HOW TO OPEN A CONSUMPTION LOUNGE

Overview

As cannabis legalization continues to evolve, a growing number of states are allowing cannabis consumption lounges. These establishments provide a safe and legal environment for patrons to consume cannabis products socially and be educated on all things cannabis. However, the process of opening a cannabis consumption lounge varies by state and involves navigating complex regulations and is a complex endeavor. This guide will walk you through the essential steps to open a cannabis consumption lounge in the states where they are legal.

The Role of Cannabis Consumption Lounges in Education and Social Connection

Consumption lounges are emerging not only as places to legally enjoy cannabis, but also as hubs for learning and community building. These lounges provide unique opportunities for both education and social interaction, contributing to a more informed and connected cannabis consumer base.

1. Cannabis Lounges as Educational Spaces

Consumption lounges offer a valuable setting for cannabis education. Unlike normal retail dispensaries, where transactions are typically quick and focused on product sales, lounges allow for more in-depth conversations between staff and patrons. Budtenders and lounge hosts often provide guidance on proper dosing, consumption methods, and product types, helping guests make informed choices tailored to their individual needs and tolerances.

Many lounges also host events such as informational sessions, product demos, and talks from industry experts. These experiences promote responsible use and help demystify cannabis for newer users. In a landscape where misinformation is still common, lounges play a crucial role in bridging the knowledge gap and fostering a culture of safety and awareness.

1. A Catalyst for Social Interaction and Community Building

Beyond education, cannabis lounges serve as inclusive social environments where people can connect over shared interests. For many, they offer a relaxed and stigma-free setting to enjoy cannabis among peers, reducing the isolation that can sometimes accompany private use.

Lounges often host themed nights, art shows, music performances, and community meetups, creating a dynamic space for social engagement. This interaction helps normalize cannabis use in a responsible, adult setting and can be especially meaningful for individuals who may not have other safe spaces to engage in cannabis-related experiences.

Individual State Licensing Overview

1. California

California has embraced the concept of cannabis consumption lounges, particularly with the passage of Assembly Bill 1775, effective January 1, 2025. This legislation allows licensed cannabis dispensaries and lounges to operate similarly to Amsterdam-style cafes, offering non-psychoactive food, nonalcoholic drinks, and live entertainment. Previously, these establishments were limited to selling prepackaged snacks and faced restrictions on on-site food preparation and entertainment. The new law aims to enhance revenue streams for legal dispensaries by broadening their service offerings. ​ 

1. New Jersey

New Jersey permits cannabis consumption areas, but only licensed cannabis retailers and medical dispensaries are eligible to establish such spaces. The NJ Cannabis Regulatory Commission (NJ CRC) oversees the application process, and prospective operators must secure municipal approval, as local jurisdictions have the authority to opt in or out of allowing consumption lounges. At the moment, just a bit over 20 municipalities allow such lounges, which include Atlantic City, Evesham Township, Jersey City, Long Branch, Newark, and Trenton. Applicants should be observant of local ordinances to determine the permissibility of consumption lounges in their desired locations. ​ 

1. Nevada

Since 2024, Nevada has allowed for cannabis consumption lounge licenses, although the period to apply for one has since closed and there is no update on the next licensing period to do so. The lounges are attached to dispensaries, but customers can’t consume what they purchase in the store on the premises, just what they buy in the lounge. Tight regulations around smoke ventilation caused months-long delays in the opening of nearly 40 consumption lounges in 2023. The Nevada Cannabis Compliance Board (CCB) eased those ventilation requirements for lounges, thus allowing some to open in 2024 and 2025. When the time does come, an applicant will have to clear several hurdles, such as establishing operating procedures. One regulation alone has nearly two dozen subsections that operators must adhere to. 

1. Illinois

Illinois’ Cannabis Regulation and Tax Act permits local governments to authorize consumption lounges, either on-site at a dispensary, or at a standalone retail tobacco store. Entrepreneurs interested in opening a consumption lounge in Illinois should closely monitor local regulations and community standards, as these can vary by municipality. In the past two year, opened its first licensed consumption lounge, operating on a bring-your-own-cannabis (BYOC) basis. For example, a current lounge offers a space for consumers to safely enjoy cannabis and purchase related products. 

Recently, two legislative measures, House Bill 3061 and Senate Bill 1772, were recently introduced in the Illinois Assembly that would allow municipalities to issue licenses for temporary events and venues for cannabis consumption, including infused products. The proposed measures would permit businesses like cafés, music venues, art galleries, and yoga studios to host cannabis-related events. Special event permits would authorize cannabis consumption at festivals, industry gatherings, and other private functions. These events would also be allowed to sell cannabis accessories on-site. Additionally, the legislation includes requirements for air ventilation systems in designated indoor smoking and vaping areas, aligning with standards adopted in markets like Nevada as discussed above. 

