Many places in the US only allow cannabis use in private homes, and even then, consumption may be prohibited by owners of apartment complexes and other rental properties. While some states may allow the sale of cannabis legally, there are a small number of public places where people can go and use purchased products legally.

Cannabis consumption lounges are places where people can go to socialize and consume cannabis. These establishments, depending on the type, offer cannabis products such as flowers, joints, and edibles for those who are of legal age to purchase and use on the premises separately from sales areas or as retail lounges that allow on-site cannabis consumption.

How Much Does it Cost to Open a Cannabis Consumption Lounge?

While Alaska first passed cannabis lounge legislation in 2018, the nation’s first social lounge, Original Cannabis Café, opened in California in 2019. Most states are just beginning to embrace this type of cannabis business, adopting their own rules for social cannabis consumption.

Currently, cannabis consumption lounges are legal in 13 states, the District of Columbia and the U.S. Virgin Islands, that have legalized social cannabis consumption on some level, – Alaska, California, Colorado, DC, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico and New York.

Alaska

In December 2018, the Alaska Marijuana Control Board adopted the first set of statewide regulations to allow and regulate cannabis use locally. Licensed retailers may apply for an endorsement to allow on-site consumption. In January 2020, two Alaskan businesses became the first cannabis dispensaries in the country to receive state approval to offer on-site cannabis consumption.

California

Following a 2018 reform, “a local jurisdiction may allow for the smoking, vaporizing, and ingesting of cannabis or cannabis products on the premises of a retailer or microbusiness” (BPC § 26200(g)). In 2022, the number of open lounges in California was limited to a dozen, with the majority concentrated in San Francisco and Oakland. More recently, a growing number of municipalities have issued permits to operators to open cannabis consumption locations, including in Southern California and the Central Valley. Of the dozen cannabis lounges currently open, this number is projected to rise to twenty or thirty over the next few years.

On September 30, 2024, California’s Governor Gavin Newsom signed Assembly Bill 1775 that allows licensed cannabis retailers and microbusinesses to serve non-cannabis hot food and beverages in the same space where on-site consumption of cannabis is allowed. The beverages sold must, however, be non-alcoholic. Licensed retailers and microbusinesses will also be allowed to host and sell tickets to live music events and other performances on their premises. The law goes into effect on January 1, 2025.

Colorado

House Bill 19-1230, passed by the Colorado Legislature and signed into law by the State Governor in 2019, requires the Marijuana Enforcement Division to license cannabis hospitality and sales businesses. As of January 1, 2020, local jurisdictions in Colorado can opt-in to the state’s cannabis hospitality business license regime.

In November 2021, Denver passed an ordinance creating licenses for cannabis hospitality establishments. No alcohol or food may be sold and no one under 21 years old may enter. The first licenses were granted in March 2022.

In 2021 the Denver city council enacted a bill legalizing what is now known as “mobile hospitality unit” licenses. As of June 2023, three companies have applied for the city’s new cannabis mobile hospitality license that allows for consumption of cannabis by adult patrons (21+) within a mobile licensed premises.

District of Columbia

Medical Cannabis Safe Use Treatment Facility Endorsement permits the on-premises consumption of medical cannabis and medical cannabis products purchased on-site at the retailer within designated areas. Licensed Retailers must submit a Medical Cannabis Endorsement Application to add the permission.

Illinois

The Cannabis Regulation and Tax Act permits local governments to authorize BYOC (bring your own cannabis) consumption lounges. In 2021, the Luna Lounge in Sesser became the first legal cannabis consumption lounge operating in the state. In April 2022, the first Chicago-area cannabis consumption lounge opened in Lake County. In 2023, the village of Wheeling has granted permission for a cannabis dispensary to open the first-ever recreational consumption lounge in Cook County.

Maryland

House Bill 0566, which Maryland Gov. Wes Moore signed into law in May 2023 establishing a recreational cannabis program, allowed consumers to bring their own cannabis and consume it at “designated-use” establishments, but restricted the sale of cannabis products at these locations. In March 2023, Maryland’s first cannabis lounge opened in Burtonsville. In April 2025, the Governor signed SB 215, which allows consumption lounges to dispense single-serving edibles or cannabis beverages to patrons for on-premises consumption only. The law also stipulates that cannabis can be “consumed, but not smoked indoors” in the lounges.

