Eighteen states and the District of Columbia have legalized recreational marijuana in the past ten years. The first two states to do so were Colorado and Washington State in 2012. Legal cannabis is a big business in those and other states, and the combined population in the legalized states represents a solid majority of the US. However, legalizing weed was just the first step in creating a business from legal cannabis. Every state had to create a tax code relevant to marijuana, set up a distribution system, set up and regulate enforcement of distribution to keep it out of the hands of minors, and several other important steps.
The next major step is to develop the laws and facilities for people to smoke weed somewhere besides their own homes or hotel rooms. States are not necessarily interested in having people walk the streets smoking skunk weed in public, but what is the alternative for states that have accepted the reality of legal cannabis. Several states, like Nevada, California, New York, and Colorado, have enormous tourist industries. They are aware that making provisions for tourists to indulge in would probably help tourism and cannabis prosper. They have or are attempting to provide “social consumption lounges” (SCLs) Colorado, so well-known for its enthusiastic embrace of recreational marijuana, won’t even allow people to smoke in public anywhere but a single lounge/dispensary, which is the way they regulate cigarette smoking.
Alaska was the first state to allow consumption lounges in2019, but expensive regulations and local laws have prevented all but a few SCLs from opening in this enormous state.
So the next big business issue is to develop a framework for cafes and clubs, and lounges that focus their businesses on enjoying cannabis smoking and other forms of consumption.
Nevada is an interesting test case for SCLs. Las Vegas, of course, is one of the most successful tourist cities in the world. They have many dispensaries in the city and elsewhere, but only a single consumption lounge exists, operated by the Paiute Tribe of Las Vegas.
However, Las Vegas has a few visionary entrepreneurs with lots of resources. They dream elaborate dreams for new, breathtaking consumption lounges that will most likely become tourist attractions that rival the casinos. The state has only recently allowed consumption lounges. One lounge being developed in a massive warehouse space, Planet 13, will have an 8,500-square-foot SCL and be one of the largest SCLs in the world if the CEOs have their way. A grand staircase will lead to a 5,000-square-foot balcony with a massive four-inch splash pool.
Currently, Nevada law only allows lounges to sell single-serving products. SCLs are just a first step for the state, and they have ambitious plans for even more sophisticated venues. One expensive issue to be worked out, particularly for large spaces, is ventilation. Nevada law does not allow just a single HVAC system for a huge public space predicated on smoking. They will have to have individualized ventilation to keep noxious smoke away from people who don’t want to get high from secondhand smoke. Tough regulations have prevented SCLs from opening in Colorado and California. There are few in California cities, like San Francisco, Oakland, and Los Angeles. California and Colorado have changed regulations and made new laws to make it easier to open pot consumption businesses. The Bay Area is at the forefront of these businesses. Around the corner from Twitter Headquarters is an upscale cannabis lounge that allows for the consumption of smoke, vaping, infused beverages, and edibles. Booking ahead at the Playground is a good idea because it is busy, but reserving a table for five or six people will only set you back $420.
The Magnolia Dispensary is Oakland’s vape lounge and dab bar. You can BYOB(ud) or purchase products on-site that can be consumed in a Magnolia Volcano vaporizer. Magnolia allows customers to eat edibles, apply topical oils or take a sublingual tincture. They also have a staff nurse to answer any cannabis questions you may have.
In Denver, the only place you can legally consume cannabis in Colorado is The Coffee Joint. It feels like an old-style beatnik coffee house. You can’t smoke at The Coffee joint, but you have to pay a $5 cover charge and sign a liability waiver.
In other states, SCLs are being accepted slowly. In Illinois, consumption lounges are BYOB(ud) are starting slowly, and there are no SCLs in Michigan. In Massachusetts, the Upscale Summit Private Lounge is the only place you can consume marijuana on the East Coast. It is members-only, making it sound chi-chi, but the cannabis experience is accessible and costs only $15.
One of the big issues with marijuana regulation in legalized states is social equity. Marijuana laws were used frequently to targe and incarcerate minority populations in many states. Clark County, site of Las Vegas, currently spends over $10 million in marijuana tax revenue on homelessness initiatives. The state will spend cannabis tax revenue funding social equity applicants for consumption lounges from populations adversely affected by marijuana laws. It is an effort to get those people involved with the marijuana business in a positive way. Denver is also taking applications from social equity applicants for SCLs and other cannabis hospitality businesses.
Nevada will be issuing up to 20 independent SCLs and wants to see half of those go to social equity applicants. Some question if the social equity applicants have access to enough capital to develop a consumption business. But the licenses themselves, since they are relatively few of them in Nevada, will become a resource that encourages investment.
These and other issues make marijuana dispensaries and SCLs an important business and investment to track over the next few years.