Deep Dive: Understanding Cannabis Consumption Lounges

This 1,500-word Deep Dive helps industry professionals understand the state of cannabis consumption lounges in the United States.

Public cannabis consumption lounges first appeared about 50 years ago, during the 1970s in Amsterdam. Called koffieshops, the often-quaint and ironic establishments allowed adult-use consumption of cannabis and hash—despite the fact that cannabis was illegal in the Netherlands at the time. Local authorities chose to not enforce the laws that could have eliminated these internationally famous and rare establishments.

A number of U.S. states have passed legislation to expand their adult-use cannabis laws with the addition of cannabis consumption lounges (somewhat like conventional alcohol bars, but with pot in the place of booze). Alaska, California, Colorado, Illinois, Michigan, Nevada, New Jersey, New Mexico, and New York now have formal laws on the books that allow and regulate marijuana consumption lounges for those 21 and over. Connecticut, Maine, and Massachusetts may soon join them (more about that below).

In 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 other 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.

"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.

When California passed its adult-use cannabis law in 2016, it gave individual cities the power to decide if they wanted to allow consumption lounges. Later, legislation was 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.

NW Cannabis Club in Portland smoking patio

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."

In 2018, the City of West Hollywood issued licenses for 16 marijuana consumption lounges, although this did not immediately result in the appearance of actual retail locations. In 2019, the Original Cannabis Cafe (named the Lowell Cafe at launch) opened to great fanfare and media coverage. During the COVID pandemic, this famous cafe shut down and has yet to reopen.

While informal cannabis lounges have appeared throughout North America for decades, they typically have been either illegal underground affairs or openly operating under what basically have been loopholes in local ordinances and state laws that allowed them to label themselves private clubs and skirt illegality.

Examples include the bohemian Northwest Cannabis Club in Portland (a private lounge that required membership that went out-of-business during the COVID pandemic) 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 now-defunct Northwest Cannabis Club, requires customers to be members to legally dispense its services.

Now-defunct NW Cannabis Club

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.

New York's recent embrace all all things adult-use cannabis (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, New York prohibits a consumption lounge license holder from also possessing an adult-use dispensary license.

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 in terms of 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.)

In 2020, Illinois legalized adult-use cannabis, which included a provision for marijuana consumption lounges. Maine and Massachusetts are currently considering laws that would permit and regulate consumption lounges. In 2021, Michigan—along with Nevada, New Jersey, New Mexico, and New York—legalized and regulated consumption lounges.

The most recent entrant to the adult-use legalization party is Connecticut, which passed SB 1201. Although the 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 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."

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."

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.

NuWu Tasting Room in Las Vegas

However, in the reasons to celebrate column, Sec. 89 of the legislation, which became effective in 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.

While 21 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 law—particularly in entertainment- and hospitality-smart Las Vegas—won’t begin to manifest until 2023.

Will other adult-use states follow in the footsteps of Alaska, California, Colorado, Michigan, Nevada, New Jersey, New Mexico, and New York by adopting formal laws that recognize and regulate marijuana consumption lounges by adults? 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.

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