7 Things to Consider Before Opening a Consumption Lounge

In a new world of adult-use legalization and cannabis being sold from thousands of nationwide dispensaries, one would think social hangouts where cannabis can be legally consumed would be commonplace. Although rare cities like Amsterdam have had social lounges and smoker bars where cannabis is legal to consume, the elusive consumption lounge may be more difficult to find than you’d expect — and for good reason.

What Is a Consumption Lounge?

First, it’s important to understand what we mean by the term “consumption lounge.” In essence, these are establishments where people can legally consume cannabis products, either by smoking, vaping, or eating edibles/drinkables. Think of it like a traditional bar, but for cannabis. People can come in, socialize, and consume cannabis products in a safe and legal environment.

These lounges can take many forms, from upscale luxury establishments to more laid-back locations. However, the regulations around them can vary depending on the legal and regulatory landscape in a given state or county. For example, in Nevada, a lounge can’t be within 1,000 feet of each other. Additionally, they must be 300 feet from places of worship and city parks.

That said, before stepping into the race to start your community’s newest hot spot, we’re going to cover 7 factors that should be considered before launching a new business venture located in the wild west of social cannabis consumption.

#1. The Dosing Dilemma

If you operate an establishment that serves alcohol, there are several rules of thumb followed by most bartenders. Behind the bustling fun of an evening out, a bartender often needs to keep track of their patrons to maintain a safe environment. Behind that friendly smile, a server is often considering:

• How many drinks have my customers had?
• Are they maintaining composure?
• Do they show signs of intoxication? How severe?
• Are they treating employees and other patrons with respect and civility?

Generally speaking, a healthy human liver can metabolize 1 drink (or 1 ounce of liquor) in an hour. This isn’t true for everyone, but it’s a standardized concept that’s widely accepted. Unfortunately, such a standard doesn’t exist for cannabis users and the intoxicating effects vary wildly from person to person. Before opening a consumption lounge, developing solid procedures and guidelines for dosing should be at the top of your list.

Dosing Is a Moving Target

Much like consuming alcohol, one’s tolerance, the product’s bioavailability, and whether a meal was consumed beforehand impact the time it takes for an edible’s effects to set in. Learning to dose responsibly may be tricky at first. However, having an experienced budtender on staff along with some companion reading material paired with your menu will go a long way in helping customers feel educated and safe.

Following best practices currently established by alcohol-serving bars can help mitigate safety issues. Don’t be taken off guard by a blitzed consumer. Anticipate the occasional patron that displays unpleasant effects and have a plan in place for you and your staff when such a scenario arises — because it will.

It’s also important to understand the varying degrees of intoxication based on whether the cannabinoids are consumed orally or inhaled. Offering a table or pod to friends consuming both edibles and inhalants will result in a wide range of effects, person to person. Key factors to consider include how long it takes for a product to take effect and the duration of the experience. Inhalants and edibles have vastly different profiles on both accounts. Understanding this will be key in planning your business flow as we will discuss below.

#2. Design a Safe, Functional Space

Some creative thinking is necessary to ensure you avoid structural layout issues and have adequate room for customers to enjoy this multi-faceted experience. Spaces needed in your lounge will likely include:

• Consumption tables where customers may enjoy an edible (or drinkable), as well as food and beverages. If you choose to allow smoking at your consumption tables, be sure to plan for smoking and non-smoking sections.
• Enclosed pods or rooms to enjoy a joint, pre-roll, or other smokable forms of cannabis. These enclosed spaces can also provide a social area where groups can fire up a multi-person hookah without the worry of their cloud disturbing the consumption tables.
• A social lounge where patrons can “park” while enjoying their experience.

Part of designing your consumption lounge will be planning the various experiences you want to offer. These may include simple joints, exotic options such as concentrates, and infused food and beverages.

