Politics
Nevada Marijuana Consumption Lounges Could Soon Become Industry’s ‘New Frontier,’ Former Top Regulator Says
Nevada’s marijuana lounges are coming soon—and the state’s former top regulator says the social consumption facilities could represent “the new frontier of the legal cannabis industry” after an extensive rulemaking process that laid a robust “foundation” for the marketplace.
Tyler Klimas, who served as executive director of the Nevada Cannabis Compliance Board (CCB) from 2020 to late 2023, discussed the state’s forthcoming hospitality market during an interview with WeedWonks that was released last week.
After a year-long process to set up rules for consumption lounges—which were legalized under a bill from Assemblyman Steve Yeager (D) that former Gov. Steve Sisolak (D) signed into law in 2021—the facilities are positioned to open imminently, Klimas said.
“Then we’re going to see them in practice,” he said. “So it’s a very interesting and exciting time to see to see what happens with this new sector.”
CCB approved an initial batch of consumption lounge licensees last June, which came after regulators gave preliminary approval to 40 prospective hospitality businesses.
In the interview, which was taped in November before he left office, Klimas acknowledged that the private industry and consumers have been eager to see the sector open sooner—but he said regulators have been intentionally methodical to ensure success, holding over a dozen public meetings to bring in a wide range of stakeholders before finalizing the rules, for example.
At this point, the remaining steps before the approved lounges open are for licensees to “find building space, get the local government approvals and build out their facilities,” Klimas said.
“It’s an unknown market. There is no blueprint anywhere,” he said. “We see many business plans and projections, but nobody really knows until we open it up. We don’t know how successful it’s going to be, which is very exciting.”
A CCB consumption lounge program officer told Marijuana Moment in an email on Tuesday that “we do not have an exact date for the opening of the State’s first consumption lounge(s).”
However, some licensees have offered tentative timelines, with the Las Vegas-based Planet 13 retailer planning to launch its first “Dazed Lounge” before the cannabis holiday 4/20, for example.
Of the 40 provisional licenses that were granted in late 2022, 20 were awarded to new independent businesses, with half of those going to social equity applicants. The other 20 were for existing cannabis retailers that planned to open up social use areas. Regulators have agreed to cap the consumption lounge licenses at 65, at least for now.
The rulemaking might have taken longer than consumers and stakeholders would have hoped, but Klimas says it was intended to be that way. And he said CCB is grateful that the legislature allowed regulators to move through an administrative process to stand up the sector, without overly prescriptive statutes or deadlines to follow. That allowed them to take input from multiple viewpoints, so that the rules that developed became a solid “foundation” for the market.
“Obviously when you’re talking about social consumption, you’ve got local governments playing a huge role in that. You’ve got law enforcement and the anxieties that law enforcement has, deservedly so, around social consumption,” Klimas, who was succeeded by James Humm of the Governor’s Office of Economic Development to lead CCB, said.
It was important to “have the space to bring all of those voices in—again, knowing that that is part of the foundation—so when we do launch, there’s no coming in after the fact right and saying, ‘I can’t believe that happened. I can’t believe you did that.'”
Beyond conventional cafe-type facilities, the law also allows for businesses that couple cannabis with yoga, serve infused food, offer THC-aided massage therapy or incorporate marijuana in other ways.
Sisolak, the former governor, touted Nevada’s lounge law in a 4/20 op-ed for Marijuana Moment in 2022, writing: “The idea isn’t new, but no one is doing it like we are in Nevada.”
“While most of the consumption lounges in other states don’t offer food, beverages or other entertainment options,” he said, “Nevada’s lounges will be a one-stop entertainment shop to create jobs, grow the industry and boost our economy.”
Under the board-approved rules, consumption must be hidden from public view. Smoking and vaping must take place in a separate room of the lounge or be prohibited entirely. Single-use or ready-to-consume cannabis products can’t be brought off-site. And businesses must provide water to every guest free of charge.
The lounges will also be cannabis-only. No alcohol, tobacco or nicotine products can be sold.
Other safety-related regulations require lounges to establish plans to limit cannabis-impaired driving and minimize workers’ exposure to secondhand smoke. Guns are prohibited, surveillance is required and procedures must be in place to reduce and respond to potentially violent or harassing behavior.
Single-use cannabis products are limited to no more than 3.5 grams of usable cannabis under the regulations, with “extracted inhalable cannabis products” (such as vaping or dabbing products) limited to 300 milligrams of THC. All single-use products with more than 1 gram of usable cannabis, and all extracted inhalables, must carry written potency warnings.
Individual servings of ready-to-consume edible products are capped at 10 milligrams THC, a fairly standard amount in states that have legalized cannabis for adult use.
Topicals, meanwhile, are limited to 400 milligrams of THC. Transdermal patches and all other cannabis products can have no more than 100 milligrams THC and must carry a written warning if they have more than 10 milligrams.
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As consumption lounges prepare to open, the state’s marijuana laws changed in another meaningful way at the beginning of the year, with a new policy in place that more than doubles the amount of cannabis that a person can buy and possess to 2.5 ounces.
Recreational retailers will also become authorized to serve medical cannabis patients as well, without having to get a separate license.
The new law came into effect under a large-scale marijuana reform bill that Gov. Joe Lombardo (R) signed into law in June. The legislation also broadens eligibility for participation in the market by people with prior felony convictions.
Meanwhile, Nevada officials recently adopted a proposal to amend hiring standards for police officers to allow job candidates who were previously disqualified for certain marijuana-related offenses to now be eligible for law enforcement positions.
The governor also signed legislation in June to create a new working group to study psychedelics and develop a plan to allow regulated access for therapeutic purposes. Staff with his office recently met with psychedelics activists to discuss the need to quickly fill out appointments on that body.
In May, the state Senate approved a resolution urging Congress to federally legalize marijuana, and the Nevada State Athletic Commission (NSAC) voted to send a proposed regulatory amendment to the governor that would formally protect athletes from being penalized over using or possessing marijuana in compliance with state law.
Photo courtesy of Martin Alonso.
