angry brawls).
How might the cannabis industry differentiate itself from established mainstream lounge business segments such as coffee shops and taverns that focus on alcohol, non-alcoholic beverages, and non-infused food? Will modern cannabis lounges borrow the speakeasy environment from a century ago? Or will they invent something entirely new?
In early June 2021, the state of Nevada passed AB341, legislation that permitted the tightly regulated legal operation of a limited number of cannabis consumption lounges. While 19 U.S. states and the District of Columbia to date have adopted adult-use marijuana laws, most do not include provisions for marijuana consumption lounges. The success and impact of Nevada’s new law—particularly in entertainment- and hospitality-smart Las Vegas—won’t begin to manifest until 2022, with the legislation going into effect Oct. 1, 2021 and licensing windows opening soon after.
Typically progressive adult-use cannabis jurisdictions, including Colorado, Oregon, and Washington, have mulled the idea of consumption lounges for years, Nevada is among the first to actually implement and regulate what is likely to become a robust network of specialized retail facilities (many of which will cater to tourists, a speciality of both Las Vegas and Reno). If successful, consumption lounges will soon be available to nearly every weed consumer in the state (two-thirds of whom reside in the Vegas metro area).
“I think this really solidifies us as the cannabis destination,” said Steve Yeager, D-Las Vegas, the sponsor of Bill AB341.
“Consumption lounges are so perfect for our tourism industry. The sooner we get out there, the more we’ll be looked upon as a marijuana-friendly city and state,” said Clark County Commissioner Tick Segerblom. Segerblom, a former state senator, led an earlier attempt to legalize cannabis consumption lounges in Nevada in 2017. He called the new law “a game changer.”
“Done the right way, consumption lounges cannot only be beneficial to the public, but also to government coffers at all levels, adding jobs and additional tax revenue,” said David Farris, Vice President of Sales and Marketing for Planet 13 in Las Vegas, one of the city’s most famous adult-use dispensaries.
In California, legislation was recently approved by the state’s Assembly that would allow licensed cannabis lounges to sell non-cannabis foods and drinks—something that is prohibited under the Golden State’s existing adult-use cannabis laws passed back in 2016.
The bill, AB 1034, was sponsored by Assemblyman Richard Bloom on behalf of the City of West Hollywood to better address the state’s position regarding marijuana lounges and allow the on-site consumption of non-infused beverages and foods.
“Just like in bars and restaurants, people want to be able to socialize with friends while consuming cannabis,” said Tim Wright, CEO of Shasta Management in Imperial County, California. The company plans to in May open the “largest consumption lounge in the U.S.”
Evolution of Lounge Laws
While informal cannabis lounges have appeared throughout North America for decades, they typically have been either illegal underground operations or openly operating under what basically have been loopholes in local ordinances and state laws that allowed them to operate as private clubs.
Examples include the bohemian Northwest Cannabis Club in Portland (a private lounge requiring membership that is tightly regulated by the local municipal government) and the trendy Tetra Lounge in Denver. The Tetra Lounge calls itself a social lounge and notes that it offers “private consumption” of cannabis that, like the Northwest Cannabis Club, requires customers to be members to legally dispense its services.
The first state to pass formal legislation in support of cannabis consumption lounges was Alaska in 2019, which amended its existing adult-use marijuana law with an on-site use option available to all licensed dispensaries. Colorado followed with 2019 legislation (HB 1234) that permitted limited lounges called “tasting rooms.”
“Not having on-site consumption [in Alaska was] detrimental to the tourist industry. There [was] nowhere to smoke and it made [tourists] feel alienated,” said Jake Warden of SWOT Team Solutions in Anchorage.
“Lawmakers’ approval and the governor’s enthusiasm for signing them into law indicate the state is ready to move forward with fulfilling Amendment 64’s promise to regulate marijuana like alcohol,” said Jordan Wellington of Denver lobbying firm VS Strategies regarding Colorado’s tasting room law shortly after it was passed.
Although yet to manifest as visitable retail establishments, the recent adult-use law passed in New York (S.854-A/A.1248-A) includes provisions for cannabis consumption lounges. Also of note, but not directly related to lounges, New York’s law allows cannabis consumption in any public space that permits the use of smoked tobacco (sorry, New York peeps, but this excludes beaches and public parks).
Interestingly, New York’s law is polar opposite that of Nevada in terms of ownership restrictions. While Nevada gives preference to existing licensed adult-use dispensaries for eligibility for lounge licenses (allowing only 20 non-dispensary licenses in the entire state), New York prohibits a consumption lounge license holder from also possessing an adult-use dispensary license. (Similarly, the Empire State prevents cultivation and processing/manufacturing licenses from owning retail dispensaries.)
Connecticut Enters Adult-Use Fray
The most recent entrant to the adult-use legalization party is Connecticut, which on June 22 passed SB 1201. Although the new law does not itself directly permit consumption lounges, it includes language regarding potential implementation of lounges in the future.
The state has committed to, no later than January 1, 2023, “make written recommendations concerning whether to authorize on-site consumption or events that allow for cannabis usage, including whether to establish a cannabis on-site consumption or event license.”
A review of the new Connecticut law brings to light an interesting and unique element wherein the state will require cities featuring populations of greater than 50,000 residents to “designate a place in the municipality in which public consumption of cannabis is permitted.” How this comes to fruition will be very interesting to observe. (Follow this series for updates as implementation of the new Connecticut adult-use law evolves.)
While this may give proponents of consumption lounges reason to celebrate, this language was followed by more sobering regulatory realities: A declaration that such amendments to the law “may prohibit the smoking of cannabis and the use of electronic cannabis delivery systems and vapor products containing cannabis in the outdoor sections of a restaurant,” for example.
However, in the reasons to celebrate column, Sec. 89 of the legislation, which becomes effective July 1, 2022, states that “no hotel, motel, or similar lodging shall prohibit the legal possession or consumption of cannabis in any nonpublic area of such hotel, motel, or similar lodging.” Nicely done, Connecticut.
That’s a Wrap
While 18 U.S. states to date have adopted adult-use marijuana laws, most do not include provisions for marijuana consumption lounges. The success and impact of Nevada’s new law—particularly in entertainment- and hospitality-smart Las Vegas—won’t begin to manifest until 2022, with the legislation going into effect Oct. 1, 2021 and licensing windows opening soon after.
Will other adult-use states follow in the footsteps of Alaska, California, Colorado, Nevada, and New York by adopting formal laws that recognize and regulate marijuana consumption lounges for those 21 and over? Only time will tell if this is the beginning of a larger wave of pot lounge culture (and commerce) that’s about to sweep the United States.
CURT’S CANNABIS CORNER THE PODCAST: Join host Curt Robbins (Higher Learning LV) , co-host David Rheins (MJBA/MJNews) industry thought leaders Alex Brough (Cannabition/Kaneh Ventures) and Alana Armstrong (Alan Aldous) as they discuss how the mainstreaming of cannabis will go well beyond public consumption lounges, to include restaurants that feature infused menus, CHABA massage therapy, pot tourism, music & marijuana events, puff and paint, and even museum experiences.