Cannabis merchants in New York are expressing frustration over their inability to open pot lounges where customers can consume cannabis on-site. This delay is due to the slow pace of rule-making by state regulators. Operators are eager to establish “consumption sites,” allowed under the Marijuana Regulation and Taxation Act of 2021, but four years after legalization, the necessary regulations are still not in place.
Arish Halani, the CEO of Herbwell Cannabis, voiced his dissatisfaction with the situation, stating, “Am I happy about it? No.” Herbwell is preparing to open its flagship store at 519 Madison Ave. in Midtown Manhattan, which will be the first cannabis dispensary on this upscale street. Halani has plans for a lounge on the upper floors and rooftop of the building, aimed at attracting professionals from nearby firms like Morgan Stanley and the Jefferies Group.
Despite the excitement about the potential lounge, Halani noted the absence of a regulatory framework to implement the lounge concept. He expressed a desire for Herbwell to be the first to open such a venue. Meanwhile, the company faces the financial burden of a 15-year lease for the entire building while waiting for approval to use part of it as a consumption space.
Other cannabis dispensaries in New York are also feeling the impact of these delays. For example, The Cannabis Place in Middle Village, Queens, has a dedicated area waiting to be converted into a lounge for customers to consume cannabis products. Executive Director Osbert Orduna emphasized the demand for such spaces, stating, “It’s disappointing that four years later, we’re still waiting for regulations to come out. The lounges would add revenue to the business. It’s a missed opportunity.”
The Office of Cannabis Management (OCM) has stated that it plans to publish rules for consumption sites when they are ready. OCM representative Taylor Randi Lee explained that the office is focusing on establishing a stable supply chain first and is currently assessing regulatory approaches for consumption licenses in New York. This includes evaluating practices from other jurisdictions and considering public health and safety factors.
Some industry insiders indicate that state health officials may be hesitant about cannabis lounges due to potential conflicts with the Clean Indoor Air Act, which prohibits smoking and vaping in most indoor workplaces, including bars and restaurants.
Currently, New York State has 333 licensed cannabis dispensaries, generating over $1 billion in sales. This growth has accelerated following a challenging rollout that faced delays due to application backlogs, lawsuits, and illegal dispensaries. Although Governor Kathy Hochul’s administration has cracked down on unlicensed shops, legal operators continue to struggle with competition from the black market.
