Las Vegas Sun

July 22, 2019

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As Las Vegas concedes on marijuana lounges, dispensaries play waiting game

Sahara Wellness Lounge

Wade Vandervort

Cannabis art graces the lobby of the Sahara Wellness dispensary, Friday, July 5, 2019. The company is one of several whose plans to open marijuana consumption lounges in Las Vegas were stalled by legislative fiat.

Sahara Wellness Lounge

The Sahara Wellness Dispensary is seen here Friday, July 5, 2019. Launch slideshow »

Two months ago, former Clark County Commissioner Chris Giunchigliani warned that the city of Las Vegas might have overstepped its authority by crafting legislation to allow marijuana consumption lounges.

“My question still as a city resident is I don’t know where their authority comes from,” Giunchigliani said after the city council approved a consumption lounge ordinance May 1. “None of the other jurisdictions have moved forward because they need consumption law to occur.”

It appears that Giunchigliani was right.

In response to the passage of Assembly Bill 533 in June, Las Vegas has officially put on hold the process to open marijuana consumption lounges, sometimes referred to as marijuana social-use venues, spokesperson Jace Radke said. Las Vegas would have been the first city in Nevada — and one of the first nationally — to host consumption lounges.

AB533 creates the state’s Cannabis Compliance Board, a five-member body modeled after the Gaming Control Board that will regulate Nevada’s cannabis industry. To the surprise of many in the industry, an amendment to AB533 added May 28 and signed into law June 12 prohibits local governments from licensing businesses that permit marijuana consumption on their premises.

“Prior to that, there was language in there that basically allowed [lounges] across the entire state,” said John Mueller, CEO of Acres Cannabis off Sahara Avenue and Interstate 15.

The duties of the Cannabis Compliance Board have been laid out by the Cannabis Advisory Panel, on which Giunchigliani sits. Board members will be appointed by Gov. Steve Sisolak July 1 of next year, a representative from Sisolak’s office said.

AB533 stipulates that in addition to regulating, licensing and registering marijuana production and retail establishments, the Cannabis Compliance Board will be tasked with conducting a study on consumption lounges. Any recommendations regarding the allowance or regulation of consumption lounges will be submitted to lawmakers for review during the next legislative session scheduled to take place January-June 2021.

Four marijuana dispensaries, including Acres, had already started the process to open a consumption lounge in Las Vegas before the city’s recent ordinance was rendered null with the ratification of AB533. None had gotten far enough in the process to pay the $5,000 application fee as required by the city’s ordinance, Radke said.

“Once the law was put in place, they withdrew and are awaiting more direction from the state,” Radke wrote in an email.

Medical and recreational dispensary Sahara Wellness is one of the businesses that had scheduled a meeting with city officials about plans to open a lounge. Owner Brenda Gunsallus said she was disappointed the dispensary’s proposed lounge wouldn’t be permitted for at least another two years.

“The day that we went in [to City Hall] was the day that the news came out that the state had put it on hold. So, we were ready,” Gunsallus said.

Under the city’s ordinance, championed by former Councilman Bob Coffin and approved by a 4-1 vote, existing marijuana dispensaries would have been able to apply for a special-use permit to open a consumption lounge. In addition to paying the application fee, applicants would have needed to submit a security plan, a plan for training employees, and sanitation and odor control plans, among other requirements. The sale of alcohol and marijuana products would have been forbidden at the consumption lounges themselves.

Given these restrictions, Sahara wasn’t anticipating making a large profit from its lounge, Gunsallus said. Her vision was to establish a space catering to the dispensary’s many elderly customers using medical marijuana for the first time.

“This was just an add-on to [our] dispensary, so tourists have a place to consume and medical patients have a place to go where we can help them and educate them on how to consume,” she said.

It is illegal to smoke or ingest marijuana in hotels and public places in Nevada, including casinos, bars, restaurants and on the street. City councilors who voted for Las Vegas’ ordinance had cited a need to establish legal venues for tourists in particular to consume marijuana.

Leading up to the passage of Las Vegas’ ordinance, Acres allocated a 9,500-square-foot space next to its dispensary for its lounge, Mueller said. The space would have included restaurant services and a performance area for bands, DJs or even political fundraisers.

Until consumption lounges are permitted, Acres intends to open a similar event space there without marijuana consumption, Mueller said. Nonetheless, he is frustrated by lawmakers’ insistence on studying the potential impacts of lounges, given that none have opened yet in Nevada.

“We had a chance to be the gold standard, to lead the country in the most highly regulated market in the country,” Mueller said. “And now the language reads that we’re going to study something that we’re not allowed to do.”

Ben Sillitoe, owner and founder of Oasis Cannabis, said that while he would have liked to open a consumption lounge this year, he thinks the delay in their opening could help some dispensary owners “fine-tune their operations.” Oasis, which had also leased space next to its dispensary for a lounge, now plans to hold on to the space until consumption lounges are approved by the state.

“We’re remaining optimistic,” Sillitoe said. “It doesn’t really impact our current business whether we have one or not.”

If and when the state approves consumption lounges, Las Vegas will move forward with its ordinance, Radke said.

“The city of Las Vegas will comply with what lawmakers and the governor deem best," he said in a statement.