Las Vegas (and the entire state of Nevada) have legalized marijuana, but have not made it easy to actually smoke it for tourists. That's because while dispensaries like Planet 13 (PLNHF) operate legally, they're not allowed to have on-site consumption lounges.
In addition, hotels, including the massive casinos operated on the Las Vegas Strip by Caesars Entertainment (CZR), MGM Resorts International (MGM), and Wynn (WYNN) do not (and can not by law) allow people to smoke marijuana on their properties. That means that while people can take edibles and other non-smoke forms of cannabis wherever they want to, there's no place where tourists can legally smoke marijuana.
That's a problem that has made much of the Las Vegas Strip reek of marijuana's well-known smell. Police almost never cite someone solely for smoking cannabis in a public place (although it's technically legal) but legal cannabis without legal consumption lounges creates a problem for a city where any sin, more or less, is encouraged, but usually behind closed doors.
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Las Vegas Getting Consumption Lounges (But Not the Strip)
In late 2021, the Nevada state legislature passed a new law allowing recreational cannabis business owners to apply for licenses to open on-site consumption lounges.
"Consumption lounges allow adults to smoke, eat, or dab cannabis products," Eater Las Vegas reported. "...The new legislation allows an existing dispensary to add a space for a lounge, with only one lounge allowed no matter how many locations a dispensary has. The other model permits independent businesses to build a consumption lounge with single-use cannabis products for sale."
It remains illegal to consume cannabis inside casinos and hotels. That could change for hotel-only properties (and one operator has already started on plans for a cannabis-friendly hotel) but it's not likely to change for casinos, due to federal law.
"Because of cannabis’ federal classification, Nevada casinos must avoid any direct or indirect involvement with the cannabis industry. The Nevada Gaming Commission has repeatedly warned its licensees that marijuana must not be allowed anywhere on their premises," Casino.org reported.
The recent legislation allowing cannabis lounges led to the creation of the Cannabis Compliance Board, which will decide how licenses will be granted. What's clear, however, is that those licenses will not go to Caesars, MGM, Wynn, or any other casino operator and that will divert customers away from those properties.
Will Cannabis Hurt Las Vegas Strip Casinos?
MGM, Caesars, Wynn, and other mega-casino operators built their properties to keep customers from leaving. Every major casino offers not just hotel rooms and gaming, but restaurants, shows, spas, gyms, and pretty much everything you can imagine. It's about keeping people on-site and spending money.
Under current cannabis rules, Las Vegas tourists must leave their hotels (and the Las Vegas Strip) to visit a marijuana dispensary. Planet 13, for example, sits about a mile off the strip, and while it has a restaurant and a coffee shop, you can't consume cannabis on the property.
That's something that will change soon under the new law and that could increase the amount of time Las Vegas tourists spend outside of the big casino properties.
Planet 13 has major plans for a consumption lounge adjacent to its massive dispensary, which will include a pool and a 5,000 square foot outdoor balcony. Given how successful the company has been at the creation of engaging retail, it's likely that it can build a consumption lounge experience that keeps customers away from the casinos, which legally cannot compete.
"Gaming venues that seek to operate more than 15 slot machines and/or table games must acquire a nonrestricted gaming license from the state. The 1,500-foot mandate required under the Nevada cannabis consumption lounge law means the closest such a venue could be to a casino is nearly three-tenths of a mile," Casino.org reported.
Planet 13 won't be the only player,
Lissa Lawatch, general manager at Oasis Cannabis, is preparing a beach-themed lounge in hopes of luring tourists from the Strip a block away, Cannabis Business Times reported. The property will be similar to the beach clubs offered by many casinos.
It's hard to know exactly what the impact of consumption lounges will be, but they likely will divert customers from Caesars, MGM, Wynn, and other properties. That could ultimately cause those companies to lobby for law changes allowing them to get in on the consumption action, but that's a federal -- not a local question -- so, while you can drink, smoke cigarettes, eat gluttonously, and, of course, gamble, in Las Vegas casinos, you won't be able to legally and comfortably smoke marijuana and that should divert some dollars from those properties.