Exotic Consumption

Having “flower” on your menu makes sense, however, even the prettiest, hand-trimmed buds may not provide enough allure for today’s cannabis-savvy customers. In many states, adult users can legally obtain their own, high-quality flower, and your clientele may be looking for a new and unique experience when they walk in the door.

One way to differentiate your social consumption lounge is to offer “exotic” options that require more than just some ground flower and rolling paper. Most cannabis customers have heard the words, “budder” and “wax” but don’t know how to consume them. As a result, many of your patrons likely haven’t tried concentrates or extracts. Great examples of “exotic consumption” options include:

• Dabs and dabbing rigs for shatter, budder, wax, and crumble
• Twax or infused joints/bowls
• Craft edibles, including drinkables

When planning your menu offerings, keep in mind that many customers are looking for a new experience. Exotic consumption options provide an experience unique to many cannabis users that are simply accustomed to toking. Offering consumers a safe way to try new methods of consumption can provide a therapeutic adventure that will result in repeat business, as well as giving your patrons a story to take home to their friends.

Consider Your Products and Menu Packages

If you’re partnering with local dispensaries and farmers, your menu is likely to change from week to week or even daily. Using a digital menu will allow your customers to easily navigate your rolling inventory of flower, edibles, and extracts.

In the spirit of operating a profitable social consumption lounge, we can take a page from family style dining. Here are a few suggestions that can help ensure profitability table after table:

1. Decide on the types of packages you want to offer. You might offer basic packages (such as a preroll or a baked edible), premium packages (that may include extracts and infused beverages), and large-group packages that span your entire menu and include additional time at their table.
2. Determine the cost of each package. You’ll need to add up the cost of all the items that are included, as well as any additional labor costs or overhead expenses.
3. Monitor the performance of your menu packages and make adjustments as needed. Talk to your patrons and gather feedback to make the menu offerings appealing to keep your customers coming back.

Offering consumers a safe way to participate in exotic consumption methods provides an experience that will result in repeat business, boost your brand, and facilitate positive word of mouth.

#3. Operating Hours and Turning Tables

Determining when your lounge or cafe will be open for business includes using some tried and true strategies from the food service industry, along with a few unique challenges cannabis lounges will need to consider. Let’s cover a few basic factors any bar or restaurant needs to keep in mind, as well as consumption lounge entrepreneurs.

Considerations for Determining Operating Hours

1. Customer demand: Observe the amount of foot traffic and sales throughout different hours of the day. Keep your social lounge open during your busiest times. Then, leverage the slower periods to clean customer-facing reusable consumption equipment, stocking, and prep work. And don’t forget to give your budtenders a break. Remember, a consumption lounge has all the operational challenges present in any foodservice operation plus all the cannabis-specific hurdles it will need to successfully clear to be a profitable business. It will be especially critical to make these determinations early on to help adjust how long your customers can stay at a table before needing to retire to the lounge.
2. Staff availability: Ensure that you have enough staff to keep your consumption tables and lounge running smoothly. Consider hiring part-time or temporary staff during peak hours. You’re also going to need budtenders to both educate and offer recommendations, as well as assist customers that may become concerned while experiencing a raging high. Your hours of operation will be partially dependent on budtender availability.
3. Location: Consider the location of your lounge and the demographics of the area. If your establishment is in an urban area or is surrounded by businesses, staying open longer and later may prove profitable. Rural businesses may not be able to solicit enough foot traffic to justify longer hours — until your brand becomes a hot spot.
4. Cost: Consider the cost of keeping your consumption lounge open for extended periods, including staff expenses, utilities, and maintenance costs. Ensure that your potential revenue justifies the cost of keeping your business open for longer.

Table Turnover

In the restaurant world, “table turn” (i.e., how many times you can re-use the same space during a particular shift), is a key metric that gets monitored. The average time it takes to seat a party, wait on them, serve them, cash them out, and then reset the table can be reasonably estimated and planned for. Unfortunately, things might be a tad more complicated in the cannabis space.

