Legally Grown- Episode 1: New Jersey’s Rocky Road to Cannabis Consumption Lounges Transcript - Norris McLaughlin, P.A., Attorneys at Law

Episode 1: New Jersey’s Rocky Road to Cannabis Consumption Lounges

Transcript: Ben Sheppard

Welcome to Norris McLaughlin’s Legally Grown, a limited podcast series where we weed through the topics of cannabis law in both New Jersey and Pennsylvania and other states as they come up. I’m your host Ben Shepard, Associate in the cannabis law group at Norris McLaughlin. This episode we’re going to be talking about New Jersey’s rocky road to cannabis consumption lounges.

So, we’re going to be talking about, uh, cannabis consumption lounges today in, New Jersey’s rocky road to starting this. So, I want to first start out by saying what the heck is a cannabis consumption lounge? Well, it’s in many ways, it’s almost like a bar for cannabis product. Probably what they would look like is our almost equivalent is a kind of the hookah lounges that we see all over the place.

So, it would essentially be something where you would have probably couches, you know, tables, almost like a bar you would have your equivalent would be instead of they’re called budtenders in the industry. And you would be served various cannabis products. New Jersey recently has edibles, so in theory, you could have edibles, joints, you know, all sorts of different things that you could smoke or ingest your cannabis in a social setting with your friends.

So, you don’t have to stay at home or anything like that. You can go out and have a good time. Now, interestingly enough, there’s quite a few states. We have about, I believe it’s the numbers now, 25 states that have legal recreational cannabis. About half of the states allow for cannabis consumption lounges. There’s Alaska, California, Nevada, Colorado, New Mexico, Illinois, Michigan, New York, Massachusetts, and now good old New Jersey. So, we’ve got 10 states that allow these consumption lounges and we just had an interesting update where the New Jersey campus regulatory commission has finalized its regulations for the consumption lounges.

All right. So now we’re all excited about the consumption lounges. Now we kind of got to see what’s going on here. So, what we have here is these regulations will permit adults. Age 21 and over to purchase and use cannabis products on-site in these lounges. That’s important that we mention that you have to purchase the product at the lounge itself.

So, there’s no such thing as BYOB for cannabis unless you’re a medical marijuana user. medical cannabis user recognized in New Jersey. So that’s one little caveat. So, you can do a BYO, guess it would be a BYOC, bring your own cannabis if you’re a medical register card holder.

Now I want to kind of unpack some of the restrictions that we have here. Other than that restriction, there’s quite a few other ones that we should be aware of. The lounges cannot sell food or alcohol. So personally, I don’t usually advise you shouldn’t mix your alcohol and your cannabis. But you’re not going to be able to do that. So, the lounge would not be able to do that.

Additionally, they can’t sell food as well. There seems to be a bit of a loophole that the customers can kind of order food. So, you could use Grubhub, you know, Door Dash, and you could have the food delivered. Interestingly enough, and this has been an issue in New Jersey, is that provision is pretty similar to some restrictions that were placed on New Jersey breweries and wineries and distilleries. That would have been about summer of 2022, which those restrictions were kind of rolled back against the sale of food. You know, perhaps I suppose you could say there might be some workarounds with like food trucks kind of camping out near the dispensary, but that’s really all I can really see. So that’s a bit of a problem.

Now, let’s kind of get into kind of the weeds of how exactly you would go about purchasing your consumption lounge license. First off, you have to be an existing cannabis business, so you got to have your dispensary permit already. You’re limited to one social use, they’re called social use licenses, and typically it’s for a micro business, that’s going to be $1,000 and a standard business is $5,000.

In particular, they’re focused on going for social equity applicants and diversity-owned businesses, which we’ve seen throughout the cannabis process lately. There’s been a much more focus. In the laws on creating more social equity, although there’s certainly, as we’ve discussed, the struggles related to that.

Now, naturally, the regulatory commissions anticipating that there’s going to be more tax revenue, economic benefits from the state, and it’s another way to incentivize cannabis tourism, as we say. So, what’s interestingly enough is New York is still, my understanding is still kind of finalizing it. They’ve said that they’re going to have these lounges, but really there’s no lounges in New York. So, there might be an incentive for New Yorkers to come over to New Jersey to enjoy these lounges. And additionally too, as we’ve discussed, Pennsylvania has still yet to legalize recreational campus. So certainly, you know, with Philadelphia bordering, New Jersey, the Lehigh Valley bordering New Jersey, you know, other major Pennsylvania areas, Stroudsburg, you know, even parts of Scranton being right next door, there’s going to be a lot of incentive for people to come over and use these lounges.

Now that’s the one thing that I do want to unpack here, though, is I think this is a good step in the right direction, but like anything, nothing in life is perfect. So, we, I think we should talk about Some of the concerns I have with the regulations and we should know about these regulations and we should really understand what’s going on there. And I say this because I think we want to make sure that these lounges are successful and I think there’s some things that we should, we should unpack here and we should understand them and we shouldn’t fight for these changes and reforms. Now, let’s start out with the first issue, the fact that you cannot sell food on premises, the fact that you couldn’t part explicitly partner with a food truck or you can’t, you know, hire a restaurant, you know, that’s a very standard thing that most people when they go out to a bar restaurant, you know, they expect to have some form of on premise food sales. Now that is concerning to me is that there is no such thing as food sales here, so it’s going to diminish the customer experience, limit the revenue, and it would potentially forbid new channels for local businesses to partner and be more introduced to customers.

One other important thing too is the regulations forbid. tipping for the budtenders. That’s incredibly concerning because oftentimes in the service industry, those individuals rely heavily on their tips. Sometimes they even make more than the tip wage, not all the time, but that’s going to be an issue with staffing quality. People are not necessarily going to want to stay if they don’t have the opportunity for tips. So why would we not want these people to supplement their income? It’s rather puzzling to me.

Next, I also think is, I understand the reason with the BYOC, bring your own cannabis for medical patients, but how exactly is that going to be enforced? Will there be, will you have to show the product at the door in your medical card? How will that be enforced? And also too, how will the budtenders prevent sharing? Could overconsumption occur? These are all things that we don’t really have in the regulations. And that’s something that unfortunately businesses are going to have to figure out because the government hasn’t stepped in here.

Now, the next thing I want to just say too, is we also should think about how we’re normalizing cannabis too with these regulations. It’s rather puzzling to me that we have to require the lounges be attached to a dispensary. That doesn’t seem to normalize cannabis use. I mean, after all, we don’t, we don’t require restaurants to be attached to a liquor store. We don’t require your bar to be attached to a brewery or anything like that. That’s rather strange.

Now, I want to just kind of close though is, this is a good step in the right direction. We should be happy that these consumption lounges are giving consumers more choice. We should be grateful to the New Jersey Canvas Regulatory Commission for pushing these things. That being said though, we need to be aware of some of the differences here. We need to be aware of some of the changes here. And we also need to be familiar with kind of the things that we can push for future reforms.

So that’s our entry to cannabis consumption lounges. I just want to kind of close out here is, this has been Norris McLaughlin’s Legally Grown, a limited podcast series where we weed through the topics of cannabis law. In New Jersey, Pennsylvania and beyond. I want to thank you, the listener, for being part of the conversation. Be sure to tune in next time for a brand-new episode. Also, please check out our blog, Legally Grown, where we try to keep you apprised with the most recent up-to-date developments in the cannabis industry, and if you’d like to learn more, please email me at legallygrown@norris-law. com. Thank you and have a good rest of your day.