How can cannabis consumption lounges turn a profit?

On paper, the idea seems sound: Customers spending time and gobs of money at a welcoming and exciting place to congregate that’s centered around cannabis instead of alcohol.But as illustrated by the recent closure of Las Vegas’ first marijuana consumption lounge after just a year in business, market conditions and onerous regulations mean it’s still challenging for cannabis social spaces to turn a profit, industry observers told MJBizDaily.

ADVERTISEMENT Though entrepreneurs nationwide are still willing to jump into the lounge act, some experts caution that the open-and-shut case at Thrive Cannabis Marketplace’s Smoke and Mirrors consumption lounge in Las Vegas should serve as a warning.“For years, lounges have always been talked about as some kind of game change for dispensaries, but it just hasn’t come to pass,” Alex Freedman, the president of the California Cannabis Operators Association, told MJBizDaily.

While successful stores sometimes appreciate the additional allure of a lounge, “businesses that have made it their core are struggling,” he added.“The hype that surrounded lounges six years ago hasn’t matched the reality that’s set in.” ‘Regulators are overthinking it’ That “reality” should serve as a wake-up call for regulators and policymakers still tweaking rules, as they are in Massachusetts.

Slapping strict limits on what lounges can sell – or, more common, what they can’t – as well as stiff licensing fees and expensive build-out requirements help set up lounges to fail, critics say.“Regulators are overthinking it, treating these things as major public health issues when they’re really not,” Freedman added.

“We’ve yet to understand the best way to permit cannabis retail lounges to make money.” Despite early struggles, consumption lounges remain a key part of the post-recreational marijuana legalization vision for many advocates and industry consul...