From Alaska to Massachusetts, a number of states are weighing measures to allow people to consume cannabis in public places such as clubs and other venues.
Legalizing cannabis clubs and other venues for public consumption could spur MJ sales and create new business opportunities, said industry officials.
In particular, the move could lead to increased sales of marijuana flower.
And it could give marijuana retailers an opportunity to add ancillary businesses – such as a coffee shop that permits MJ use – to their existing operations.
Legal public consumption also could spur greater use among cannabist tourists. And it could go a long way to alleviate problems with out-of-state tourists who want to smoke cannabis but have no legal place to go.
“If anything, social clubs will create a more clear path for the out-of-state tourist to be able to come to Colorado and enjoy and be more responsible,” said Justin Jones, founding partner of Denver Consulting Group and DANK, a medical and recreational retail shop in Denver.
Current crop of bills, initiatives
Legislation before the Nevada and Colorado state legislatures would allow bring-your-own marijuana clubs. The Republican-controlled Colorado Senate approved the legislation last week, although Gov. John Hickenlooper threatened to veto the measure if it doesn’t ban indoor smoking of marijuana.
In addition, voter-approved recreational marijuana initiatives in Maine and Massachusetts allow the licensing of cannabis clubs or consumption at retail stores, once recreational cannabis legalization goes into effect in 2018 in those two states.
In Alaska, state regulators recently moved to revive a stalled proposal that would allow marijuana consumption at marijuana retail stores.
On a more local level, 53% of Denver voters last November approved an initiative to create a four-year pilot program to allow businesses to apply for a city permit to create cannabis consumption areas. The law initially allowed such areas in bars and restaurants but was later changed to prevent any establishment with a liquor license from obtaining a permit.
The legislation before Colorado lawmakers is seen as an effort to provide guidance to localities – much like the state currently allows cities and counties to determine zoning rules for cannabis businesses.
Farther west, industry experts are closely watching Nevada’s public-use legislation. Las Vegas, a tourist mecca, could become a major player on the international marijuana scene if social clubs are allowed after the state’s new recreational marijuana program goes into effect. That could happen as soon as July.
Las Vegas receives some 42 million visitors a year. Without a public venue to consume cannabis, tourists who want to smoke recreational marijuana would be at a loss for where to go. Federal gaming rules won’t allow Nevada casinos to house marijuana businesses, including social clubs, on their properties. So people would need a legal place to consume.
“What are their options?” asked Derek Connor, a canna-centric business attorney in Henderson, Nevada. “Go hide in a dark alley in Las Vegas, which isn’t exactly the safest option, or go smoke in your room or somewhere else and break the law.”
A boon to flower sales
Colorado has been dealing with this problem since it legalized recreational cannabis in 2012. Hotels warn guests that smoking anything, whether tobacco or cannabis, in their room could lead to a cleaning charge of $200 or more. So tourists often choose edibles or vaporizer pens.
Jones, the Denver consultant and retail owner, said his shop’s workers often field questions from out-of-state consumers about where they can consume.
He said that if these consumers can go to an outdoor patio to smoke, maybe they’ll buy more flower – versus their current practice of buying more edibles and vaporizer pens.
Connor, the Nevada attorney, agreed. “I think this will open up the market for flower more,” he said. “If they do have a safe place to go smoke, whether it’s a club or limos or whatever, that’s going to change their buying habits. It’s going to open up a lot more flower sales to customers.”
A viable business model?
Connor predicted many medical marijuana businesses in Nevada would vie for social-use permits, since they’re already in the industry and know how to deal with the regulations. Plus, several of the business owners have good working relationships with the state.
“They would be excellent choices for licenses for public consumption venues,” he said.
Jones doesn’t think a stand-alone social club marijuana business would be very profitable. But having a shop that sells coffee and allows cannabis consumption could succeed, for example, or a movie theater.
He’s considered opening something like a marijuana museum in Denver complete with a tour where people could smoke at the end. Another idea would be something similar to tourists who visit a brewery and quaff the brewer’s beer on-site at the tour’s end.
Move in the right direction
Jones sees public use as a good first step. But, as a next step, he would like rec shops to be allowed to open a club with a window where consumers could buy a joint or another product and consume it on site.
“That’s where it would work viably for a business,” he added. “Where you could sell $5 joints or a $10 edible at the establishment and they can be consumed there. Just like going to a bar where they pour you a beer and you sit and drink it.”
Connor hopes the details for public consumption will be sorted out sooner rather than later.
“Something has to get done soon otherwise you’re going to force our tourists to break the law or get kicked out of their hotels,” he said. “And that doesn’t work for Vegas as a tourist economy. Cannabis and the Strip are just going to have to work together.”
Bart Schaneman can be reached at barts@mjbizdaily.com