Massachusetts

Even though social consumption establishment licenses were part of the adult-use cannabis measure that Massachusetts voters approved in 2016, their implementation was delayed and only on December 11, 2025, the Cannabis Control Commission approved regulations for social consumption licenses. It is expected that the new regulations will take effect January 2, 2026. Once the regulations are promulgated by the Secretary of the Commonwealth, the CCC will begin the implementation process which includes publishing license applications for the three new licenses. Three social consumption license types are created:

• Supplemental – for existing cannabis establishments to add on-site consumption to their operations.
• Hospitality – for new or existing non-cannabis businesses to host consumption activities in partnership with qualifying cannabis establishments.
• Event organizer – for qualifying cannabis establishments to organize and host temporary consumption events.

Michigan

According to the rules, “a designated consumption establishment is a commercial space, licensed by the MRA, that authorizes adults to consume cannabis products on location”. Cannabis products cannot be sold on site, but can be ordered from nearby dispensaries and guests are allowed to bring their own products. Michigan’s first recreational cannabis lounge opened in March 2022 and as of April 2023, there were three licensed consumption lounges in the state.

Minnesota

A Microbusiness license in Minnesota allows on-site consumption of edible cannabis products on a portion of its premises.

Missouri

The current DHSS rules allow an owner or entity in control of a public place to make a non-public place by providing one or more enclosed private spaces where a qualifying patient may consume medical marijuana. Cannabis products cannot be sold on-site but may be ordered from nearby dispensaries, and guests are allowed to bring their own products.

Nevada

In June 2021, the Governor of Nevada signed Assembly Bill 341, which authorized the Nevada Cannabis Compliance Board (CCB) to license and regulate consumption lounges statewide, always subject to local approval. The State plans to issue up to 65 lounge licenses (40-45 for lounges attached to existing dispensaries, 20 for independent lounges), of which 10 are reserved for social equity applicants.

20 completed retail cannabis consumption lounge applications submitted to the CCB in October 2022 and 10 independent cannabis consumption lounge social equity applicants were selected for a prospective license during the Random Number Selection Event in November 2022. In June 2023, Nevada regulators approved first three cannabis consumption lounges, including two in the Las Vegas Valley.

New Jersey

As part of the recently approved rules, opening a cannabis lounge requires both the New Jersey Cannabis Regulatory Commission and municipal approval. A consumption lounge must be located on the same property as a retail dispensary and the sale of food and beverages is prohibited.

Jersey City and Atlantic City have already approved an ordinance allowing for a consumption lounge. The first lounge is expected to open this year.

New Mexico

The Cannabis Regulation Act allows consumption lounges and further specifies that “local jurisdictions may allow for the operation of cannabis consumption areas provided specified conditions are met by the cannabis consumption area(s) a local jurisdiction allows”. As of July 2023, the state’s Regulation and Licensing Department has approved almost 20 consumption lounges around the state, although not all of them have opened.

New York

As part of its cannabis legalization agenda, the state of New York also legalized cannabis lounges. Cannabis lounges, under the state regulations, would only be able to open in individual municipalities that have opted into having them within their borders.

The U.S. Virgin Islands

There are three permits in Virgin Islands: Adult-use lounge permit / On-site cannabis use permit / Cannabis temporary use permit.

“A Person in possession of a valid Adult Use Lounge Permit; Cannabis Use Permit or Temporary Cannabis Use Permit is authorized to undertake and allow the restricted consumption of Cannabis Products by individuals twenty-one years of age or older in an on-site Designated Consumption Area licensed and authorized by the OCR by individuals. There shall be no sale of Cannabis, Cannabis Products, or Cannabis accessories in or within the Adult Use Lounge, except that an Adult Use Lounge may be owned and operated by a Cannabis Dispensary Licensee.”

Interactive Map

Should you have any questions, please do not hesitate to contact us. 

Cannabis Lounge + Retail Business Plan Sample (Massachusetts)

We also offer a Cannabis Vertically Integrated Financial Model with Lounge and Events.

Hemp/CBD Products Retail and Lounge Business Plan Templates are available at hempcbdbusinessplans.com.