Cannabis Lounges Finally Coming to California

Stephen Andrews
10 Aug 2022

Industry experts predict that cannabis lounge ventures will expand exponentially over the next few years. The number of lounges currently operating in California is limited to a dozen, with most clustered in San Francisco and Oakland. Only a few other places across the nation, such as Las Vegas, have introduced sit-down style pot consumption spots.

Plans for cannabis lounges have been long in the making. But their grand debut has been slowed down by the pandemic outbreak. For California, lounges would be a game-changer. 

As of recently, more municipalities have issued permissions for operators to launch cannabis consumption venues, including in Southern California and the Central Valley. From the dozen cannabis lounges currently operating, this number would grow to twenty or thirty over the next couple of years. 

Some of the spots that are preparing to launch cannabis consumption lounges include National City in San Diego County, Desert Hot Springs and Palm Springs in Riverside County, Port Hueneme in Ventura Country and Coalinga in Central Valley, among others. 

Desert Hot Springs even permitted cannabis entertainment facilities and retail of pot products at hotels. 

However, the expansion of consumption lounges across the nation has so far been marred by slow growth. Many operators have expressed concern about whether lounges could really bring extra profits. 

For Lauren Fontein, co-founder of The Artist Tree, a West Hollywood cannabis retailer that recently launched The Studio Lounge, "Consumption lounges are a very crucial part of pushing the industry forward and normalizing cannabis use." 

West Hollywood is currently the new hotspot for the consumption lounge industry. City authorities issued 16 licenses in 2018, eight per edibles only and eight for smoking, vaping or ingestion. This far, The Studio Lounge is the single licensee of the 16 to have launched into business.

What can you expect at a venue such as The Artist Tree? Sit on the patio terrace and bogart a joint with a friend or order a glass bong. In a bustling area of the city, just south of the famed Sunset Strip, it's a pretty spot to enjoy. During the week, there's live music, drag queen brunches, or relaxing types of activities such as yoga, painting classes, and sound baths.

What's stopping California from having more beautiful places like this? The answers might sound familiar. Consumption lounges are subjected to a long list of restrictions. Even more so than other cannabis business subjects. 

Just to note down a few of those restrictions, an owner of a consumption lounge has fewer allowances than growers or manufacturers. They need to secure the property within approved zoning at the local level. And they also must pursue retail permits at the state level since there is no such thing as specific consumption lounge retail license. 

Perhaps the most painstaking realization once you are in the cannabis lounge business is that you basically can't make extra cash from serving food and beverages to guests at the premises. Due to the retail distinction, Californian cannabis consumption venues are bound to source food and drink from third-party providers and deliver them to lounge patrons, which means lost potential revenue in every sale. In addition, on-site cannabis is priced the same as if you are selling it in a dispensary. 

These limitations can be particularly harsh for smaller operators who are not integrated with big industry. If a small business wants to take the benefits of positioning early in the lounge sector, it would be a lot more challenging and there's currently nothing to change that except perhaps to change the laws. California dreamin'!

Stephen Andrews