City of Sacramento
Law and Legislation Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-01102 9/19/2023 Discussion Item 6.
Discussion on Social Consumption at Special Events and Onsite Consumption Lounges File ID: 2023-01102
Location: Citywide
Recommendation: 1) Discuss the topic of social consumption of cannabis, which is smoking or ingesting cannabis or cannabis products in a designated consumption area, whether within a designated consumption space operated by a permitted cannabis business or at a licensed cannabis special event, and 2) provide direction to staff.
Contact: Davina Smith, Cannabis Manager, 916-808-4772, [email protected]; Zarah Cruz, Program Specialist, 916-808-8925, [email protected]; Office of Cannabis Management, Office of the City Manager
Presenter: Davina Smith, Cannabis Manager, 916-808-4772, [email protected], Office of Cannabis Management, Office of the City Manager
Attachments:
1-Description/Analysis
2-Summary of Findings from Other Jurisdictions
Description/Analysis
Issue Detail: Social consumption is an activity by which cannabis is smoked or ingested in a designated consumption area, whether within a licensed consumption space operated by a cannabis retailer or at a licensed cannabis special event. Currently, social consumption in the City is only allowed at State-licensed cannabis special events at the State-owned Cal Expo.
Designated, permitted social consumption locations, whether in lounges or at special events, can provide a legal space to consume cannabis in a way that doesn't impact the non-cannabis- consuming public, and which is away from those who are under 21.
Cannabis industry stakeholders, more particularly the participants of the Cannabis Opportunity Reinvestment and Equity (CORE) Program, have been seeking a policy proposal on social consumption. At the request of stakeholders, the Office of Cannabis Management (OCM) hosted a meeting dedicated to the topic in December 2021. At this meeting, OCM provided comprehensive
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information including licensing limitations under State law, sought to clarify misconceptions, and received input on how stakeholders envision onsite consumption in Sacramento.
In the Spring of 2022, EPS, which conducted a comprehensive study on Sacramento’s cannabis program and industry presented its recommendations to the Committee and onsite consumption was one of the recommended actions that Council could take in order to boost the cannabis industry and the CORE program, the City’s cannabis social equity program. However, the Committee voted not to forward EPS’ recommendation pertaining to onsite consumption to the Council and instead directed staff to further explore the subject and bring it back before the Committee at a later time.
On August 30, 2022, the Committee conducted an onsite consumption workshop at which regulators from various jurisdictions in California, which included the City and County of San Francisco, the Cities of West Hollywood, Palm Springs, and Oakland were invited to give presentations and respond to questions from the Committee. Some of the more specific topics and committee concerns that were covered during the workshop included:
· Onsite consumption lounges and events
· Community concerns and how they were addressed
· Revenue from onsite consumption vs the cost of regulatory oversight · Enforcement challenges
· Insights and lessons learned
In 2023, OCM hosted a series of community engagement meetings to provide stakeholders with up- to-date information on existing State and local regulations in Sacramento and other jurisdictions, presented different onsite consumptions models that currently exist in the state, and sought stakeholder suggestions on what they believe would be the best fit in the Sacramento community.
The first of the series was a virtual meeting held on April 12, 2023, in which 75 stakeholders participated. On April 19th, OCM engaged with the leadership of Sacramento’s Property and Business Industry District (PBIDs) during their quarterly meeting at which OCM made a presentation and sought input on how onsite consumption lounges could best fit in Sacramento’s hospitality/entertainment locations. On April 25
th, a third meeting was held in downtown Sacramento,
where more than 60 participants viewed visual presentations depicting various onsite consumption models. Participants placed stickers next to their preferred option, made additional suggestions, and engaged in a one-on-one discussion with staff on a variety of topics related to onsite consumption models. Following the community engagement sessions, an online survey with the same questions and options presented at the in-person meeting was sent out to cannabis stakeholders, which included permitted businesses, current and potential applicants, PBIDS, neighborhood associations and any individual who had previously attended a stakeholder meeting or signed up for alerts for cannabis news. The list contained more than 3,000 names (including duplicates) and of which, 481 responses were received. While opinions varied on consumption lounges, i.e., attached to a
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dispensary or stand-alone with delivery, exclusive to CORE or not, respondents were unanimous in their support of expanding social consumption events outside of Cal Expo.
