The challenge with cannabis lounges in Detroit

There could eventually be 30 cannabis lounges across Detroit, but as of now there's none.

Why it matters: Consumption establishments are a unique type of cannabis business — the idea of a café where you can smoke pot generates a lot of intrigue.

Like retailers, they interface with the public. But unlike retailers, they allow consumers to smoke on site.

Yes, but: They are extremely rare all across Michigan, not just Detroit. They can be difficult to make profitable because it's not legal to sell either alcohol nor cannabis itself on site. Their patrons buy product from a nearby retailer or get delivery.

• Our state has two recreational lounges (in Kalkaska and Hazel Park) since adult-use sales started in late 2019.

The latest: Detroit is allowing businesses to apply for licenses like retail and lounges in three phases. The first wrapped up in December.

• The city will allow a total of 30 lounges, and opened up applications for 10 in the first phase, but has not approved any as of yet.
• Thirty-three out of 100 retail licenses got awarded.
• The second round will open on a yet-to-be-disclosed date.

What they're saying: "A licensed consumption lounge is a challenging business model and a few potential applicants and current licensees appear to be discussing the best way to go about it," Kim James, head of the city's marijuana office, said in a statement. "... We hope to license some in the next round."

• She said lounge applicants lacked the zoning approval required to use their buildings for cannabis.
• City Council President Pro Tem James Tate says lounges are "very expensive" ventures, but the city provides technical assistance for potential business owners pursuing licenses. He believes they'll open as the industry grows.

The intrigue: Pinning down who's closest to opening Detroit's first cannabis lounge is tough. The identities of lounges who failed to secure a license and could try to apply again are not being disclosed.

Zoom in: Christian Perine, founder of in-the-works lounge Blew Amsterdam, tells Axios she hasn't applied for a city license yet. She couldn't obtain a property, which is required.

• She recently pivoted to seeking out a larger cannabis brand to partner with, merging the Blew Amsterdam platform with financial backing.
• "As a social equity company, I don't have the money that these other companies have. I'm just a regular, independent mom from Detroit."

What's next: Pricy and limited real estate for cannabis makes it hard to secure property and open a lounge. A set of changes to zoning rules is slated to go before City Council soon that could open up more land for cannabis uses, planning commission staff tell Axios.

• Part of the update helps consumption lounges specifically by allowing them to set up near cannabis retailers, which they cannot do now.

Read more about cannabis in Detroit: Who's winning and who's losing in recreational cannabis