Nevada lawmakers look to allow cannabis consumption lounges for economic growth, diversifying marijuana industry

Nevada lawmakers hope this session will be the one where they resolve a “vexing” problem that has lingered since 2017 — it’s legal to consume marijuana recreationally, but not in a public place.

AB341, presented Friday in the Assembly Judiciary Committee, would authorize the creation of cannabis consumption lounges. The businesses would function like bars for marijuana use, allowing people to legally consume outside of a private home.

“More than 40 million tourists visit Las Vegas every year,” said bill sponsor Assemblyman Steve Yeager (D-Las Vegas). “Many of those are interested in trying cannabis, but there's nowhere they can legally do so. They can't bring it into their hotel rooms. They can't consume outside. As a result, many of them end up breaking the law.”

Lounges would be restricted to people 21 and over, and public consumption would still need to be out of sight of passersby. Customers might bring their own products in, or the venue can sell “ready-to-consume” products, although not in quantities that would make it a de facto retail cannabis dispensary.

Proponents have big dreams that the bill could unleash a new wave of tourism, as well as fine dining experiences featuring cannabis-infused food and drink. They described concert and comedy venues where cannabis was allowed, and one public commenter proposed a mind-body wellness center akin to a yoga studio where people could use cannabis as they work through trauma.

“We are confident that a diverse group of operators will have the creative vision to build lounges that are experiential and fun,” said Nicole Buffong, the western regional director of Minorities for Medical Marijuana.

Supporters see lounges as a key tool in diversifying an industry with ownership and board membership that skews heavily male and white, in part because of high financial barriers to entry. The bill includes a preference for “social equity” applicants, defined as those who have been “adversely affected by previous laws and criminalized activity relating to cannabis.”

“As a minority woman and a disabled veteran, even with the financial freedom to start my own business, I could not afford and did not have the political connections to get a license in the early rounds of licensing in Nevada,” said Christina Thomas, director of veterans voices in the Chamber of Cannabis, a Las Vegas nonprofit dedicated to a more inclusive cannabis industry. “We must find better ways to be more inclusive to veterans, disabled members of the community, BIPOC [Black, indigenous and people of color] communities, and those disenfranchised by the War on Drugs.”

But some lawmakers raised questions about whether the bill provides a viable pathway to the leadership classes of the industry, or leads entrants into a financial dead end. The bill envisions two types of licenses: one for a retail consumption lounge that is adjacent to a dispensary, and one for a standalone, independent lounge that may or may not sell products on site.

“We all know that there's a cost associated with the inventory controls, et cetera, that go along with selling cannabis — the [point of sale] that goes along with that, security measures,” said Scot Rutledge, a lobbyist representing the Chamber of Cannabis. “And so there was flexibility for somebody who was entering into this, wanting to open up an independent cannabis lounge, but may not want to start with selling cannabis.”

Proponents described scenarios where lounge owners would set up venues so attractive that they would earn a national reputation and gain the wherewithal to afford a dispensary license. Skeptics wondered aloud whether that would leave minority entrepreneurs opening up bring-your-own-cannabis establishments and making little, if any, money.

“Your model for no sales or ‘bring in’ does not appear to be an intentional model,” said Assemblywoman Shondra Summers-Armstrong (D-Las Vegas). “It seems aspirational and, to me, destined to fail.”

Some lawmakers raised concerns about how to prevent visitors to a cannabis lounge from leaving the premises and then driving home impaired. Marijuana and its psychoactive ingredient THC works through the body differently than alcohol, producing a delayed high and eluding clear-cut measurements of impairment such as blood alcohol content.

“Somebody could get 100 milligrams and feel completely fine, while another person can have 10 milligrams and be completely floored,” said Chris Sayegh, a Los Angeles-based chef focused on cannabis-infused fine dining.

Bill proponents say the issue can be addressed through training staff to recognize impairment in consumers, or for arrangements such as partnerships with ridesharing services to ensure customers are more likely to hand over the keys if they are not fit to drive. Ultimately, though, it’s up to consumers to be responsible.

“Everybody has free will, and of course if they want to go to a bar and have a few beverages, it is within their right to already do that,” Sayegh said. “The only time that the staff is liable that they see that somebody is completely inebriated, and they don't do anything to prevent it.”

The chances of success for the business model remain uncertain. Presenters acknowledged that some states that have tried the concept have imposed so many restrictions on lounges — including on food and beverage inside — that the end product has been unappealing to customers.

They say that shouldn’t deter Nevada from trying it.

“I think the concerns about what has happened in other states are legitimate concerns,” said John Hudak, who works for the Brookings Institution but co-presented in his personal capacity. “But I think the tourism model in particular in the state of Nevada adds to what is an existing resident demand for these types of establishments in the state.”

The bill is still a work in progress, with one and maybe more amendments potentially on the way. But Yeager hopes this will be the year to take the leap. When the concept was floated in the 2019 session, lawmakers pumped the brakes with a clear ban on the lounges to allow more time to consider the idea.

“The bottom line is we simply cannot wait another two years to get this right,” Yeager said. “The time is now.”

— This story is used with permission of The Nevada Independent. Go here for updates to this and other stories.