The Law and Legislation Committee (Committee) is asked to provide direction on whether to forward a policy proposal to Council to allow cannabis social consumption in Sacramento and if so, what kind of social consumption should be allowed.
The base decision points are listed below, followed by additional description and detail.
A. Social Consumption Events
1. Continue to limit cannabis consumption events to Cal Expo only; or
2. Create a regulatory program for cannabis consumption events at locations, apart from Cal Expo;
a. Pilot program for cannabis consumption events, or
b. Permanent program for cannabis consumption events.
B. Consumption Lounges
1. Prohibit all consumption lounges; or
2. Create a regulatory program for consumption lounges at storefront retailers.
C. Opportunities for Cannabis Equity Participants
1. Open to all, with priority to Cannabis Opportunity Reinvestment Equity (CORE) members; or
2. Open only to CORE members.
I. SOCIAL CONSUMPTION EVENTS
State law requires a cannabis sales and consumption event to have a temporary cannabis event permit for the specific location which is good for a maximum of four days. To apply for a temporary cannabis event permit, the applicant must have a temporary event’s organizer permit that is good for a year. “A temporary cannabis event may only be held at a county fair event, district agricultural association event, or at another venue expressly approved by a local jurisdiction for the purpose of holding a temporary cannabis event.” (4 CCR § 15601(e)). Additional state law restrictions preclude a premises licensed for the sales of alcohol or tobacco from hosting a cannabis consumption event.
Cannabis at the events must be sold by licensed retailers within a pre-approved retail area and only those 21 and over shall be allowed into the cannabis event. The names and cannabis license numbers of all retailers participating in the event must be submitted to the state Department of Cannabis Control (DCC) and all retailer requirements regarding track and trace, sales limits, etc. must be adhered to. The consumption area of the event is not allowed to be visible to anyone under 21 or the general public, no alcohol or tobacco is allowed in the consumption area, and “[a]ll
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requirements for onsite cannabis consumption imposed by the relevant local jurisdiction shall be followed and smoking of cannabis goods shall be prohibited in any areas where smoking is prohibited by law”. (4 CCR § 15603(d)).
In the city of Sacramento, cannabis consumption events are currently only authorized at Cal Expo.
The City’s current practice requires a cannabis organizer to request and receive local authorization for a cannabis sales and consumption event. This local authorization consists of a form filled out by the organizer, providing information about the event, and agreeing to abide by all of Cal Expo’s requirements and a referral to the councilmember whose district Cal Expo is in. In 2018 and 2019, three cannabis consumption events were held at Cal Expo. Two of these were High Times events to celebrate April 20th, an unofficial holiday in cannabis culture, and the third one was a Tree Harvest Festival to celebrate cannabis harvesting. The Office of Cannabis Management (OCM) has not received any requests for the local authorization of a cannabis event at Cal Expo since 2019.
Other jurisdictions in California have authorized locations apart from fairgrounds or district agricultural associations for cannabis sales and consumption events. Some examples include the Oakland City Council authorizing Market Daze, a three-day cannabis marketplace, consumption, and music festival in Frank Ogawa Plaza in September 2021; Humboldt County authorizing the Tree Lounge area for cannabis sales and consumption at the Northern Night Festival at a private campground in Piercy in July 2022 and 2023; and the City and County of San Francsico authorizing Grasslands, a cannabis sales, consumption and music venue at the Outside Lands music festival at Golden Gate Park in August 2019, 2022, and 2023.
Cannabis stakeholders have expressed interest in holding special events beyond Cal Expo. Specific ideas that have been presented include a cannabis night at a comedy club, cannabis and music events, cannabis and wellness events (yoga, massage, hair care, etc.), cannabis and movie screenings, a cannabis-themed street fair, and an alcohol/tobacco-free venue that could host activities that include cannabis consumption. Stakeholders believe that these types of cannabis events can provide a potential tourism and sales boost for both the cannabis businesses and the city, as they would be a regional draw.
