One year after rollout, Las Vegas cannabis consumption lounges still face challenges

By Tyler Schneider

Las Vegas Weekly

Thrive Cannabis Marketplace’s Smoke and Mirrors has ceased operations as a cannabis consumption lounge indefinitely as of April 4, according to Tosh Lollie, general manager of the dispensary, which shares a building with the venue on Sammy Davis Jr. Drive.

It was the first of two state-sanctioned cannabis consumption lounges to open in Nevada when it made its debut in February 2024. The second, Dazed Consumption Lounge, launched inside Planet 13 dispensary on Desert Inn Road two months later. A third, Sky High Lounge, has been operating since 2019, but isn’t required to follow state regulations because it’s located on sovereign tribal land owned by the Las Vegas Paiute Tribe.

Thrive managing partner Mitch Britten tells the Weekly that it plans to convert the Smoke & Mirrors space into a special event venue, until state regulations change to “make this license type more economically viable.”

“In its current form, the regulatory framework, associated compliance costs, and limitation on the types of products that can be offered simply doesn’t support a sustainable business model for lounges, and we’ve adjusted our operations accordingly. We’re still very much committed to the potential of social consumption spaces and believe that with thoughtful regulatory adjustments, they can play a meaningful role in the future of the cannabis industry in Nevada,” Britten says.

 The closure of the consumption lounge accentuates a slow rollout of Nevada’s cannabis consumption lounge licensure program, which was approved by state legislators in 2021. Although recreational cannabis was legalized statewide in 2017, it’s still illegal to consume anywhere outside of private property.

Cannabis lounges, which offer patrons a space where they can legally use marijuana products in a public setting, were viewed as a remedy that could provide tourists greater access to a Nevada cannabis market that recorded more than $829 million in taxable sales for the 2024 fiscal year.

As the last lounge standing (for now), Planet 13’s Dazed attributes much of its customer base to tourists. Manager Blake Anderson estimates 250 customers come in on any given day.

“It gives them a safe place to consume their cannabis so they don’t have to walk up and down the street or risk a hotel fine,” he says.

It’s unclear when another lounge could open, but according to the Nevada Cannabis Compliance Board (CCB), 21 additional lounges have earned conditional approval. Another 10 licenses have been set aside for social equity applicants, or prospective lounge owners from “communities disproportionately impacted by poverty and high arrest rates,” according to the CCB.

Rachel Lee, owner of a local cannabidiol-based wellness business called Sunflower Compassionate Company, applied for a social equity license in 2022. She tells the Weekly she was just a 19-year-old mother of two living in the Historic Westside in 1994 when she was arrested and later convicted on marijuana charges. Lee denies the charges.

“That trafficking charge really did my life in. After it happened, I would get jobs on the Strip but they would fire me once they saw my record,” Lee says. “From there, I just checked out of life. I went into a lifelong spiral of addiction and depression until I got into recovery in about 2017.”

Lee, who believes her conviction was tied to “the failed war on drugs,” was eventually selected via a random lottery system to move forward in the social equity process.

In July 2024, the CCB announced that six of the 10 initial social equity applicants were disqualified. Not meeting residency requirements was the rationale.

Although Lee made the cut, she says it’s going to take some time to secure the $200,000 in liquid assets required to earn her conditional license, which will allow her to start seeking out a location.

“The hardship is that, if you’re really, truly impacted, you’re probably not going to be able to get past that [$200,000] barrier,” Lee says.

Nevada policymakers are working to address the problem. In March, the five-member CCB voted unanimously to extend the deadline to 2026 for Lee and two other social equity applicants to earn the board’s conditional approval, giving them more time to find investors and complete their applications. In Carson City, legislators are considering Assembly Bill 203, which would make social equity applicants exempt from the $200,000 liquid assets requirement.

Tyler Klimas, former executive director of the CCB and founder of cannabis consulting firm Leaf Street Strategies, was a key player in establishing Nevada’s “flexible, responsible and comprehensive” cannabis policies. He calls the state’s entry into the consumption lounge sector of the market “a giant policy experiment that we’re all living day-to-day.”

“I think the fact that we only have two open just speaks to the newness of it. Everybody’s trying to figure out what a business model looks like,” Klimas told the Weekly prior to Smoke and Mirrors’ closure. “It’s a whole new sector of the cannabis economy. We’ve got to figure out what kind of experience and product lines the consumer wants, and that takes time.”

Christopher LaPorte, managing partner of Reset Las Vegas, the cannabis consulting and hospitality management group that helped Smoke and Mirrors get off the ground, says another hurdle lies in finding investors in a “heavily regulated” industry that’s still federally illegal.

“It always comes down to money, and it’s difficult to get a space if you can’t afford to buy a building. On top of that, getting insurance and finding a landowner who’s willing to lease to a cannabis business is a challenge in and of itself,” LaPorte says.

However, Klimas believes it’s only a matter of time before more investors come around to the financial viability of the concept.

“When you look at some of the data out there, cannabis consumption has never been higher. There are more people consuming cannabis on a daily—or near-daily—basis than they are alcohol for the first time,” Klimas says. “Those people are more interested than ever in having cannabis be a part of their experiences when they travel.”

In his mind, Las Vegas is “perfectly positioned” to take a leading role on cannabis consumption lounges. According to the Marijuana Policy Project, Nevada is one of 12 states that allow some form of recreational cannabis lounges. Others, like Maine and Oregon, are considering various proposals to do so.

“If you’re going to try to meet the consumer where they’re at, nobody is more well-versed in facilitating adult experiences responsibly than a city like Las Vegas. The writing is truly on the wall, and this just fits in really well with what we do. We have a real opportunity here to lead and get out in front of this,” Klimas says.

Nevada’s ability to capitalize on that potential will depend on continued collaboration between the CCB, state legislators and aspiring operators like Lee, who says she recently secured a second investor.

Further down the line, both LaPorte and Klimas say efforts to integrate lounges with the food service and entertainment industries could prove incredibly popular and lucrative, but would also require legislative changes to implement.

“Things take time. There’s a culture that we have to continue to embrace and a lot of education that we still have to do,” LaPorte says. “But at the end of the day, tourists need a place to smoke, and that’s what these places are.”