‘It’s not some scary den; smoky den:’ Consumption lounges coming to Nevada
As marijuana lounges open in Nevada, entrepreneurs work out the details with few guarantees of success.
Updated December 27, 2022 - 1:50 pm
Dozens of marijuana consumption lounges could spring up in the Las Vegas Valley in the coming year, but it’s still unclear what they will look like.
Yoga studios, “paint and puff” and live entertainment venues have been floated in a list of possibilities.
Most of the 40 provisional licenses awarded in Nevada were for locations in unincorporated Clark County and the city of Las Vegas.
Rachel Lee and her business partners, who are trying to procure a city license, know they want their proposed lounge to be an inclusive space with a focus on mental health and hope to operate it alongside a nonprofit that gives back to youth-oriented programs.
“Our company will be known for being a part of the community,” Lee said in a recent interview.
They’ve been in meetings with Realtors and investors and want to open their lounge as soon as possible, Lee said. “We don’t want to be one of the last to open, we want to be up there with the rest of them … so, we’re working hard so far.”
Meanwhile, the owners of the spacious and aesthetically pleasing Top Notch TCH are keeping their preliminary plans under wraps but say they want their lounge in Clark County to be part of the continuous growth they’ve experienced since they became early adopters in the dispensary business.
It has been a “slow build” from having a couple of customers a day when they sold medical marijuana and the locale looked more like a small DMV office, to a buzzing retail store that serves about 1,000 consumers a day, co-owner John Heishman said.
They want the storefront, located off U.S. 95 near the Henderson border, “to stay true” to their identity and close-knit relationships they’ve built with their regulars, co-owner Kema Ogden added. “To have that kind of connection with your customer base is important to us.”
Thus far, there are a few guarantees: Cannabis users for the first time since Nevada legalized the drug in 2016 will be allowed to legally consume the product in public, and there will be sets of regulations in place.
“It’s still a question in the industry: how do you do this and how do you make money doing this business model,” Juliana Whitney, a Las Vegas-based cannabis consultant, told the Review-Journal.
Lounges coming to Nevada
Cannabis consumption lounges were approved during the 2021 Legislature, a few years after the state legalized the recreational use of the drug and creation of dispensaries.
The Nevada Cannabis Compliance Board recently issued its provisional licenses. Only 20 dispensaries in the state applied to run a lounge attached to or “adjacent to” the storefronts. There was a cap of 20 independent applicants who will be allowed to operate stand-alone lounges. Half of those licenses went to people negatively affected by marijuana laws before legalization, such as Lee, dubbed “social equity” licenses.
Only Clark County and Las Vegas opted into allowing the businesses in the valley. The county recently voted to implement its own regulations, which included banning alcohol consumption, establishing temporary no-tow zones at parking lots, a last call and a requirement that the businesses submit safety protocols to mitigate impaired driving. Las Vegas hasn’t voted on its rules.
Trial and error
Whitney estimated that the first lounges could start to open in the first half of 2023. To succeed, they will require marketing, trial and error, creativity and “making a really enjoyable, unique, attractive customer experience that (other potential) visitors could hear about.”
The thinking includes building a business model that would “succeed even if cannabis were not a part of it,” she said. “If the only sell is cannabis, that’s a hard sell when you can just go buy it and go home.”
There’s uncertainty in the industry about whether the lounge concept could succeed, she said.
“No one is very confident,” said Whitney, noting that only 20 dispensaries applied for a license.
A failing lounge at retail spaces, which have storefront dispensaries to fall back on, would be different than one of an independent license holder, she said.
But the independent operators are “much more gung-ho” because the industry hasn’t burned them, she said.
There’s plenty of cannabis supply in the state, which leads Whitney to believe Nevada will not move to soon expand the number of dispensaries, cultivation or production licenses. Furthermore, she said, lawmakers will likely not issue more licenses for lounges while they examine how the initial establishments play out in the first few years.
But the pioneers will set the stage “for everyone else in the future,” she said.
Whitney wants the stigma surrounding the establishments to fade.
“I hope that new consumers aren’t intimidated by these lounges, that these lounges are being built for your everyday person, the same person that restaurants are being built for,” she said. “It’s not some scary den, smoky den, they’re going to be cool.”
‘Bigger than all of us’
Lee is the founder and CEO of Sunflower Compassionate Company. Having researched the medicinal effects of cannabidiol — an ingredient in marijuana — she was amazed when she made a topical CBD lotion for her elderly mother, who suffers from arthritis.
The pain was immediately gone, Lee said. It’s then that she established her company during the pandemic, manufacturing custom-made lotions from home for a growing number of loyal customers, including a man with dozens of surgeries who is allergic to pharmaceutical painkillers.
Lee’s life was not always on path to what she hopes will lead to generational wealth for her and her business partners.
At age 19, Lee got nabbed on a drug trafficking charge — and was later convicted — even though “I never sold drugs in my life.”
“That lie on my name ultimately changed the course of my life,” she added.
Employers would hire her, and then fire her days later when they found the conviction on her record, Lee said. She moved out of state and completed a radiology course. When it came time to submit to a state board exam to become an X-ray technician, she was denied because they “thought I was a drug trafficker.”
The trauma of not being able to get ahead, despite her best efforts, led to a life of depression and addiction, from which she has recovered, and she regularly attends meetings.
Her mother, she said, taught her that “we just keep moving.”
She got a job helping disabled people, and then became a certified truck driver, delivering carbon dioxide to Strip resorts.
Lee said the site of a seminar with Black Joy Consulting and Cannabis Equity and Inclusion Community — a nonprofit founded by Aesha Goins, which helped social equity applicants navigate the system — was held at the same community center where she had completed community service decades earlier after her conviction.
The nonprofit linked her up with Kenneth Landrum and Douglas Turner, “a perfect fit,” Lee said.
Lee’s sister, Renee Lee, completes the current team of four. They said they hope to hire a diverse workforce.
It’s an exciting time for us,” Rachel Lee said. Her sister and Landrum expect there to be tears when their lounge opens.
“That day, I’m pretty sure I’m going to shed a tear or two,” Landrum said. “To accomplish a goal that big will be huge.”
Renee Lee added: “We will be opening up to something that’s bigger than all of us.”
Good business plan needed
Ogden and Heishman know that operating a successful lounge at their dispensary is an uphill battle, but they “have a lot of good leads” to what their business might look like.
They might first operate a tasting section, if they’re required to open something soon, where they will allow other retailers to also showcase their products.
Afterward, their lounge might center around food, entertainment or “the gamut in between,” Heishman said.
Like any other business, a bakery, car wash or a restaurant, they know that the concept could be unsuccessful, Ogden said. “If you don’t have a good business plan and concept, and marketing plan — all these things that just go into a regular business — it can fail.”
She added: “It’s just scary to go into any new undeveloped business because you’re the first to do it.”
It’s not, however, the first time they’ve taken a risk, and had it pan out. They did it with their dispensary while others looked from the sideline, they said.
“The only difference is we took the risk, and we came out and put everything on the line to find out,” Ogden said.
An earlier version of this story misstated the relationship between the current supply of cannabis in the state and the potential for more lounges.
Contact Ricardo Torres-Cortez at email@example.com. Follow him on Twitter @rickytwrites.