Stakeholders have reported that the cost of hosting a cannabis consumption event at Cal Expo is prohibitively expensive for all but the very largest and well-funded events and carries a lot of financial risk. Cal Expo is not suitable to hold cannabis events simultaneous to other activities at the venue due to age restrictions for cannabis events and prohibitions on the cannabis sale and consumption area being visible to the general public or those under 21. Additionally, prohibitions on smoking would limit participants to the designated outdoor Cal Expo smoking areas: Green Gate, outside of Expo Center 5, outside of California Building B, outside of the Tractor Supply Company Big Barn, and the Miller Lite Racetrack Grandstand. Given the high temperatures our region can experience in parts of the Spring, Summer and Fall and the lack of shade and areas without concrete and asphalt reflecting the heat, events occurring primarily outside can be unpleasant for attendees at Cal Expo and deter
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attendance. For all these reasons, stakeholders have argued that smaller venues where cannabis events can occur with a smaller number of participants and a smaller financial outlay to host them are needed in our city. A limiting factor on venues that could host a cannabis consumption event is the state’s prohibition on issuing a temporary cannabis event license to a location with an existing alcohol or tobacco seller’s permit.
In the event the Committee agrees with stakeholder’s that venues apart from Cal Expo should be made available for cannabis sales and consumption events, the Committee should decide if they want to recommend the creation of a pilot cannabis events program, or a permanent cannabis events program. A pilot program could authorize the issuance of a set number of approvals, then require OCM to report back to the Council on the events, such as whether there were any neighborhood complaints or calls for municipal services resulting from the event, and whether the event was well- operated and attended. Conversely, the Committee could recommend creation of a permanent program for approving cannabis sales and consumption events that could be approved and then updated over time as needed.
II. CONSUMPTION LOUNGES
Current State and Local Laws
Under state law, a cannabis consumption lounge is an add-on operation to a licensed cannabis retail business, and they do not issue a separate state license for the lounge alone. This means that there can be no stand-alone cannabis consumption lounge, without an attached cannabis retail operation.
State law leaves it up to the local jurisdiction to decide if cannabis consumption lounges on the premises of licensed cannabis retailers or microbusinesses should be permitted, as long as the consumption area is restricted to those over 21, is outside of the view of the general public, and no sales of alcohol or tobacco occurs. AB 374, recently amended by the State Senate, would allow for the preparation and sales of non-infused food and beverages and packaged non-infused food and beverages in the consumption area, and the sale of tickets for live entertainment in the area where cannabis is consumed.
DCC treats both storefront and non-storefront delivery licenses as a “cannabis retailer” when it comes to having a consumption lounge onsite as long as the local jurisdiction approves it. However, in Sacramento, storefront retailers and non-storefront delivery retailers have distinct Business Operating Permits (BOPs). Also, storefront dispensary BOPs are capped at 40 and any new storefront permits would be available first to CORE participants, whereas non-storefront delivery BOPs are not capped and are open to anyone. While storefront and non-storefront delivery are both retail uses, they have some different land use requirements under the City’s Conditional Use Permit (CUP) process. Non-storefront delivery retailers are not open to the public and therefore tend to be in areas with good access to major roads and highways and minimal foot traffic. Storefront retailers, on the other hand, are open to the public and try to be in an area with good parking and good foot
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traffic. In the tours detailed below, none of the consumption lounges were served by a cannabis delivery retailer, instead they all had storefront retail operations attached to the lounge. Both regulators and lounge operators did not see a cannabis lounge served by a delivery business to be a viable option, due to the state law requirements for delivery (such as no entry by the public, mandated delivery by automobile, etc.), as well as the costs of maintaining two separate permitted facilities.
Consumption Lounge Tours and Meetings with Owners and Regulators Between April 2022 and July 2023, OCM staff visited a total of nine consumption lounges in San Francisco, Oakland, Palm Springs, Coachella, and West Hollywood, as well as a cannabis-friendly hotel in Desert Hot Springs and met with a number of regulators from these jurisdictions. The purpose of these visits was to see first-hand how consumption lounges were operating in other jurisdictions and understand the challenges and opportunities associated with permitting social consumption. A summary of the site visits is attached as Attachment 2.
III. OPPORTUNITIES FOR CANNABIS EQUITY PARTICIPANTS
The CORE community views onsite consumption as a new business opportunity that should be exclusive to participants of the program. This is consistent with the recommendations in the Environmental Planning Systems (EPS) study that was presented to this Committee in 2022. Should the Committee decide to recommend to Council that onsite consumption be allowed, it should also provide direction on whether the opportunity should be exclusive to CORE participants or to instead, to open the opportunity to all storefront retailers, but give CORE participants priority. The former would mean that no retail and consumption lounge permits could be issued to anyone except a majority CORE-owned business. The latter would mean that CORE participants would get an opportunity to open a retail and consumption lounge before any non-CORE individuals/businesses.
