Why One of the State's Biggest Dispensaries Isn't Pursuing Pot Hospitality

The Green Solution, one of Colorado's largest dispensary chains, controls nearly every part of the company's marijuana production process, from seed to sale and all things in between. But so far, it hasn't ventured very far into social consumption.

Legal at the state level since 2020, marijuana hospitality establishments must be permitted by their respective local governments. The vast majority of city councils, town boards and county commissions haven't yet broached the topic, but the Green Solution was successful in two that have, securing approval in Black Hawk in 2019 (that town had quietly opted into marijuana hospitality in anticipation of the then-upcoming law) and winning one of five local licenses in an Adams County lottery last year.

Yet even after securing permits for marijuana hospitality establishments in those two communities, the Green Solution decided to wait on opening any lounges or tasting rooms, says CEO Steve Lopez, and he can't guarantee that they will ever appear.  According to the City of Black Hawk, there is no longer an active marijuana hospitality permit in the town.

"We didn't know what the traffic was going to be like and if people saw a need for it. Then we had the pandemic," Lopez explains. "The risk may not justify the cost."

The COVID-19 pandemic didn't just press pause on current marijuana hospitality business models; it also pushed back local government conversations on the subject, with some communities just starting to pick up the topic again this spring.

But even before the pandemic, profitable business models for licensed marijuana hospitality ventures have been few and far between in Colorado.
For starters, social pot consumption permit holders are banned from having an active liquor license. "People have started consumption lounges, and they've varied widely in how they set it up. Nobody is knocking it out of the park," Lopez notes. "We've looked at everything from video gaming, kind of like a lounge, to bringing in live music."

He also says he has concerns about the Green Solution being responsible for customers who drive away from a pot lounge.

Denver's marijuana licensing program, implemented at the local level in 2017 before the state hospitality law passed, has only one active permit; the majority of marijuana hospitality businesses have opted to remain private, unlicensed establishments. The Denver City Council adopted the state's program in April, though, and loosened rules could bring more businesses to the table.

Rita Tsalyuk, co-owner of Denver's only licensed pot lounge, the Coffee Joint, has often said that the lounge is used more as a draw and amenity for the neighboring dispensary, 1136 Yuma, which she also co-owns. According to Tsalyuk, before the pandemic, traffic at the Coffee Joint wasn't strong enough for it to operate as a stand-alone lounge.

Colorado Springs also has a local marijuana establishment licensing program, but it's set to expire, and only one establishment in that city is currently permitted by the state Marijuana Enforcement Division. Dillon, Glendale and Central City approved marijuana hospitality in various forms in 2020, but none of those towns has seen a marijuana lounge open yet.

And while there's now an opening for a marijuana hospitality lounge application in Black Hawk, don't expect to light up in a casino any time soon. On top of the state law banning liquor sales at marijuana hospitality businesses, Black Hawk's local ordinance only allows a marijuana hospitality business to operate in the History Appreciation Recreation Destination District, a stretch of Gregory Street outside of Black Hawk's Gaming District...and the casinos.