For high-traffic locations, accepting reservations can help improve operational efficiency. Thankfully, planning on how to take reservations goes hand in hand with figuring out how long it will take to turn a table and allow customers to remain in the lounge. Once you’ve properly planned for turning tables, adding the option to take reservations should be relatively simple.

It’s hard to prepare for everything, however, knowing how long a table may be occupied and how long guests hang out in the lounge will be critical in mastering your business’s customer turnover.

#4. Plan for an Air-Tight, Commercial HVAC

Next, let’s address the elephant in the room. How do you prevent your consumption lounge from becoming a giant hot box? Not all of your patrons will want to get a second-hand high when visiting your establishment. In addition to designing an area for consumption tables and pods for smoking, having a custom HVAC in place will be next on your list. Designing or modifying a commercial HVAC system can be quite an investment, but an important one. Things to consider include:

1. Think about the size of your lounge: The first step is to determine the size of the space that needs to be cooled, heated, sterilized, and filtered. This will play a large part in the size of the HVAC system.
2. Consider the layout of the space: It’s important to consider the layout of your consumption lounge and how the HVAC system will be installed to accommodate your customers. Ensuring everyone’s experience is a positive one will require advanced ventilation and filtration.
3. Odor can be an issue. Be sure to have an HVAC system that can scrub the odor associated with the terpenes which result in potent aromas both inside and outside your establishment. In many states, this is a requirement, not a recommendation.

Keeping the air clean and scrubbed of cannabinoids and terpenes will not only fulfill the criteria required for a commercial consumption lounge, but it will also make for a better experience for your patrons.

#5. Security and “No-Tow” Zones

A comprehensive review of the security procedures, staffing, and equipment needed to run a successful consumption lounge is beyond the scope of this article. Suffice it to say that you will need to thoughtfully review dozens if not hundreds of decisions related to your facility’s security. We are going to highlight a few key points to emphasize the need to map out your security strategy from the moment your customers arrive until they safely and securely depart.

Security Staffing & Policies for Cannabis Consumption Lounges

Bars have a rich history of bouncers as a means of roughneck security. With all the challenges imposed by serving cannabis on-site, a more formal security policy is going to be needed. And that all starts with hiring the right people and clearly laying out expectations. You are going to want to craft policies and procedures to answer questions such as:

1. What should you do if a customer has over-indulged?
2. How do you handle rowdy customers or parties? For example, what do you do if a group starts smoking cannabis in a zone not designated for combustible cannabis consumption?
3. How are you securing the delivery, receipt, and storage of cannabis products into your consumption lounge facility?
4. Do you have a space to securely isolate an individual away from your other customers?

Next to your budtenders, your security staff can play a huge role in ensuring that all your patrons have an enjoyable experience. By quickly identifying and dealing with various issues, your security staff will have to act as part concierge, part lifeguard, and part sheriff. Clearly define your escalation policies and think through how to best handle the unfortunately routine situations you should anticipate as the proprietor of a cannabis consumption lounge.

The vibe of your security team is essential. If your team is too aggressive, you may find your patrons reacting poorly even if they are only witnesses to your security staff’s interactions with other patrons. If your staff is too meek, they may let problems rise to a level where other guests become negatively affected. Striking the right balance of fair, fun, and firm will be essential.

Cameras, Cameras Everywhere

Many new operators in the cannabis space are surprised by the requirement to have a plethora of cameras on site. Your security feeds should completely cover your entire cannabis operation with no “dead zones.” For even small spaces, this can be a challenging requirement. While many restaurants and bars employ video surveillance, they have no requirement to retain video for any period of time and they aren’t required to cover every area with camera footage. They may only focus on key areas like the cash wrap or the entrances and exits.

Not so with most cannabis facilities. The information technology infrastructure required to appropriately fulfill most state regulations can be daunting for even experienced operators. And video retention requirements can mean there are petabytes of video that need to be securely backed up, readily accessible in case of problems, and potentially also stored off-site. This is definitely an area where you will be best advised to seek outside consultation.