With the current cap of 40 cannabis storefronts, 10 of which are reserved for CORE participants, the City may need to consider whether new storefront permit opportunities should be issued if it decides to move forward with consumption lounges.
Policy Considerations: Should the committee decide to forward a recommendation to Council to allow social consumption in the City, it should take into consideration potential changes to City Code, including Title 5, which will need to be amended if Council decides to add more storefront dispensary permits, a consumption lounge-specific permit, and/or to create a special events permit for cannabis businesses; Title 17, which prescribes the CUP for storefront and non-storefront dispensaries, and a review of the prohibition of smoking under Title 8.
Economic Impacts: None.
Environmental Considerations: This action is exempt from the California Environmental Quality Act (CEQA) because it is the adoption of an ordinance, rule, or regulation that requires discretionary
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review, including environmental review, and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity (CEQA Guidelines sections 15061(B)(1), California Business and Professions Code section 26055(h)) and because it does not have the potential for causing a significant effect on the environment (CEQA Guidelines section15061(b)(3)).
Sustainability: Not applicable.
Commission/Committee Action: In the Spring of 2022 the findings and recommendations of the EPS study were presented to the committee. At that time the Committee voted not to forward EPS’ recommendation pertaining to onsite consumption to the Council and instead directed staff to further explore the subject and bring it back before the Committee at a later time.
On August 30, 2022, the Committee conducted an onsite consumption workshop at which regulators from various jurisdictions in California, which included the City and County of San Francisco, the Cities of West Hollywood, Palm Springs, and Oakland gave presentations and responded to questions from the Committee.
Rationale for Recommendation: Staff seeks to receive clear direction from the Committee on how to proceed with the next steps should it decide to forward a recommendation to Council to allow social consumption in the city. In addition to the legislative process involved in drafting ordinances amending several sections of the City Code, a Council action allowing social consumption will also require the development of administrative processes to review and approve onsite consumption to a storefront dispensary’s operation, building considerations where cannabis smoking will be allowed, potentially a special permit process for cannabis events outside of Cal Expo and through all these, continued engagement with stakeholders. The process will take time, especially for onsite consumption in lounges, as CUPs and building code requirements will need particular consideration.
From the extensive research and community engagement conducted on this topic, staff believes that if the City opens its doors to onsite consumption, Sacramento’s experience would not be substantively different from those experienced by other jurisdictions. In addition, because of the timing, the City now has the opportunity to apply best practices and build on the successes of jurisdictions that have approved it over the last few years. Social consumption can be a potential future revenue generator to a dispensary, and if owned by CORE, it provides an extra boost to gain advantage in the business, which could then translate to additional tax revenues for the City and the opportunity for the creation of generational wealth for a CORE participant.
Regardless of potential tax revenues, the City should also consider the overall community benefit of keeping sidewalks and public places smoke-free by encouraging cannabis smoking to take place in a contained and legal location. Finally, since cannabis is legal in California, regulators should treat it no different than regulating alcohol or cigarettes by developing strict regulations, especially around youth access, while providing extensive public education on its health impacts.
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Financial Considerations: Not applicable.
Local Business Enterprise (LBE): Not applicable.
Attachment 2
CONSUMPTION LOUNGE TOURS AND MEETINGS WITH OWNERS AND
REGULATORS
Following are findings from the tours of consumption lounges and meetings with owners and regulators:
San Francisco
OCM staff met with San Francisco Environmental Health and Cannabis regulators and visited Moe Green’s and Barbary Coast, two storefront retailers with onsite consumption lounges. These facilities are located on busy streets in commercial areas with lots of foot traffic and easy access to public transit. Neither facility had customer parking. The lounges are inside the dispensaries, in a separate room closed off with glass doors.
These two lounges do not charge customers to use the lounge, but they do require that only cannabis purchased at their dispensary be consumed onsite. The dispensary staff speaks with customers to find out if they are newer cannabis users and if they intend to consume in their lounge (staff mentioned that they often get people with suitcases who are just off their flights and want to experience a cannabis lounge). If the customers are inexperienced, staff will make a point to guide purchases to lower-potency products and personally check in with these customers in the lounge more often, rather than just relaying on the extensive camera system set up to allow staff observation of the lounge.
