The New Jersey Cannabis Regulatory Commission officially opened applications for cannabis consumption lounges on January 2, giving licensed dispensaries the green light to create safe spaces where adults can consume cannabis on-site. This marks a significant step forward for the state’s cannabis industry, bringing new opportunities for social consumption while maintaining strict regulations to ensure public safety.

One example of an early entrant is XENA, a dispensary in Jersey City owned by Haytham Elgawly. With a cannabis lounge capable of accommodating around 75 people, Elgawly has invested over $1 million over the past three years to meet New Jersey’s stringent compliance requirements. “It’s been a long road with a lot of focus on safety — from installing air purification systems and smoke mitigation technology to ensuring soundproofing and climate control,” Elgawly explained. The goal is to provide a safe, well-regulated environment for patrons.

While the costs have been high, Elgawly commended the Cannabis Regulatory Commission (CRC) for its support. “As a minority business owner and social equity applicant in an impact zone, the commission helped prioritize my application,” he said, highlighting the state’s efforts to promote fairness and inclusivity in the cannabis industry.

Key Rules for Cannabis Consumption Lounges

T o operate a consumption lounge, dispensaries must first receive approval from the municipality and adhere to strict state regulations. These include:

• Adult-Only Access: Lounges are restricted to individuals aged 21 and older.
• No Alcohol or Unregulated Cannabis: Patrons may not consume alcohol or any cannabis products not purchased from the licensed dispensary.
• Food Policies: Although food and beverages cannot be sold on-site, patrons are permitted to bring their own or have food delivered.
• Odor and Safety Controls: Businesses must implement effective odor control systems and enforce consumption limits to protect public health and ensure a safe environment for everyone.

Applications for cannabis consumption lounges are currently open to social equity businesses, including those owned by individuals with cannabis-related convictions or those who have lived in economically disadvantaged areas. The application process will expand to include other licensed dispensaries later this year.

As New Jersey continues to develop its cannabis market, consumption lounges are expected to offer a unique, community-focused experience for residents while reinforcing the state’s commitment to safety and equity.