A red-hot new segment of the industry is taking off, with little direction and massive obstacles
In theory, consumption lounges should be where the rubber meets the road in the cannabis industry. But while new lounges are opening across the country, operators don’t seem to have much runway to work with under the current regulations.
California in 2019 was the first state to allow licensed consumption lounges to open — and then the coronavirus pandemic hit and the segment was left idling. By the time the world was ready to stop working from home, Alaska was already running consumption lounges, Colorado, Illinois and Michigan were launching their programs, and Massachusetts, Nevada, New Mexico, New Jersey and New York were developing their own regulations.
Today, lounges are open in Alaska, California, Colorado, Illinois, Michigan and New Mexico.
But business owners in the fast-growing segment are hopeful the regulations, which were built around the regulatory framework of the existing state cannabis industries and don’t necessarily lend themselves well to hospitality businesses, will ease as the new segment finds its footing.
Marijuana Venture reached out to operators in open and upcoming states to see what these businesses can legally offer consumers, what is currently working for their business models and what they hope to incorporate in the future.
Even as numerous consumption lounges are opening their doors in major cities like Los Angeles and Chicago and comparatively remote cities like Fairbanks, Alaska, and Kalkaska, Michigan, the city of Las Vegas — known for its massive hospitality industry — is struggling to get operators up and running.
“We’ve been riding out these regulations since 2017,” says Chris LaPorte, a managing partner for the upcoming Reset consumption lounge that is waiting to open inside the Thrive cannabis dispensary in Las Vegas. “We know what we want, we have what we want, but we have a lot of rules and regulations to get around. The reality is — and I’ve done business in other states — in Las Vegas we have just a much higher barrier to entry.”
LaPorte says the latest and perhaps largest barrier to entry was the requirement for lounges to have a ventilation system capable of 30 air exchanges every hour, which he says is double the amount required for cigar bars in the city and five times as much as regular smoking bars. The Nevada Cannabis Compliance Board agreed to loosen the air-ventilation requirements, settling on 20 air exchanges every hour, and issued three conditional permits to lounge operators on June 20, 2023. LaPorte says the delays were “almost” a blessing in disguise as he has watched other lounges open and has seen their pain points — particularly in staffing and entertainment. He plans to capitalize on Las Vegas’ massive entertainment industry by incorporating it into the lounge’s design.
“If there’s nothing else to do but just smoke in a room, yeah, you might get stepped out of some money,” LaPorte says. “But if you provide a show as a ticketed event, you could still find a way to ensure that you have a good, happy and educated staff.”
In addition to ticketed entertainment such as music acts and comedians, Reset is also planning to offer food service.