With recreational cannabis use now legalized across many states, and consumption lounges following fast, does this signal a coming shift in consumer behavior?
Source: https://daily.sevenfifty.com/
August 31, 2022
At the back of the Rise dispensary in Mundelein, Illinois, about 45 minutes from downtown Chicago, is a new cannabis consumption lounge. Bar stools face shelves stocked with a plethora of smoking equipment in place of bottles, and on each of the tables in the casual seating area is an Art Deco-inspired ashtray. Over in the Smokeasy, an adjacent private event space, there are stylish booths and mid-century modern light fixtures. The two adjoining businesses function just like a bar with a speakeasy cocktail space on the side-but instead of drinks, guests commune over cannabis.
The lounge, which is operated by Green Thumb Industries, opened in celebration of 4/20 on April 20, 2022, and is the first in the Chicago area. While a traditional bar offers guests the opportunity to sip craft cocktails that they couldn’t make at home, Rise lounge offers the chance to test out state-of-the-art vaporizers, pipes, gravity hookahs, and other such smoking devices, as well as a vast array of cannabis strains from the attached Rise dispensary. Table service makes the whole experience a breeze for novices and regular consumers alike. Arguably, lounges like Rise offer a viable social alternative to the bar experience.
Nineteen states and Washington, D.C., have laws that permit recreational cannabis use. Colorado and Washington state were the first to legalize in 2012, and both now have established and flourishing industries, while states with new cannabis legalization laws, like New York, Virginia, and New Mexico, are just getting started. Though it’s still early days, alcohol industry professionals are questioning how this new cannabis landscape might impact on-premise alcohol sales in the future.
“Across the country, we’re seeing more Americans turning to cannabis for well-being and away from alcohol,” says Sara Stewart, the project specialist working on Green Thumb Industries’ lounge experience, which was modeled after the tableside hospitality that people expect from a bar or restaurant. “Offering an environment where people can consume safe, high-quality cannabis products certainly may impact alcohol and bar sales.”
The New Face of the Cannabis Lounge
Not all states with legalized recreational cannabis use yet have the framework in place for consumption lounges. However, in the states where lounges were licensed early, including Illinois, Alaska, California, Colorado, and Nevada, they have also been slow to open-hesitant, perhaps, to navigate this new frontier’s patchwork of policies and the associated costs. Those that have launched or are in the planning stages differ in design and service details, but many, notably, have honed their aesthetic and branding to appeal to a broader demographic.
In Alaska, Good Titrations, for example, located in a former Chili’s, looks like an upscale Western spot with wood-paneled walls and a bar transformed to serve coffee, snacks, prerolls, and edibles. The Artist Tree Studio Cannabis Lounge in West Hollywood, meanwhile, located above the eponymous dispensary, offers rotating art exhibits and live music in a bright, plant-filled space. Thrive Cannabis Marketplace is set to open a lounge later this year on the Las Vegas Strip, with a curated food and beverage program to target the tourist market. In Colorado, Tetra has a hip DIY aesthetic, while JAD’s Mile High Smoke looks more like a traditional bar, with big screens playing sports and comedy events, as well as a full cannabis menu.
More are on the way-the Patterson Inn hotel in Denver will have an attached consumption lounge, solving the designated driver dilemma. “The goal is to expand the amenities for guests who are staying here,” says Chris Chiari, the founder and CEO of The 420 Hotels and The Patterson Inn, about his hotel’s recently opened bar, 12 Spirits Tavern, and the soon-to-come consumption lounge. Though they’re all separate businesses, the three are complementary and also open to the public. Chiari says he hopes they become a destination for locals in the Capitol Hill neighborhood.
The upscale interior design, just like that in California’s Papa & Barkley Social or Nuwu in Las Vegas, is comparable to any high-end cocktail bar. The businesses also have impressive ventilation to do away with any smoke concerns and abide by regulations-Chiari notes that his lounge will have casino-grade air filters. Many tout their product transparency, too, with well-trained “budtenders” to help educate guests. These are casual socializing spaces, where you can also get a coffee, see a show, cowork, meet friends, or even have a spa treatment while enjoying a smoke. But getting high is no more the raison d’être of these lounges than getting drunk is at a cocktail bar.
While the number is still relatively low, momentum is growing. Other legal states have paved the way for lounges and are waiting for businesses to open. Michigan is expected to have its first lounge before the end of the year. New York, New Jersey, and Pennsylvania have created a legal framework for cannabis businesses to get licensed, and Maine lawmakers are set to reconsider lounge legalization in 2023. “The biggest hurdle that a lot of cannabis people share is a frustration with regulation,” says Chiari. “But I’ve had liquor and horse-racing licenses; the similarities with cannabis are there.”
A Changing Consumer Demographic
With legalization comes legitimization and a step away from stereotypes of cannabis leaf graphics and red eyes. This rebranding has helped to welcome in guests who may not have considered a trip to a lounge before. “We are connected to the Rise Mundelein dispensary, so many guests are cannabis customers looking to try new luxury devices before purchasing one for themselves,” says Stewart. “But we also see guests of every experience level who are interested in the lounge experience.”