You’re Going to Need a Bigger Vault.

First, if your lounge is part of or in partnership with a dispensary, you need to have secured, camera-covered storage. Whether you’re storing product or cash, it will be critical to ensure you have enough high-security storage. When planning for secure storage, remember to keep in mind:

1. Inventory needs to be secured. Your cannabis product is required to be secured properly in clearly labeled containers or bins. This is in part, to prevent customers or unauthorized persons from accessing your product.
2. At least in the foreseeable future, social lounges offering various forms of cannabis product deal largely in cash. This is primarily due to banking restrictions driven by the plant’s federal categorization as a Schedule 1 drug. Storing large amounts of cash will require bank-caliber storage and security.
3. Consider payment alternatives such as cannabis-friendly debit solutions. You may also look to have one or more well-stocked ATMs on-site if you are required to transact in cash.
4. Although not often top of mind, you’ll need proper security for your establishment’s data. This is needed to keep your lounge compliant with state and federal regulations.

Ensuring a high level of security and storage may seem obvious, but it’s highly necessary and can’t be overlooked when planning and designing your social consumption lounge.

Don’t Tow Me, Bro

In addition to having additional security staff on location, establishing a “no-tow” zone with local authorities will help ensure your couch-locked customers have the peace of mind that their vehicle won’t be towed if left in the lot for an extended period of time.

No-tow zones are designed to protect vehicle owners from having their vehicles towed without warning or justification. This can be an inconvenience and a financial burden to customers and business owners. One of the downsides is when a parking lot is publicly known to be a no-tow zone, it places vehicles at higher risk of being broken into or vandalized. And being parked at a cannabis consumption lounge could draw additional attention to the possible contents of the vehicles. Again, additional security is needed to ensure a safe location for your customers.

#6. Additional Equipment Considerations

Building or retrofitting a bar or restaurant is standard fare in the foodservice industry. Although not easy by any stretch, the necessary equipment, licenses, and processes are fairly well known.

When setting up a consumption lounge, most of the typical foodservice elements are still required. However, there may be unique equipment required outside the typical restaurant design. Ultrasonic washers can be helpful in cleaning cannabis extract and resin from reusable consumption equipment. The tools to consume exotic cannabis products will need to be available to rent to customers, along with a skilled budtender to advise new customers on how they are used.

The additional equipment equates to additional expenses. You’ll also need to be sure you have experienced staff to teach, train, and operate the equipment and tools used for standard and exotic consumption.

#7. Design and Build vs. Retro-Fitting Your Consumption Lounge

Opening a bar at a location previously used to operate a foodservice business can often be a “plug-and-play” venture. However, when considering a consumption lounge, the requirements listed above can become increasingly complicated to execute. Although a bit more of an investment upfront, a properly designed social lounge can save your business money. It can also prevent a plethora of headaches resulting from taking shortcuts and short-term savings.

If you’ve just acquired a license for a consumption lounge, or better yet, are just looking into getting one, reaching out to our design and build team is easy, convenient, and will give you peace of mind that you’re starting out on the right foot from the beginning. A quick conversation before you start can save you a tremendous amount of time and prevent costly mistakes.

Profitability Starts With Preparation

The idea of a cannabis consumption lounge sounds like the holy grail of social acceptance. We won’t be surprised to see medicinal and adult-use consumption lounges become as commonplace as going out for a beer. And they also provide a safe and legal space for people to come together and connect over a shared love of cannabis. This can be especially important for people who might not have a social circle that supports the use of this medicinal plant.

Still, as we’ve discussed, standing up a consumption lounge isn’t the same as opening a cafe or bar. And there are social concerns such as increased marijuana usage by young adults and the potential for them to become targets for law enforcement. Cannabis consumption lounges are coming and through careful regulation and education, we will finally see this budding business model come to fruition.