Although the use of these cameras limits the amount of time staff needs to be in the lounge, staff goes through them whenever a customer leaves to wipe down the table and replenish the matches, rolling papers, etc. San Francisco’s stringent requirements on interior air filtration in the lounge mean that smoke and cannabis odors are quickly eliminated inside the lounge and are not detectable outside the doors to the lounge. The lounges also provide a detailed cannabis consumption safety instruction card at each table for those who may be consuming for the first time. Customers could rent dab rigs, which were sterilized after each use, or bring their own.
Oakland
OCM staff visited Rose Mary Jane’s, a storefront and consumption lounge, and spoke with Oakland cannabis regulators on the phone. Rose Mary Jane featured local artists’ work on the walls of their facility. The indoor consumption area, consisting of seats around a "bar", was primarily for consuming cannabis-infused beverages, including mocktails (served with a sealed vial of cannabis concentrate that the customer opened and added to their mocktail), and was open to the storefront. Televisions were on in the interior. A garage-sized door that stayed open in good weather allowed access to the outdoor consumption lounge, which was fenced in and had both shaded and sunny seating areas for people to smoke cannabis outdoors and socialize. There was no charge to visit the lounge, no time limit, and no outside cannabis was allowed to be Attachment 2
consumed. Metered parking was available in front of the business, and it was near public transit in a walkable, mixed-use area (within a block of a Whole Foods, a hotel, a bank, a 7-11, and near Lake Merrit). Security and storefront staff were trained to look for signs of alcohol intoxication, and those customers would not be served. Staff was also trained to look for signs of cannabis overconsumption and assist customers if needed.
No strong odors of burned cannabis were detected by OCM staff at the facility.
Palm Springs
The three consumption lounges visited in Palm Springs were fairly diverse, and OCM staff was accompanied on the visits by Palm Springs cannabis regulatory staff. The first one, Hightend, located at one end of town on a commercial/light industrial block with housing nearby, was not in a very walkable area and had a parking lot that appeared to be heavily used by customers, although there was a bus stop across the street. The lounge area of the storefront dispensary was in a separate room with frosted glass walls and doors, which prevented storefront customers and staff from seeing into the lounge. When OCM staff arrived, the doors to the lounge were open, and the odor of burned cannabis was readily detectable in the retail area. The lounge had couches and a number of TVs showing different sports events. No fee was charged to use the lounge, and there was no time limit. Customers were encouraged to bring their own dab rigs, pipes, or other smoking devices. Staff reported that they kept a lookout for customers showing signs of alcohol intoxication and would refuse to serve them.
Customers could bring in food, but it wasn’t encouraged.
Four Twenty Bank Dispensary and Lounge was a former bank (including a vault) that had stood empty and blighted for a number of years before being renovated and turned into a storefront and consumption lounge. It’s located on a main street in the downtown area with a great deal of foot traffic from both locals and tourists. Although there did not appear to be dedicated parking, there was street parking outside, parking garages nearby, and public transit a half-block away. The consumption lounge was integrated with the storefront retail space, and the odor of burned cannabis was readily detected at the front door. Apart from the sales area, there were pool tables, a large-scale chess set, arcade games, a stage with professional lighting and sound systems, televisions, and a variety of seating areas throughout the space. No fee was charged to use the lounge area (apart from quarters to play pool and video games), and no time limit was imposed. Similar to Hightend, business staff expressed concerns about not serving and removing those intoxicated by alcohol rather than concerns around over-consumption of cannabis. Customers were encouraged to bring their own dab rigs, pipes, and other smoking devices or purchase one at the retail area. Customers could bring food in, but it wasn’t encouraged.
Attachment 2
The third facility, Coachella Valley Green Dragon, had a retail facility on the first floor and a consumption lounge on the second floor. To access the lounge area, a staff member would escort a customer after they had made a purchase outside to a private elevator that opened into an open lounge area with seating areas for both individuals and groups. This lounge had a separate private room that could be reserved for groups. A budtender was stationed in the lounge to check in with customers, provide bottled water and canned non-infused drinks, and take additional orders that would be brought up. No odor of burned cannabis was detectable in the retail facility. In the lounge facility, no one was smoking, so OCM staff was not able to personally experience the efficiency of the air filtration system; however, the lounge did not retain any odors from previous cannabis smoking. This location was on a busy street in the downtown area, about a block from the Four Twenty Bank Dispensary and Lounge, across the street from a Rite Aid, and half a block from the Plam Springs Art Museum.
