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The Future of Adult Use Consumption Lounges in Nevada

Accounting, Advisory, Industry Politics

Will Adult-Use Cannabis Consumption Lounges Be a Reality In Nevada?

The answer is likely yes, though probably not in 2017.  Recently Nevada’s Legislative Counsel Bureau released an opinion on the legality of consumption lounges in Nevada that has had the news both locally and nationally speculating about the future of Adult Use lounges in the Silver State.

The opinion states municipalities have the legal option to make decisions about whether or not to allow adult use consumption lounges and authority to regulate these businesses.  We have already seen that the city of Henderson made their decision on the matter before the legal opinion was issued.  Henderson will not have Adult-Use cannabis consumption lounges.  We also know more about where the Clark County Commissioners stand on the issue after the September 19th meeting where an informal poll of the commissioners saw 6-1 opposed to moving forward on consumption lounges.  This leaves fully operational consumption lounges largely off of the table for 2017 due to the time it would take to establish regulations and garner support among the commissioners.

Why Are the Commissioners Hesitant About Adult-Use Cannabis Consumption Lounges?

Besides the concern of federal interference, a recurring theme of late, there are some concerns that can be addressed as potential Adult-Use cannabis lounge operators develop their business plans.  Commissioner Kirkpatrick asked who would be in charge of enforcing any ordinances the commission develops for these lounges, how much would it cost to oversee, and how would these businesses be taxed? Commissioner Brager asked about ventilation and odor concerns.  Commissioner Gibson was interested in how lounges could be monetized.  The commissioners seemed united in one sentiment, it is more important to get it right than to be first out of the gate, and are choosing to look into the developments in Denver before moving forward with the consumption lounge issue.

How Can These Concerns Be Addressed?

When the commissioners are ready to tackle the consumption lounges they will likely look to current regulations for age restricted activities and locations to establish a framework to build on and answer questions about who is responsible for enforcement and what it may cost.

The questions about how these lounges could be monetized and taxed can partially be answered by the LCB’s legal opinion and the county’s legal staff who mentioned member only establishments and other barriers to public access.  Depending on the venue it isn’t hard to imagine lounges that incorporate non-cannabis related goods and services that can be monetized and taxed.

Odor control can be addressed in a strategic business plan to ensure compliance with regulations, which opens up opportunities for innovation in design and implementation.

Taking Cues from Other States

The Clark County Commissioners have already discussed sending personnel out to Colorado to better understand the regulations and ordinances the state is establishing for public consumption areas.  Denver has had some trouble of its own getting public consumption lounges up and running.  Among these issues are a lack of applications to become licensed lounges because many believe the regulations and zoning restrictions to be too burdensome to remain in compliance.

Alaska is considering on-site consumption models while California is looking at similar on-site options and lounges as they build their regulatory framework.

What Is Currently Allowed?

Currently Adult-Use cannabis can be purchased legally by adults 21+ with valid ID and by medical patients with registry cards and ID. These products can only be legally consumed at private homes away from public view.  A need exists for a publicly acceptable and legal location for non-residents who purchase cannabis products legally consume them. There are a number of entrepreneurs who are looking to find a way to meet this need head on in new and innovative ways.

Interested in Building a Business in the Cannabis Industry?

We are a full-service CPA firm that focuses on the needs of the cannabis industry.  What does this mean for your business? It means having a team that understands the unique political, cultural, and legal environment that affect the industry you want to be a part of, offering services and advice that help you grow your business.

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