Chicago still bans cannabis lounges but entrepreneurs get creative

Illinois' weed sales reached record highs last year, but cannabis consumption lounges are having a slower ramp-up.

Context: Illinois permits the lounges — licensed businesses that allow smoking and consumption on the premises — with a catch. Local municipalities get final approval.

• The state hosts a select few, including Rise in Mundelein, but Chicago does not allow them.

What they're saying: The city didn't respond to questions on why they're prohibited, but in 2020 Mayor Lori Lightfoot did try to advance a plan that was stymied in City Council.

• "It's not gonna work, and there's gonna be illegal dens of people smoking the stuff," Ald. Howard Brookins (21st) told the Sun-Times at the time.

The intrigue: Cannabis consultant Amy Dordek Dolisnky says some entrepreneurs are concerned local pushback on lounges will hurt the Chicago market.

• "Regulations make it complicated," Dordek Dolinsky tells Axios. "I do think there will be a future for them, I just don't know when."

Reality check: Lounges were expected to be a big part of states' rollouts of legalized marijuana. But the pandemic slowed demand for them.

Still, analysts think that could change.

• "We will soon see legal consumption lounges and permits for on-site consumption at events in every market where cannabis is legal," Ricardo Baca of Grasslands, a cannabis-focused marketing agency, tells Axios.
• "Legal on-site cannabis consumption is no longer an if; rather it's a when — and as more states find success in these ventures, others will join the fold."

Be smart: Right now, the Illinois law says the lounges are BYOC (bring your own cannabis). You can't buy marijuana and consume it in the same store.

Yes, but: Several Chicago entrepreneurs are getting creative and working around that law.

• The Sesh Bus parks at different locations and gives away products that you can consume on the premises.
• Brunch of Stoners is a members-only meetup designed to "enhance your brunch."

Between the lines: "There's ambiguity in the law on what you can and can't do," Brad Spirrison, CEO of cannabis industry insights group Grown In, tells Axios.

• "These consumption events are being creative and compliant at the same time."

What we're watching: Colorado, which legalized marijuana years ahead of Illinois, could host the world's first consumption-friendly hotel. The Patterson Hotel in Denver will debut a high-end lounge this year.

• "Leading the way in a new market has meant hurdles that, once cleared, will offer a model for other operators to follow." Patterson Inn owner Chris Chiari tells Axios. "A bright future is on the horizon."