There was good foot traffic from both locals and tourists. There was a parking lot shared with adjacent businesses, street parking, and bus stops about a half block away. The business had made the decision not to provide free rolling papers or matches and instead encouraged customers to patronize a neighboring smoke shop to purchase those items. Customers could also bring their own dab rigs or pipes. Customers could bring food in, but it wasn’t encouraged.
Coachella
The Canna Club was located at a highway offramp across from a truck travel center in an area with few other structures nearby. There was a dedicated parking lot that was shared with an attached chicken fast-food restaurant. Lounge customers were encouraged to order food that could be brought over from the restaurant. The retail area was in a large room, with the glass-walled lounge taking up half of the space. Business staff reported that the ability to easily see into the consumption area made it easy to monitor customers and go into the room to wipe down tables when patrons left. No odor of burned cannabis was detectable in the sales area, and although no one was smoking in the lounge, there was no smell of previously smoked cannabis. Business staff attributed that to a good ventilation system and regular changing of the filters. There was no charge to use the lounge and no time limit, although products had to be purchased at the retail area to use the lounge. There were a variety of seating options for individuals and small groups, and several televisions were tuned to sporting events.
Business staff reported no issues with either alcohol- or cannabis-impaired patrons and stated that they often had family groups (adult siblings, parents, and adult children) in their lounge and there were very rarely any problems.
Attachment 2
West Hollywood
OCM staff met with several members of West Hollywood cannabis permitting and enforcement staff and visited two cannabis storefronts and lounges. West Hollywood allows lounges to serve cannabis-infused drinks (served as mocktails with a packaged and sealed vial of cannabis concentrate on the side to allow customers to infuse their beverage themselves), and they require lounge owners’ staff to undergo a Responsible Beverage Safety (RBS) training program and apply the same principles to the cannabis lounge patrons as if they were serving alcohol.
The Artist Tree had its cannabis retail area downstairs and the consumption lounge upstairs. The retail area featured art by local artists and had a small indoor greenhouse that patrons could walk into and select clones to purchase, along with potting soil and other home gardening items. No charge was imposed to use the consumption lounge, but no outside cannabis could be consumed in the lounge. Both reservations and walk- ins were accepted for seats in the lounge. The lounge was accessed by an elevator, and a staff member was stationed on the second floor to check people in and seat them in the lounge. Patrons could sit indoors or outdoors on a balcony that overlooked Santa Monica Boulevard. Plants along the balcony edge prevented those on the street and in the opposite building from observing the consumption activities. The ventilation system extended out onto the balcony to capture the burned cannabis smell. Burned cannabis could be smelled in the lounge. Patrons were provided QR codes from two different restaurants that would plate and deliver food to consume in the lounge. Waitstaff checked in with customers, delivered the plated food, mocktails, and additional cannabis that was ordered, and processed payment for the items. During the visit, the lounge was busy, with most of the outdoor tables occupied and about half of the indoor tables occupied. Groups at the larger indoor tables were playing games like Pictionary, while the balcony was quieter and consisted mostly of couples talking quietly. Street parking was available outside, along with public transit. Patrons were also observed using ride-sharing services. The area is urban mixed use, with a Trader Joe’s next door, a hotel, restaurants, yoga facilities, and a bank in the surrounding block, and mixed-density residential in the block behind the business. The Artist Tree also holds smaller-scale free events such as cannabis yoga, cannabis paint parties, and cannabis drag brunch. West Hollywood has decided that these events are part of the business’ regular social and marketing activities and do not require a cannabis event license or an event permit from the City at this time.
The Woods is also located on Santa Monica Boulevard, less than a mile from the Artist Tree. It is also in an urban area with restaurants, bars, coffee shops, and clothing stores, and is located only 400 feet from West Hollywood City Hall. The Woods has its retail area in front of the property. The consumption area is located outside in the back Attachment 2
of the retail area and has a bar for pre-packaged cannabis-infused drinks and infused mocktails, as well as outside seating areas and a variety of enclosed cabanas. Products must be purchased onsite to be consumed in the lounge area. Lockers can be rented to hold cannabis to be consumed at a later visit. Although there is no time limit in the lounge, the cabanas are rented on an hourly basis, and reservations are encouraged.
