In the ever-evolving and fiercely competitive cannabis industry, consumption lounges (aka. social or smoking lounges) are generating a big BUZZ (see our MED “Colorado Marijuana Hospitality Certification”).
Innovators and proponents for their legalization see it as a prime opportunity to better compete in a saturated market, attract new customers and GROW market share. Opponents throw up a heap of red flags, including drugged driving, crime, and the health risks associated with smoke exposure.
Whether this new retail business model blows up or not is anybody’s guess, nevertheless, our industry must prepare for this next big wave in cannabis consumption. Here’s a deeper dive into the opportunities, and risks versus rewards for businesses looking to ride the potentially next big wave in cannabis.
The concept of a cannabis consumption lounge is nothing new, really. Similar to a bar that serves alcoholic beverages, consumers at least twenty-one (21) years of age can not only purchase flowers, edibles, etc. from a budtender but also consume these products in a social gathering place.
Amsterdam’s “coffee shops” serve as the inspiration and model for cannabis innovation in the U.S. In the Netherlands, however, coffee shops operate in a legal GREY area with their products being supplied by an entirely underground cultivation market.
Of course, here in the United States, the burden falls on individual states since marijuana remains illegal at the federal level. Analysts predict cannabis consumption lounges will be a budding business in states where recreational and/or medical marijuana is legal.
This emerging business model is particularly attractive to states with more mature cannabis laws, like California and Nevada. Alaska became the FIRST state to allow consumption lounges and Nevada is the latest to announce plans for the first state-sanctioned lounges by mid-2022.
In all, seven (7) states including the aforementioned, as well as New Jersey, New York, Pennsylvania, and Illinois, are forging ahead with their plans to allow for consumption lounges in 2022. These states will likely serve as a blueprint for other states as their popularity grows.
Risks vs Rewards
State regulatory bodies are grappling with how to develop, implement and enforce the rules surrounding social consumption lounges. For example, what will the laws around consumption lounges look like? How will businesses mitigate the myriad of risks through cannabis hospitality and social consumption training?
They will also need to carefully address questions and concerns about public health implications. Could public consumption spaces cause people to OVER-consume? Will there be limits on how much cannabis a person is allowed to consume at a lounge in one visit? What is a “single serving” of cannabis anyway?
These are all questions surfacing to the top. Many see the potential benefits of licensed social consumption lounges as ways to curb the illicit market, regulate public consumption, ensure consumption in a safe space and bolster the economy.
A “Designated Consumption Establishment License” is particularly attractive to entrepreneurs looking to enter the cannabis market, but AREN’T interested in growing, processing, or operating a traditional dispensary. Furthermore, cannabis consumption lounges are particularly attractive for their potential to attract tourism dollars.
The masses of tourists buying cannabis products in states that have legalized recreational marijuana have nowhere to smoke it legally – not on the sidewalk and not in their hotel rooms.
What Lies Ahead
In order for the cannabis industry to continue to thrive and expand, new retail models must be considered. We believe it is highly likely that social consumption lounges will become increasingly common, especially in major United States cities with legal adult-use cannabis programs (check out our “Colorado Marijuana Hospitality Certification”).
If you’re thinking about opening a cannabis consumption lounge, it’s important to stay on top of your state’s specific laws since they do VARY from state to state and are likely to change and evolve. It’s equally important to make sure you have the right policies in place.
Let us know what you think.