Meet Sara Stewart, Cannabis Consumption Lounge Pioneer

Only 34 years old, Sara Stewart has had a fascinating professional life. After working in in the hospitality and event space for about 15 years, the LA-based Stewart has become, in only a few years, a foremost expert on cannabis consumption lounges. Having been a cannabis consumer for most of her adult life, Stewart made her foray into this sector by managing and operating two of the first cannabis consumption lounges in the U.S. However, it hasn’t been easy as she admits the business model is rife with regulatory challenges.

This Q&A has been edited for conciseness and clarity.

Iris Dorbian: What made you launch a cannabis consumption lounge? How did you begin?

Sara Stewart: While thousands of people legally sell cannabis each day, very few have also guided a customer through consuming their products onsite. My first job in the cannabis industry was at Lowell Cafe in 2019. To this day, Lowell has been the only licensed cannabis cafe in the country to also serve non-infused food through an in-house kitchen operating as two separate businesses. This experience was extremely unique, and I quickly learned how challenging incorporating onsite consumption experiences would be for the industry. From then on, I knew I wanted to continue exploring the boundaries of cannabis hospitality with the valuable insight I had gained.

Dorbian: How would you define a cannabis consumption lounge?

Stewart: Unfortunately, the term “lounge” has been defined by the cannabis industry as “any licensed venue where you can legally consume cannabis.” Many workers in cannabis hospitality believe that this term is far too limiting. Going forward, cannabis venues are essentially going to become comparable to other social establishments—prioritizing experience and entertainment above substances, be it alcohol or cannabis. I believe that cannabis lounges are going to look like many different businesses in the future, including bars, restaurants, movie theaters, live music venues, and more.

Dorbian: How many cannabis consumption lounges do you currently operate?

Stewart: Lowell Cafe was the first lounge I operated, which was from 2019 to 2020 before their closing due to the pandemic. I recently wrapped up my second lounge project: Rise Lounge with Green Thumb Industries in Mundelein, Illinois. Realistically, cannabis lounges are a challenging business model. Not many people have successfully navigated their operation, especially with recently passed regulations that essentially prohibit the sale of food and other necessary revenue streams onsite.

Dorbian: How has the market changed since you launched your first cannabis consumption lounge?

Stewart: Sadly, the market hasn’t changed significantly since my first launch. The biggest change I have noticed is the increasing amount of cities and states beginning to approve lounges in some capacity. As I mentioned before, lounges are hard to handle. The cities currently approving lounges are not thinking about the operational challenges they inadvertently create. For example, the health department considers water and ice to be “food production.” Some cities are not allowing food in their lounges. Therefore, it’s difficult to have water and ice available for patrons. This is why only a few lounges have opened. Additionally, it is obvious that in a post-COVID world, people are more hesitant to share joints and bongs, and mini-pre rolls are gaining popularity because of it. Consumers’ preferences are changing as the world does, forcing lounges to adapt to evolving needs.

Dorbian: What are the challenges of operating cannabis consumption lounges?

Stewart: There are many logistical challenges to operating a consumption lounge, including buildout costs, navigating the business structure, real estate availability, smoke and odor control, and educating and training staff. However, the biggest challenge is generating revenue based on different license types. Depending on licensing, some lounges in California are required to be “edibles only” in 50% or more of their space. This regulation alone is extremely challenging when there are not enough fast-acting, low-dosed products on the market that are best suited to a lounge experience. In my opinion, 5mg to 10mg is too highly dosed for a single product in a lounge—not to mention that taking only one edible is hardly a consumption “experience.” In reality, lounges like ours need to sell 2.5mg two or three times in a session in order to generate revenue.

Dorbian: What advice would you give to someone who may be interested in launching a cannabis consumption lounge?

Stewart: For current cannabis businesses, don’t assume that your existing retail footprint is an appropriate space for a lounge. Restaurateurs don’t build cafes behind a liquor store: They take over a hospitality-driven building. Retail operators often get too hung up on what they are already doing, but this is an experience based-business that requires a new way of thinking and operating.

Build a relationship with your city representatives.They often don’t realize that they are passing regulations that will create more challenges for operators and reduce other important factors to afterthoughts.

Be the customer!