The cabanas range in size, and most have televisions, air filtration systems, rolling papers and matches, and windows that open. Patrons are encouraged to bring their own dab rigs, pipes, or other smoking devices. Although no cannabis was being smoked while OCM staff visited, the cabanas we went into did not smell like previously burned cannabis. OCM was informed that there were houses behind the lounge area, and so the area had been landscaped with mature plants and a waterfall to a large koi pond to provide noise and visual screening, and the cabanas had been oriented to open away from the direction of the residences behind the business.
Desert Hot Springs
OCM staff toured the Desert Hot Springs Inn and met with its owner, a retired marketing executive. The Inn allows cannabis consumption in a common outdoor area that is equipped with a barbecue pit, a fire pit, and a shaded sitting area where guests can socialize and smoke cannabis outside. The Inn also offers CBD massages and other wellness services. Smoking cannabis or tobacco is not allowed in the rooms or in the mineral pool. The owner reports that most of his guests are older repeat customers who come because of the hotel's policies on being dog-friendly, cannabis-friendly, or both.
The owner reports that although the inn only has seven rooms, they are booked most nights because people want a safe, comfortable place to consume cannabis while on vacation without having to hide it. Although the Inn occupies a very large lot with no near neighbors, the owner works to cultivate a good relationship with neighbors and the business community and believes that the Inn has brought many tourists into town that otherwise would have stayed in Plam Springs instead.
Summary
Regulators and lounge owners agreed that providing a designated location where cannabis could be consumed benefited their communities in several ways. It discouraged people from loitering in the streets, in public parks, or in cars to smoke, which reduced complaints of cannabis smoke odors from the community. For renters, a consumption lounge may be the only place they can legally smoke cannabis, as landlords generally don’t allow smoking. Consumption lounges can provide a place for social interaction and incorporate cannabis into other activities that are typically available to alcohol consumers in a bar, such as watching televised sports together, playing board games, and enjoying food and snacks together. And finally, some regulators and lounge owners reported that consumption at a lounge can occur in a safe Attachment 2
space under the supervision of staff trained in spotting the signs of overconsumption and what to do in those situations, which can be helpful for those inexperienced with using cannabis.
Regulators and lounge owners strongly agreed that overconsumption and violent behavior have not been issues with cannabis consumption lounges. They did relate that people who had over-consumed alcohol had caused problems at a few consumption lounges, which was why there was a focus on not letting alcohol-impaired individuals in and not serving them. Regulators in the cities that were visited did not report spikes in cannabis-impaired driving connected to consumption lounges. The lounges in the desert cities all observed that, apart from occasions when a popular sports game is on TV, cannabis consumers, either singly or in groups, typically consume their products and do not overstay. Some businesses reported they were either currently offering or were planning to offer free activities and events to draw customers in and have them stay longer, such as painting parties, live music, and wellness activities.
None of the lounges in the desert cities charge a fee to use their lounges, and they have not observed the lounges driving new customers to the dispensary. They report that they have not seen a bump in the dispensary’s revenue solely as a result of the lounge.
But owners believe that consumption lounges are still recovering from COVID shutdowns and the public’s hesitancy to congregate indoors. They speak to providing a lounge as a benefit for their customers and the community and are situating themselves for a future they see happening when the cannabis-consuming public gets more accustomed to the idea of using cannabis in a social setting, much like socializing at a bar, and then their lounges will attract more patrons.
Palm Springs, which is considered the most tourist-oriented city among the desert cities, is intending to market onsite consumption as a part of a full vacation experience in the city, according to regulators. West Hollywood has similar plans. As the only city in Los Angeles County that currently allows onsite consumption lounges, city officials report that the lounges attract significant clientele from the neighboring cities of Los Angeles, which currently does not allow onsite consumption, and Beverly Hills, which prohibits all cannabis businesses, along with clientele from many other nearby cities.
To recap, onsite consumption lounges have generally been a positive addition to the operation of cannabis dispensary businesses, based on the perspective of local jurisdictions, the cannabis industry, and the cannabis-consuming public. From the experiences shared by regulators and businesses, concerns previously articulated by this committee have not been an issue or pose a threat to their communities. Depending on the businesses’ creativity in incorporating the consumption lounge and its associated Attachment 2
activities into the cannabis dispensary, lounges may or may not be a significant revenue generator. But these lounges are still viewed as a contribution to the community at large because they provide a safe space for patients and consumers to smoke cannabis legally and help minimize exposure for the non-cannabis-smoking public.