The cannabis industry is evolving beyond traditional retail, with on-site consumption lounges becoming a growing trend across the United States. Joining states such as Alaska, Nevada, and Colorado, New Jersey and California have stepped up as leaders in cannabis hospitality, paving the way for innovative and immersive experiences. These states are among a select few that now permit adults to legally consume cannabis in designated social settings, offering a glimpse into the future of cannabis culture. From fostering community to enhancing tourism, the introduction of these lounges marks a significant shift in how cannabis is integrated into everyday life.
California
In September, California Governor Gavin Newsom (D) signed a landmark bill, Assembly Bill 1775, legalizing cannabis-cafés in the Golden State. Under Assembly Bill 1775, licensed cannabis consumption lounges will be permitted to serve non-cannabis-infused food and drinks, as well as host live entertainment. This legislation creates a significant shift from prior regulations as the new model mirrors the infamous Amsterdam-style cannabis cafes in the Netherlands. Prior to enacting Assembly 1775, Governor Newsom initially vetoed a similar bill in 2023, Assembly Bill 374, citing health concerns for employees of the lounges. As such, legislators carefully crafted the language of Assembly Bill 1775 to include workplace protections such as masks and separation between public consumption spaces and back rooms of businesses where food is prepared or stored.
Municipalities throughout the state will maintain significant regulatory oversight over the operations if they are permitted in their jurisdiction, including local zoning and land use requirements, business licensing, and measures to reduce secondhand smoke exposure. Further, Assembly 1775 permits localities to opt-out of allowing such establishments or operations. Recently, Sacramento City Council passed an ordinance allowing social consumption at select dispensaries, allowing the city to join others such as West Hollywood and San Francisco in aligning with the new measure. Despite alleging health concerns from opponents, proponents argue that it will enhance the state’s legal cannabis market and revive cannabis businesses, who have faced challenges from the unregulated market and high taxation.
New Jersey
In the beginning of this year, cannabis consumption lounge regulations were unanimously approved by the New Jersey Cannabis Regulatory Commission (“CRC”), offering new business opportunities in the Garden State. Under the CRC’s regulations, consumption lounges will be required to be attached to licensed retail locations for adults twenty-one (21) years and older. The “social use” licensing fees will be one thousand ($1,000.00) for microbusinesses; and five thousand ($5,000.00) for standard operators. Unlike California, New Jersey lounges will not be permitted to sell food or beverages, however, guests may bring their own or have it delivered, if the municipality in which the lounge is located permits it.
Unfortunately, after ten (10) months since approving the rules, the CRC has failed to address when the application process will begin for retailers who want to operate lounges. Since there is no legislative deadline for the CRC to issue the applications, “it is not considered delayed,” CRC spokeswoman Toni-Anne Blake said according to Marijuana Moment. Moreover, there are concerns as to whether municipalities will even permit such operations as fewer than a dozen have passed ordinances allowing it since the regulations were approved.
Conclusion
The rise of on-site cannabis consumption lounges represents an exciting new chapter for the cannabis industry, but it’s not without challenges—especially in New Jersey. Despite the state’s progressive stance on cannabis, getting the on-site consumption market moving has been slow, hindered by regulatory complexities and hesitation from local governments. Many municipalities have chosen to ban these establishments outright, often due to a lack of understanding about how they can operate safely and responsibly. Providing municipalities with clear information about the benefits of on-site consumption lounges—such as boosting local economies, promoting responsible use, and creating safe spaces for consumers—New Jersey and California can unlock the full potential of this emerging market.