While nearly half of states have legalized cannabis for recreational use, far fewer have legalized designated spaces for public consumption.
Many places across the US only permit cannabis use in private residences — and even then, consumption may be prohibited by landlords of apartment complexes and other rental properties.
The good news? Legislation surrounding social consumption is on the rise, expanding the potential for new avenues of business in a highly competitive industry.
What is a cannabis lounge?
Cannabis lounges are places where people can go to socialize and consume cannabis. Similar to buying drinks at a bar, these businesses offer cannabis products like flower, joints and edibles for those who are of legal age to purchase and use on the premises.
While the business concept is new to the US (the nation’s first social lounge, the Original Cannabis Café, opened in California in 2019), states are beginning to embrace the idea by adopting their own regulations around social consumption.
States where social consumption is allowed
There are currently 10 states that have legalized social cannabis consumption on some level, and the specific regulations vary in each of them. Further, not all states that have legislation on the books have issued business licenses yet.
Consumption lounges are legal in the following states:
- Massachusetts — regulators approved a social consumption pilot program, but have yet to establish a plan to implement it
- New Jersey — legislation must approved by municipalities, and Jersey City and Hoboken recently became the first in the state to approve consumption lounges
- New Mexico
- New York
Background on cannabis consumption lounges
You probably know about Prohibition-era speakeasies, but did you know that cannabis lounges were known by the same name as the underground cocktail bars? And well before Prohibition, major cities like New York, Boston, Philadelphia and Chicago had social cannabis spots known as “hashish clubs” or “hemp retreats.” Some modern-day dispensaries and smoking lounges pay homage to this history by incorporating speakeasy themes into their businesses.
Perhaps a better-known frame of reference for the consumption lounge comes from overseas, in the “coffee shops” of Amsterdam where patrons gather for cannabis rather than a cup of joe.
These have been around since the 1970s, when the federal government in the Netherlands made a legal distinction between “hard” and “soft” drugs. Coffee shops began selling the softer of the two — marijuana, of course — and law enforcement turned a blind eye while prioritizing harder substances. The businesses are now legally permitted in the city, though loosely regulated.
How cannabis lounges provide safe spaces for consumption
In the US, cannabis lounges can provide avenues to safe consumption for several reasons. Unlike the Netherlands, cannabis is strictly regulated from seed to sale, so patrons know where their cannabis is coming from and that it was harvested with their safety and wellness in mind.
Lounges are run by professionals who are educated in cannabis consumption, dosage and the products they sell, and are available to guide customers who are new to cannabis. Much like the role of a bartender, staff members are responsible for ensuring that patrons are consuming safely and responsibly.
Lastly, a social lounge can increase safety by keeping cannabis off the streets. Prior to legalizing social consumption, with the first cannabis lounges set to open this year, the Nevada community expressed concern about excess public consumption in Las Vegas. With social consumption moving in the right direction, Nevada – along with other states – can hopefully reduce these issues by providing safe spaces for recreational use.
The importance of strategic marketing
Knowing and communicating the regulations
If you are planning to open a social lounge, you’ll have the responsibility of navigating a new sector of the industry, complete with its own legislation, and communicating this new business concept to the public.
Since laws vary state-to-state, you’ll need to ensure that your customers — particularly those visiting from out-of-state — understand what’s permitted. In addition to social consumption laws, it’s important that you follow any regulations specific to marketing your canna-business.
Standing out from the crowd
While the retail cannabis market is oversaturated, cannabis lounges are brand-new territory where they’ve been legalized. But trust us: it won’t be long before the competition increases.
How do you stand out from the get-go? By establishing your own niche and defining a unique brand to attract and engage customers — even when more cannabis lounges start popping up in your state, county, and city.