Leonda Addison-Reed founded cannabis company Royal Tree TLC last October. She applied for a business license and, after Nevada regulators conducted a random number selection, received a provisional license for an independent consumption lounge at the end of November.

Addison-Reed says she’s “nervous and excited” to finally get things in motion.

“It has taken a lot to get to this point. … My dad previously was convicted of marijuana charges, which affected me adversely, not having him in the home. … He got caught in a cycle, and that affected us a lot,” she says. “My father passed away, [so] for me, this is his legacy. … I’m trying to turn something that was adverse for our family into a business that my kids can take over sometime.”

The 39-year-old mother of three says she hopes to open a consumption lounge that’s welcoming to both locals and tourists, “with a Cheers vibe, where we kind of know you and know a little bit about you.” Poetry and spoken word nights, DJ sets and brunch events are possibilities—depending what kind of space and financing she’s able to secure.

Since 2021, cannabis lounge entrepreneurs have been clearing regulatory checkpoints, inching closer to the finish line. At the same time, the community at large has been awaiting public options for consuming cannabis, which Nevadans in 2016 voted to legalize.

Dispensaries have been open since July 2017, and tourists have certainly been enjoying adult-use cannabis. But it has been illegal to consume cannabis in Strip hotel rooms or any public place.

Of the 40 provisional consumption lounge licenses Nevada regulators issued in November 2022, 37 retail and independent licensees opted to open dispensaries in unincorporated Clark County or the City of Las Vegas. Henderson, North Las Vegas, Boulder City and Mesquite, meanwhile, opted out of consumption lounges entirely.

As required by a 2021 law, half of the state’s independent licenses went to “social equity applicants,” meaning they or a close family member have been convicted of and adversely affected by a cannabis-related offense.

It’s been a long road for consumption lounges, and there could still be roadblocks ahead.

Independent licensees—that is, lounge businesses not attached to a cannabis dispensary—must secure real estate, submit a business and security plan and pass an initial “suitability investigation.” Once all that checks out, lounges have one year to open their doors, per state regulations.

Location, location, location

The Las Vegas City Council approved its regulations on March 1, with an additional requirement for 1,000 feet of separation between lounges. That drew pushback from licensees who say it makes finding prospective locations for their businesses difficult.

“When the city was researching the consumption lounge ordinance, staff looked at best practices in other cities and saw that most had a 1,000- to 5,000-foot distance separation for dispensaries,” Jace Radke, a spokesman for the City of Las Vegas, said via email. “A 1,000-foot separation was adopted in the City of Las Vegas ordinance for consumption lounges, but … there is a waiver process. Those wanting to have lounges closer together can take their request to the City Council.”

Addison-Reed is one of 10 independent licensees looking to open a consumption lounge in the city. Five retail licensees are also looking to open in the jurisdiction.

The challenge, she points out, is that investors seem more interested in the tourist corridors around the Strip and Downtown. “A lot of investors may not be Nevada residents … so they don’t know much about the outskirts in our community. They’re geared toward being very central, or close to the Strip.

“If waivers aren’t granted allowing multiple venues to be near the Arts District or the Strip, we’re going to have concerns,” she adds.

The city’s regulations additionally prohibit waivers within the Symphony Park district, the Las Vegas Medical District and the “resort casino district.”

Nevada and Clark County consumption lounge regulations don’t include a 1,000-foot separation between lounges. State law, however, requires lounges to be at least 1,500 feet away from establishments that hold nonrestricted gaming licenses.

Ventilation requirements

Retail licensees—lounge businesses attached to existing dispensaries—might have had a head start toward securing real estate. But that doesn’t mean their path is completely clear, explains Brandon Wiegand, chief operating officer for Thrive Cannabis Marketplace.

Wiegand says Thrive hopes to open a consumption lounge at one of its four Las Vegas dispensaries this year. It has set aside about 2,500 square feet for the project, and has plans for outdoor consumption under Clark County regulations, which require an odor mitigation plan.

“We’ve got a little bit of a leg up, because we already built out our lounge, allocated a space and finished that at our Sammy Davis Jr. [Drive] location,” he says. “We really just need to finish off fixtures, furnishing and equipment.”

But, he adds, that includes complying with ventilation requirements. “And that’s probably the most concerning part,” he says.

State regulations, which were approved by the Cannabis Compliance Board last summer, require “a separate ventilation system within any designated smoking room, capable of 30 complete air changes per hour at a minimum that must be directly exhausted to the outdoors; [along with] a separate system within the rest of the cannabis consumption lounge capable of 20 complete air changes per hour at a minimum.”

The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) sets rates for “air changes,” or how much outdoor air is brought into a room per hour. The recommended rates, which vary depending on occupancy and the type and size of facility, are lower for homes, offices and shopping malls than for schools, gyms and restaurants. In indoor smoking settings like cigar lounges and casinos, the requirement typically lands around 25 air changes per hour, according to one industry expert.

Smoking lounges typically require higher ventilation rates, but Wiegand says Nevada’s cannabis standards seem “excessive” and could total more than $150,000 in installation costs to meet. He suggests that cigar lounges might provide a practical model for sufficient ventilation and odor control, without breaking entrepreneurs’ budgets.

“The bid we got back was extreme—well into six figures in order to provide HVAC for the space, [with] the way regulations are written,” Wiegand says. “I think, frankly, [Nevada] got it wrong. The air exchanges that are required [for cannabis] are far beyond even those for cigar lounges.”

Wiegand, who also serves as president of the Nevada Cannabis Association, which represents several dispensaries and cannabis establishments, adds that the Cannabis Compliance Board has demonstrated “a willingness and openness” to adjusting regulations, so long as they are “science-backed.”

In the past, some licensees have successfully petitioned for exceptions or adjustments to certain regulations—a process that requires public meetings and can take months, according to the compliance board, which sent the Weekly this statement: “The board acknowledges the need for continued review of the regulations and flexibility as the state rolls out this first of its kind program.”

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