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.
The Vault Dispensary Lounge
Palm Springs, California
The Vault Dispensary Lounge in Palm Springs, California, is the longest-running licensed consumption lounge in the country, having opened in August 2019. Owner Rich Eaton was still renovating his location when he found out he was going to have a lounge license and made sure to incorporate elements like a full-size bar, several different seating areas and a stage for performers, as well as lighting and atmospheric elements that were intended for consumption and not just retail.
“Everything was going great,” Eaton says of the lounge’s initial launch. “Everything was trending up and going fantastic and then, March of 2020 gave us a nice slap of reality.”
In those first few weeks of the pandemic, Eaton felt as though his lounge was doomed to fail, but the business was deemed as “essential” and he soon realized that during a global lockdown a lot of people suddenly didn’t have a place to consume cannabis.
“Maybe their wife doesn’t smoke, or they don’t want to smoke in front of their kids, or they’re in an apartment where they can’t smoke,” Eaton says. “We were able to give people a place to go and relax and enjoy the plant outside of COVID.”
As The Vault was acting like a home-away-from-home for a lot of his pandemic-era customers, Eaton learned a lot about what consumption lounges should offer their patrons and says communal, weekly events have become his top performing nights.
“It’s just this crazy night of all of these socioeconomic groups coming together and having fun in one place,” he says. “You see a 30-year-old macho guy sitting next to a drag queen and sharing a joint, laughing and having fun — I mean nowhere else does that happen — and that happens every Wednesday (at the Vault).”
Eaton says revenues double on bingo Wednesdays, and ticketed events see an even larger return. However, he says, the absence of an in-house kitchen, or even the ability to have a barista, is holding the business back from being truly realized. He says it’s important that regulators understand that cannabis consumers do not parallel alcohol consumers and that these businesses simply need more than what the state is allowing them.
“The consumption amount is way less — and I mean, way less — than alcohol,” Eaton says. “With alcohol, you could sit there and drink four or five vodka tonics in the course of two and a half hours, but you’re not going to smoke four joints.”