Licensed cannabis operators in New York are expressing their frustration over delays in opening pot lounges where customers can consume cannabis on-site. The holdup is due to regulatory inaction, as officials have yet to draft the necessary rules for these consumption sites.
The Marijuana Regulation and Taxation Act of 2021 legalized marijuana and permitted the creation of “consumption sites,” similar to cigar bars, where patrons can enjoy cannabis products. However, four years later, pot-shop owners are still unable to apply for a license for these lounges due to the lack of regulations from the Office of Cannabis Management (OCM).
Arish Halani, CEO of Herbwell Cannabis, voiced his disappointment, stating, “Am I happy about it? No.” His company plans to open a flagship store in Midtown Manhattan at 519 Madison Ave., which will be the first cannabis dispensary on that upscale street. Halani shared plans for a stylish lounge on the upper floors and rooftop of the building, aimed at attracting nearby professionals from firms like Morgan Stanley and Evercore Partners. He lamented the absence of a regulatory framework to implement the law allowing cannabis lounges, expressing a desire to be the first to launch such a venue.
While waiting for the regulations, Herbwell Cannabis is committed to paying a high rent for a 15-year lease on the entire building. Additionally, the firm is planning another cannabis shop and potential lounge at E. 372 Fordham Road in The Bronx. Other licensed dispensaries have also prepared spaces for lounges but are disappointed by the slow progress in rule-making by the OCM.
Osbert Orduna, Executive Director of The Cannabis Place in Middle Village, Queens, shared that their existing “VIP” lounge is ready to be transformed into a space for customers to sample cannabis products. He emphasized the desire to provide a venue for cannabis consumption and expressed frustration, noting, “It’s disappointing that four years later, we’re still waiting for regulations to come out.” Orduna believes that these lounges would generate additional revenue for businesses, calling it a missed opportunity.
The OCM has stated that it will release rules for consumption sites when feasible. Taylor Randi Lee, a representative of OCM, explained that the agency is currently focused on implementing business licenses critical for establishing a stable supply chain, including cultivation and retail. The OCM is also assessing regulatory approaches to consumption licenses by reviewing practices from other areas and considering public health and safety issues for both employees and patrons.
A source within the cannabis industry noted that state health officials may be hesitant about cannabis lounges because they could violate the Clean Indoor Air Act, which prohibits smoking and vaping in most workplaces, including bars and restaurants.
Currently, there are 333 licensed cannabis dispensaries in New York State, generating over $1 billion in sales. This increase has been significant since last year, following a difficult two-year rollout marked by application backlogs, lawsuits, and illegal pot shops. While authorities, under a law signed by Governor Kathy Hochul, have shut down hundreds of unlicensed shops, legal operators continue to face challenges from the black market.