1. Massachusetts

Massachusetts is in the process of finalizing regulations for cannabis cafes, with public feedback solicited as recently as January 2025. The proposed framework includes three types of licenses: a supplemental license for existing cannabis businesses to host on-site consumption, a hospitality license for non-cannabis businesses, and an event organizer license for temporary cannabis events. Notably, the draft regulations have removed the previous THC cap of 20 mg per day, indicating a shift toward more flexible consumption policies. 

Commissioners have set a goal of mid-2025 to publish final social consumption regulations. In the coming months, CCC Commissioners will hold a series of meetings to edit the regulations, host a public hearing, and accept formal public comment.

1. New Mexico

New Mexico permits consumption lounges, allowing local jurisdictions to authorize their operation, provided specified conditions are met. New Mexico requires those applying for a cannabis consumption area license to also fulfill all requirements expected of a cannabis retailer. Prospective operators must ensure compliance with both state regulations and local ordinances to establish a consumption lounge in New Mexico. 

New Mexico does have two types of cannabis consumption area licenses. These are Type I and Type II permits. Type I permit allows for the consumption of cannabis products on the licensed premises except for smokable forms, inhalation products, and any product consumed via the respiratory system. A Type II permit allows for the consumption of all cannabis forms including those consumed through the respiratory system.

1. Minnesota

In Minnesota, the Cannabis Event Organizer License allows temporary cannabis events, although this license will be the last type to be issued in the state and not apart of the initial licensing rounds.  This license permits individuals or entities to host cannabis-focused events—lasting up to four days—where licensed vendors may sell and adults 21+ may consume cannabis products. Applicants must submit a detailed event plan including site diagrams, vendor rosters, and security protocols. Proof of local approvals and compliance with age restrictions, security staffing, and cannabis waste management are required. Events must only admit those aged 21 and over, with strict signage and ID checks.

The license also requires organizers to use licensed transporters for moving cannabis to and from the event and prohibits security personnel from consuming cannabis within 24 hours of duty. While organizers may charge admission or booth fees, revenue-sharing based on product sales is not allowed. Smoking is only permitted in designated consumption areas, and compliance with local Clean Indoor Air laws and zoning ordinances is mandatory. Until licenses are available, cannabis events involving hemp-derived products must adhere to current laws and seek local approval. 

1. New York

When New York legalized cannabis in 2021, it envisioned the establishment of on-site consumption lounges. However, as of April 2025, the Office of Cannabis Management (OCM) has yet to finalize regulations for these lounges, causing frustration among entrepreneurs eager to enter the market. The OCM has indicated that it is prioritizing other business licenses essential for the supply chain before addressing consumption lounge regulations. ​ 

1. Other Potential States

Early in April, bills in both Maine and Oregon were presented that would legalize consumption lounges in those states as well. 

To learn more about obtaining a Cannabis Consumption Lounge License, explore our comprehensive guide.

Key Considerations for Opening a Cannabis Consumption Lounge

1. Understand State and Local Regulations: Thoroughly research the specific laws and regulations governing cannabis consumption lounges in your chosen state and municipality. Compliance with zoning laws, licensing requirements, and operational guidelines is crucial.​ This includes:

• Business Registration
• State Licensing
• Local Approvals
  • Some municipalities will require additional local licenses
• Health and Safety Compliance
  • Adhere to regulations for air filtration, sanitation, and employee training on responsible cannabis service and education.

1. Develop a Comprehensive Business Plan: Outline your business model, including operations, security measures, waste disposal, sustainability practices, community engagement, and employee training. A well-structured business plan is essential for navigating the licensing process and attracting investors.
2. Secure Financing: The cost of installing and maintaining proper air-ventilation systems can be extremely high — sometimes reaching six figures. Due to federal banking restrictions on cannabis-related businesses, securing financing can be challenging. Explore alternative funding sources such as private investors, venture capital, or cannabis-specific financial institutions.​
3. Engage with the Community: Building positive relationships with local communities and addressing their concerns can facilitate municipal approval and contribute to the long-term success of your lounge.​ Hosting educational events and providing a safe, social space for responsible consumption can help normalize cannabis use and demonstrate your commitment to public engagement and awareness.
4. Stay Informed: Cannabis regulations are evolving. Regularly update your knowledge of legal changes and industry best practices to ensure ongoing compliance and competitiveness.​

Conclusion

Opening a cannabis consumption lounge requires careful navigation of a complex regulatory landscape. By understanding the specific requirements of your state and locality, developing a robust business plan, and engaging with the community, you can position your venture for success in this emerging sector.

Cannaspire can help you take advantage of new opportunities that allow cafés, art galleries, music venues, and yoga studios to host cannabis events. Our team will guide you through all requirements, including air ventilation, business plans, permits and other required documents, ensuring full compliance with state and local regulations. From planning to permitting to already-operational compliance, Cannaspire is here to help you launch safely, successfully, and confidently.