Nevada Marijuana Regulators Announce Lotteries For State’s First Consumption Lounge Licenses

Nevada marijuana regulators announced on Wednesday that they will be holding lotteries at the end of the month to select 20 independent cannabis consumption lounge licensees, half of which will be reserved for social equity applicants.

The state Cannabis Compliance Board (CCB) said it will conduct “two drawings via a random number selector” on November 30 to determine which businesses will be the first to receive approval for independent consumption lounge licenses.

“The CCB anticipates the first lounges to be licensed and able to open during the first half of 2023,” a notice says.

Regulators said earlier this month that they received about 100 applications for the new license type during a 10-day application window in October.

These developments come more than a year after Gov. Steve Sisolak (D) signed a bill from Assemblyman Steve Yeager (D) legalizing consumption lounges.

Current retailers are able to apply for a separate license category to build lounges into their existing operations, and they are not subject to a competitive selection process. The lotteries are for independent lounge licenses for businesses that want to enter into a contract with a retailer to purchase and prepare ready-to-consume marijuana products for resale at brand new facilities.

CCB approved regulations for marijuana lounges over the summer. The law could also allow businesses that couple cannabis with yoga, serve infused food, offer THC-aided massage therapy or incorporate marijuana in other ways.

The governor touted Nevada’s lounge law in a 4/20 op-ed for Marijuana Moment this year, writing: “The idea isn’t new, but no one is doing it like we are in Nevada.”

“While most of the consumption lounges in other states don’t offer food, beverages or other entertainment options,” he said, “Nevada’s lounges will be a one-stop entertainment shop to create jobs, grow the industry and boost our economy.”

Under the board-approved rules, consumption must be hidden from public view. Smoking and vaping must take place in a separate room of the lounge or be prohibited entirely. Single-use or ready-to-consume cannabis products can’t be brought off-site. And businesses must provide water to every guest free of charge.

The lounges will also be cannabis-only. No alcohol, tobacco or nicotine products can be sold.

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Other safety-related regulations require lounges to establish plans to limit cannabis-impaired driving and minimize workers’ exposure to secondhand smoke. Guns are prohibited, surveillance is required and procedures must be in place to reduce and respond to potentially violent or harassing behavior.

Single-use cannabis products are limited to no more than 3.5 grams of usable cannabis under the regulations, with “extracted inhalable cannabis products” (such as vaping or dabbing products) limited to 300 milligrams of THC. All single-use products with more than 1 gram of usable cannabis, and all extracted inhalables, must carry written potency warnings.

Individual servings of ready-to-consume edible products are capped at 10 milligrams THC, a fairly standard amount in states that have legalized cannabis for adult use.

Topicals, meanwhile, are limited to 400 milligrams of THC. Transdermal patches and all other cannabis products can have no more than 100 milligrams THC and must carry a written warning if they have more than 10 milligrams.

Marijuana sales totaled just under $1 billion in Nevada in the 2022 Fiscal Year, generating more than $152 million in cannabis tax revenue, officials reported this month. Most of the proceeds are going toward funding schools.

The hope is that the cannabis lounge option will further stimulate sales when those services launch.

Sisolak has committed to promoting equity and justice in the state’s marijuana law. In 2020, for example, he pardoned more than 15,000 people who were convicted for low-level cannabis possession. That action was made possible under a resolution the governor introduced that was unanimously approved by the state’s Board of Pardons Commissioners.

Meanwhile, a Nevada judge ruled last month that the Board of Pharmacy’s classification of marijuana as a Schedule I substance violates the state Constitution and that the agency “exceeded its authority” by making that designation.

The ACLU of Nevada filed a lawsuit earlier this year, alleging that despite voter-approved legalization police have continued to make marijuana-related arrests because the Board of Pharmacy has refused to remove cannabis from its controlled substances list.

That has effectively created a legal “loophole” that the civil rights group says conflicts with long-standing constitutional protections for medical marijuana patients.

Separately, in August 2021, a former Las Vegas police officer who sued after facing termination for testing positive for marijuana scored a significant procedural victory, with a district judge denying the department’s request for summary judgement and agreeing that state statute protects employees’ lawful use of cannabis outside of work.