Dispensary CEO: Las Vegas marijuana consumption lounges won’t initially be profitable

Chris Donovan / The New York Times

An employee at a smoking lounge in Toronto is shown exhaling cannabis vapor, Oct. 6, 2018.

Don’t expect Las Vegas marijuana consumption lounges to be cash cows for their owners — at least initially.

That was part of the message delivered by Ben Sillitoe, co-founder of Oasis Cannabis, during a Las Vegas Medical Marijuana Association luncheon on Thursday.

“We lost a lot of money for a really, really long time,” Sillitoe said. “You don’t just get to open a cannabis business and make a ton of money. I promise you that lounges will be the same way.”

The Las Vegas City Council last month approved an amendment to allow for lounges to operate by existing dispensary owners. Those without a state license to sell cannabis would be allowed to seek permits for off-site lounges starting in 2020.

Because of the city’s somewhat lengthy permitting process, it’s expected that the first lounge won’t be open until sometime this fall at the earliest.

The city did, however, receive its first special-use permit application request for a lounge on Thursday, according to a city spokesman. That was from Nevada Wellness Center on South Valley View Boulevard.

“(Lounges) are a step in the right direction,” Sillitoe said. “At some point in time, you won’t need to have a cannabis consumption lounge to be able to consume cannabis, but this is the first step and it’s a hugely important first step.”

Taping into revenue sources through lounges could be tricky for dispensary owners. Marijuana-related items can be sold at lounges, but not marijuana products.

The city’s amendment doesn’t allow for alcohol at lounges, something that was a sticking point for law enforcement. If law enforcement finds alcohol at a lounge, the space could be closed for 10 days.

“It would be nice to have beer and wine (at lounges) at least as a minimum,” Sillitoe said. “It would be more fun (to have beer and wine), but this is part of that mentality that we have to start slow. We have to gain social acceptance and alleviate the fears that people have, just like we did with cannabis legalization. We’ll be able to do more things down the road.”

City Councilman Bob Coffin, the sponsor of the new ordinance and big proponent of the lounges, said it was important that current dispensary owners be the first ones allowed to open lounges.

“These are people who are vetted and who have gone through the process of having their backgrounds checked,” Coffin said. “I think we’re going to have a good lounge industry.”

Nevada, of course, legalized recreational marijuana in 2016, but the law only allowed people to smoke at private residences.

“Taverns should allow for cannabis consumption. I think we’re on our way to that type of social acceptance," Sillitoe said. "One day, maybe cannabis will even be a little bit more socially accepted than alcohol because it has been proven to be a healthier alternative for our society.”

While Coffin said he believes the perceived problems with drivers operating vehicles while high on marijuana are often exaggerated, Sillitoe conceded that there are challenges to regulating the cannabis industry.

“We need to limit lounges to begin with, so we can understand how hard it is to regulate them, what the impact on society will be and how to monetize them,” Sillitoe said. “Once that’s been done well, and you open it up to other people, you will see social consumption become normal. Right now, it’s a little controversial.”

In 2018, a company called CLS Holdings USA acquired Oasis Cannabis, though Sillitoe remained with Oasis following the transaction. Oasis Cannabis was founded in 2014.