Cannabusiness Advisory

Over a year ago, in February 2022, Senator Julian Cyr proposed a bill to the Massachusetts legislature to legalize social consumption facilities in Massachusetts. Senator Cyr argued that while social consumption is already in law in Massachusetts, there is no place where someone who wishes to partake in cannabis consumption can legally do so. As such, he proposed introducing social consumption lounges and cafes, which would allow people to indulge in cannabis responsibly and legally.

A social consumption lounge is a place where patrons can go, purchase cannabis and consume the purchased cannabis on the established premise. Like a bar or restaurant, people would be able to sit down and enjoy their favorite cannabis products while socializing with other guests. Some unique cannabis lounge ideas extend beyond what you would think of as your typical bar and include multiple-course gourmet dining experiences cooked with cannabis-infused oils and ingredients.

In July of 2022, Massachusetts lawmakers took a step towards making this happen by passing a bill legalizing consumption lounges in Massachusetts. Once the bill becomes law, residents of a specific town will vote on whether to allow a consumption lounge in their town. The Massachusetts Cannabis Control Commission also needs to review and propose regulations regarding the rollout and governance of consumption lounges in Massachusetts. The bill and the regulations have not seen much progress since July 2022, but we are hopeful that these issues will be resolved soon to further stimulate the cannabis market in Massachusetts.

Despite the regulations not being finalized, Massachusetts currently has one recreational space offering the consumption lounge experience set up through a series of loopholes in state and federal regulations to allow for the social consumption of cannabis. Summit Lounge in Worcester, Massachusetts, is a private membership club that does not sell cannabis itself but instead generates revenue by charging a fee per visit or a membership fee based on a monthly or yearly subscription. After paying the entry fee, patrons can consume and enjoy one of the many different recreational events that Summit hosts and also can enjoy a snack or milkshake from Summit’s café. Close-by dispensaries offer plenty of options for visitors to acquire their cannabis prior to going to Summit to indulge.

While I find it difficult to see any downside with consumption lounges, regulations could threaten their viability and sustainability by imposing overly restrictive regulations. In particular, certain geographic restrictions or prohibitions on selling food and drinks could stifle revenue and potential profit growth. Additionally, limitations on consumption methods, such as prohibiting combustibles indoors and restricting outdoor smoking areas in densely populated areas, could reduce the appeal of these lounges. Cannabis consumption bars would be great for the cannabis market as a means to further stimulate and develop the cannabis industry. However, the regulators certainly have a tight line to walk as they consider the interests of the greater public while drafting these regulations.

I am optimistic that Massachusetts regulators will consider mistakes made in other states while imposing new regulations. Cannabis consumption lounges in California have gotten off to a bumpy start, with very stringent restrictions making it difficult for the lounges to stay viable. In particular, the restrictions prevent the dispensary from selling any non-cannabis foods or drinks or hosting live events, such as music or comedy shows. The California restrictions make it difficult to turn profits, as food, drinks, and ticket sales could be a big source of revenue for this type of venue. However, hope is not lost, as a bill was recently introduced in early February of 2023 to lift these restrictions. This should come as a big boost for those cannabis lounges in California that have been struggling to offer the full Amsterdam Cafe experience that everyone thinks of when it comes to cannabis consumption lounges.

Nevada is another state which has had progress with cannabis consumption lounges. The Nevada Cannabis Compliance Board approved regulations for consumption lounges in June 2022. Additionally, the Las Vegas City Council recently approved regulations for consumption lounges in Las Vegas. Many of the Las Vegas City Council’s restrictions include geographic restrictions, prohibiting consumption lounges from setting up operations within 1,500 feet of casino and resort operations. The regulations also require a 1,000-foot buffer between consumption lounges to avoid overcrowding. As one of the country’s biggest nightlife and hospitality centers, the legalization of consumption lounges in Las Vegas is a big step in the right direction, but I tend to think that prohibiting consumption lounges on casino and resort properties seems like a big missed opportunity.

In addition to consumers who are eager to enjoy the social aspects of the consumption lounges, I am sure cannabis entrepreneurs are eager to pursue a new potential business opportunity. I am hopeful that we will get an update on the consumption lounge regulations soon, however, we will have to wait and see if the restrictions that the Cannabis Control Commission imposes allow these gathering spaces to flourish into a viable business model.