Let’s dive right into how to open a cannabis lounge in 20245. Cannabis lounges or onsite consumption businesses is an upp and coming business model in the United States.
1. Understand the Legal Landscape
First, not all legal cannabis states allow social consumption venues, so, you are limited on where you can open a cannabis lounge in the U.S. As of mid‑2025, 12 states, plus Washington, D.C. and the U.S. Virgin Islands, have rules that do or will permit licensed cannabis lounges or onsite consumption under specific conditions. These include:
- Alaska
- California (with AB 1775 effective January 2025)
- Colorado
- Illinois
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Nevada
- New Jersey
- New Mexico
- New York
However, actual licensing is most always contingent on localities opting in—meaning even within permitted states, you can only open a cannabis lounge in select cities.
States & Cities Where Cannabis Lounges Are Legal
You can open a cannabis lounge in the following states:
California
- AB 1775 became law January 1, 2025, allowing licensed dispensaries or lounges to sell non‑psychoactive food, non‑alcoholic drinks, and host live events, provided the local city permits it.
- West Hollywood, Coachella, and select Southern California jurisdictions have embraced these permits; Sunset Social Club in West Hollywood already operates as a membership-based lounge with mocktails, espresso, and access to events.
- In Port Hueneme, Ventura County, the Wheelhouse Lounge opened in 2023 as the county’s first consumption permit site.
Nevada
- Enables licensed consumption lounges, separate from dispensaries, where indoor smoking is allowed under strict ventilation rules. The first tribal‑land venue opened in 2019; non‑tribal Smoke & Mirrors launched in early 2024.
Colorado
- Under Initiative 300 (Denver pilot) and subsequent rules, businesses (e.g. event venues, hospitality sites) can apply for Marijuana Hospitality Business or Retail Marijuana Hospitality Business licenses, allowing smoking or ingestion in designated spaces. Smoking indoors is permitted under controlled environments.
Other States
- Alaska, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, New York, and DC/USVI allow on-site consumption in regulated settings, though rules vary on whether food, alcohol, or smoking is allowed. Many require local opt‑in or are still launching licensing rounds.
Cannabis Consumption Businesses are the up and coming cannabis business model. If you are looking to start a cannabis business, opening a cannabis lounge, may be your best bet as it is still early in the business space. Opening a cannabis lounge offers large opportunities for creativity and competition.
🧠Step‑by‑Step: Opening a Cannabis Lounge
Here is how to open a cannabis lounge:
✅ Step 1: Local & State Research
- Check if your city or county has opted in for on-site cannabis consumption licenses. Without opt-in, even legal states won’t issue permits.
- Review local zoning, ventilation, age restrictions, and whether smoking or only vaping/edibles is permitted.
✅ Step 2: Select Business Model & License Type
Different license types depending on the jurisdiction:
- Dispensary with on-site consumption endorsement (e.g., California, New York, Alaska).
- Independent consumption lounge license, often separate from retail (e.g., Nevada, Colorado).
- Hospitality business licenses which may vary on whether they can serve cannabis sales vs. bring-your-own models.
✅ Step 3: Prepare Application & Design
- Create a floor plan that separates sales from consumption areas, meets local ventilation regulations, includes employee monitoring zones, and enforces adult-only access zones.
- If smoking is allowed, install industrial-grade ventilation and comply with second‑hand smoke management policies.
✅ Step 4: Build Your Experience & Services
- California lounges like Sunset Social Club emphasize education + lifestyle, offering membership programming, mocktails, art shows, and cannabis education alongside smoking zones.
- Consider features like retail-infused beverage bars, lounges, lounges with board games or book shelves, and events to create a holistic venue.
✅ Step 5: Submit & Engage Community
- Submit your license application where required (may involve neighborhood board approvals for Denver-style hospitality districts).
- Engage local community and transparency efforts to ease health or zoning concerns.
- Once operating, encourage user-generated content with branded hashtags and host events to build community.
💬 Policy & Market Outlook
- Although New York legalized lounges under its 2021 Marijuana Regulation and Taxation Act, state regulators had yet to finalize application rules as of early 2025—creating operational delays for businesses ready to launch,
- The rise of cannabis lounges is not just about sales but tourism and culture: cities like Portland and Denver position themselves as cannabis tourism destinations thanks to social consumption venues like Cirrus Social Club.
🔑 Key Takeaways
- Only a subset of cannabis-legal U.S. states currently permit licensed lounges; even in those, local opt-in is required.
- California (AB 1775), Nevada, and Colorado lead in legal lounge frameworks, while others are rolling out pilot programs or limited licensing.
- Opening a lounge demands strict design planning, permit compliance, community engagement, and creative, hospitality-driven user experience.
- Successful lounges blend education, aesthetics, events, and a safe social environment for cannabis consumption.
With increasing consumer demand for social cannabis experiences, understanding laws and building a compelling concept are essential. Contact Us if you’d like help drafting your business plan or application. You can download a business plan or SOP Template today to get started.
