A candid discussion about capitalizing on cannabis consumption
It seems regulators sent consumption lounges out to die.
At least that was the consensus from operators 18 months ago when I wrote a broad overview of consumption lounge models in Alaska, California, Nevada and Michigan. And they weren’t wrong: three of the seven lounges featured in the June 2023 issue of Marijuana Venture have since shuttered their doors.
“It’s a rough industry,” says Julie Montante, the owner of the Four Twenty Bank Dispensary & Lounge in Palm Springs, California — one of the four survivors. “I think, personally, we’ll only survive if they allow alcohol to come in. I am being real and being honest.”
Given California’s regulatory changes for cannabis lounges that went into effect in September 2024, I felt this issue would be a great time to revisit the businesses and see how they’ve adapted. But I found many in the same predicament, grappling to survive. Those that remain were mostly putting a heavy emphasis on being more than a place where people can smoke weed, by offering varieties of entertainment, amenities and social activities.
But after diving back into the consumption lounge sector, I came across a couple operators with alternative models to the licensed lounge, ones that capitalize on the allure of social consumption without falling into the regulatory pitfalls of legal cannabis. Here’s hoping these new models signify some optimism for lounge operators who are currently being regulated to death.
Straddling the Line
I can safely say we’ve never featured any business quite like LazyDaze.
“What sets us apart is, to my knowledge, we’re one of the first companies to have lounges that straddle both the hemp-derived cannabinoids and state-regulated, permitted, fully licensed recreational cannabis dispensaries,” says LazyDaze co-owner Nicholas Mortillaro. “We’ve actually got business models for both hemp and traditional marijuana.”
LazyDaze has three locations in Texas, one in Baltimore and one in Albuquerque. The Baltimore, Albuquerque and San Antonio locations are franchises.
LazyDaze is about as close to an Amsterdam-style coffee shop as the country has ever seen: a coffee shop, with all the beverages one would expect from a coffee shop in 2025, where you can also buy and smoke — or otherwise consume —cannabis or hemp-derived THC products. The full menu of edibles and beverages can optionally be infused with THC, CBD, kratom, kava or adaptogenic mushrooms, Mortillaro says.
During our conversation, I mentioned to Mortillaro that nearly half the licensed cannabis lounges I spoke with in 2023 have since closed, and he didn’t seem at all surprised.
“It’s really too bad that so many marijuana operators have been forced into closing just by high taxes and the compliance burden,” he said. “I wouldn’t say that it is easier on the hemp side, but I’d just say it’s generally less insane than many places, including Colorado and California, that regulate cannabis like it’s nuclear waste.”
LazyDaze started as a headshop in 2004, then transitioned into a vape shop. After the 2018 Farm Bill legalized hemp, founder Hans Enriquez started incorporating CBD and CBD-infused coffee, which gave way to the chain’s current iteration.
“We realized that in a world full of liquor stores, be the bar,” Mortillaro says. “I can enjoy a beer or two at the bar; I know it’s more expensive but I’m willing to pay the difference for that social atmosphere.”
At Marijuana Venture, we’ve often debated how lavish a lounge or retail store really needs to be before it hits diminishing returns. For my tastes, I have to say LazyDaze is in the right groove: no chandeliers or stage, it’s just coffee with various forms of THC. And according to Mortillaro, I’m not in the minority.
“Business is definitely good,” he says. “We’re basically reinvesting everything we can into the expansion of the company, but it is cash-flow positive.”
Meanwhile, in California
California has the most cannabis lounges and probably the most problems for them to overcome. Operators face steep taxes and limited options to draw in customers. The situation has become slightly less dire for lounges now that they can serve food and non-alcoholic beverages. Which, as an aside, what the hell were regulators thinking? You charge exorbitant fees and taxes to allow operators to offer a social place to consume but won’t let them sell food and drinks? Every operator I’ve talked to in California says they watch people come in to smoke, then leave to get something to eat and spend their money elsewhere. The state is taking in hundreds of millions of dollars from operators every quarter, and that’s not including local city or municipality taxes, but they didn’t have the care or consideration to think at all about how these businesses could survive. Regulators finally allowed lounges to serve food and drinks starting on September 30, 2024, but it’s too little too late for the operators who already closed their doors.
“Opening a kitchen is just added labor,” Montante says. “Unless they let us cook with cannabis, it’s not worth it. They can go eat next door.”
Montante’s Four Twenty Bank Dispensary & Lounge in Palm Springs is one of the 10 consumption lounges licensed by the city. She’s been in the industry for more than 10 years as a retailer and opened one of the first consumption lounges in the Palm Springs area. From what I’ve gleaned during our conversations, Montante is doing everything right.
While social consumption is the hook, her business is a venue for shows and a dispensary. She’s already found all the workarounds for not being able to serve food and has brought in all the performers, pinball games, billiards tables and amenities to keep people entertained. She says, quite candidly, that it still may not be enough in the end.
“To be honest with you, I think the cannabis business is kind of dying,” she says. “We keep our prices low — as low as possible. But the vendors as well as the variety aren’t there. We’re all struggling.”
The Miracle
If The Miracle in Mundelein booked the right act, I would be willing to leave my sleepy corner of the Pacific Northwest to drink, smoke weed and listen to music with a huge crowd of strangers at the concert series in northern Illinois. Sadly, Tom Petty died back in October 2017.
Normally, I wouldn’t think to include a cannabis-friendly concert series in a feature about consumption lounges, but The Miracle in Mundelein has a lot more relevance to the cannabis industry and its consumers than any event I’ve seen. First, it’s not only in a state with adult-use cannabis and licensed lounges, but it also takes place on the property of the RISE Mundelein Lounge & Smokeasy, one of the consumption lounges we featured in 2023 that is still in business. Second, the concert series has big, relevant acts, such as Wiz Khalifa, Action Bronson, Cypress Hill and Slightly Stoopid. And third, it has alcohol.
Alcohol sales are the backbone of the hospitality industry. The majority of lounge operators I’ve spoken with refer to it as this intangible beast that just cannot be lassoed by anyone with a cannabis license, and yet this concert series has somehow threaded the needle and brought together two of America’s favorite vices.
“Attendees largely leaned into the cannabis experience,” says Armon Vakili, the vice president of strategic initiatives and partnerships at Green Thumb Industries, which owns The Miracle. “This aligns with broader trends we’re seeing — more people are choosing cannabis over alcohol in social settings.”
The two-day event debuted in 2023 and has successfully brought in thousands of concertgoers for two consecutive years. The success of the show is hardly a mystery, but the execution of getting it launched is something I believe many operators will be trying to duplicate for years to come.
“It took close collaboration with the village of Mundelein to secure the necessary licenses and permits while ensuring a safe environment, with the event focused on responsible consumption,” Vakili says. “Working with the village of Mundelein has been key to our success. Our long-standing relationship with the town helped us navigate permitting and regulations to bring The Miracle to life.”
Now, I know smoking weed at a concert is hardly a novel idea. I’ve done it more times than I can count (I vividly remember many years ago when an entry guard gave me back my 20-sack after frisking me at the entrance). But there was always a risk of getting my stash confiscated, getting kicked out or even facing legal consequences. Just the thought of being able to freely walk around a concert with a beer in one hand and a lit mini joint in the other sends me daydreaming — and I quit smoking weed more than 20 years ago.