According to a 2021 Gallup poll, 60 percent of adults in the United States report that they drink alcohol. That’s down from 65 percent of adults in 2019. The poll also found a difference in alcohol consumption among younger generations. While 70 percent of those 35 to 54 years old reported that they drink alcohol, only 60 percent of people aged 18 to 34 reported the same.
While alcohol consumption is decreasing, cannabis is doing the opposite. Another Gallup poll found that 49 percent of adults have used cannabis compared to 45 percent two years earlier. It appears in early studies that younger generations, the first to have widespread legal access to recreational cannabis as soon as they turned of age, have an even stronger preference for cannabis. A survey by the cannabis research firm New Frontier Data found that 69 percent of people aged 18 to 24 preferred cannabis over alcohol. Another survey from Technomic found that 38 percent of Gen Z would visit a cannabis lounge to consume, which is comparable to the 41 percent who said they would visit a bar for drinks, presaging a future world in which the two options coexist.
For Chad Michael George, the owner of Denver-based Proof Productions, a network of bartenders, event planners, designers, and consultants, and the treasurer of the Denver chapter of the United States Bartenders’ Guild, cannabis lounges don’t pose a real threat. “I think we will continue to see a small percentage of people, especially younger generations, that opt out of consuming alcohol, but I just don’t think those people are going to stop going out for dinner or socializing with friends,” he says. “Cannabis lounges will have a hard time replacing the social aspect of a bar, as I think people that do not partake will be hesitant to go to these establishments, even more so than a sober person would be hesitant to go to a bar or restaurant.”
Is Collaboration in the Cards?
While the bar and lounge share common ground in offering an inviting, aesthetically pleasing space for guests to responsibly consume psychotropic substances, further crossover is unlikely in the near future. Regardless of the state, cannabis sales and alcohol sales are likely to remain distinct. “There’s a hard separation between alcohol and THC at the moment, and I don’t expect that to change anytime soon,” says James K. Landau, an attorney who provides cannabis legal services in New York.
The current legal framework for recreational cannabis, including for lounges, varies state by state. Yet as people look toward the potential end of the federal cannabis prohibition, which has been in place since 1937, industry groups are advocating for cannabis and alcohol to exist on a level playing field-primarily by taxing cannabis in the same way alcohol is taxed, as laid out in a statement released by the Wine and Spirits Wholesalers of America (WSWA) in July. They wrote: “WSWA strongly believes that any cannabis legalization effort in Congress should be coupled with a robust and comprehensive federal regulatory structure that draws on long-established, successful federal laws and policies governing the U.S. alcohol industry.”
New regulations could bring changes for bar workers as well as lounge employees. One of the biggest impacts that cannabis may have on bars is from a legal standpoint, says Abraham Cohn, a lawyer with Cohn Legal. An emerging legal issue is “the extent to which bars need to worry about serving alcohol to customers who may already be ‘impaired’ from their prior-consumption of cannabis,” says Cohn. “Different states have different rules about the liability bars may or may not face when serving alcohol to obviously intoxicated customers (dram shop laws), but the question of what this liability means for cannabis intoxication is entirely uncertain.”
Dram shop laws hold individuals and establishments accountable for serving intoxicated people who then cause harm to others because they’re drunk. In theory, the equivalent of dram shop liability may apply to people who are served a drink while high and then cause injury or death to themselves or someone else after leaving. It is, in short, new legal territory.
The Broader Outlook
For some, the threat doesn’t come from cannabis lounges per se, but from the broader availability of another form of legal high. “Bar owners should not be threatened that they are going to lose customers because of cannabis consumption lounges’ existence,” says Brandon Dorsky, the CEO of the cannabis brand Fruit Slabs, which makes edibles in California. However, “bar owners should be generally concerned for their bottom line given the availability of legal cannabis and public cannabis consumption as an option. Legalized cannabis historically correlates with a reduction in alcohol related activity, including both sales and drunk-driving deaths.”
The novelty of cannabis lounges could be enough incentive to draw in people who grew up in the early 2000s and before, says Dorsky, but he expects that it could be short-lived, especially for people who aren’t already regular cannabis consumers. “While consumption lounges are a great option for tourists, people with children who cannot consume at home, and those wanting a novelty experience, they are still expensive relative to consuming outside of the lounge,” says Dorskey. “Being able to publicly consume cannabis without fear of retribution from the law is an exciting thought and something that may trigger someone to do it once, but not repetitively unless they love to consume cannabis.”
As cannabis becomes increasingly socially acceptable and more states legalize recreational use, the bar space and the lounge space will come to operate side by side. Cannabis legalization is in its nascency, and while there have been insufficient studies for anyone to authoritatively predict what outcome these changes will have on the bar industry yet, without doubt, much like the end of Prohibition laid the foundations for a seismic shift in consumer behavior, so too does this moment-even if it’s not for everyone.
“Regardless of whether or not you are a bar owner or cannabis consumer, the rise of cannabis consumption lounges and cannabis fueled experiences will certainly change the landscape of menu options on your nightlife menu for the better,” says Dorskey. However, he adds: “[It] will certainly influence the social lives of some-but not all.”
Nickolaus Hines is a journalist who writes about beer, spirits, food, and travel. He’s the food and drinks editor at Matador Network and has written about drinks for Liquor.com, Men’s Health, October, Hop Culture, Supercall, and VinePair.