Consumption lounges: Manitoba re-opening round two cannabis consultations, part one

Over the past three years, the Canadian adult-use cannabis industry has continued to move through different phases of development. We began in “phase one” with the legalization of combustible and flower products and witnessed the growing pains related to supply and demand issues and more restricted retail licensing regimes. In “phase two” we saw “Cannabis 2.0” come to life which brought the legalization of edibles and ingestibles, relaxed and/or expanded retail licensing regimes in some provinces and increased demand and supply of a wide variety of products.

Now, as the industry continues to move forward, stakeholders are left to ask “what will come in phase three?”

One topic of discussion which is resurfacing is with regard to alternative venues for the purchase and consumption of cannabis. For some time, as the country navigated through the infancy of the recreational cannabis market, the conversation surrounding spaces for consumption, frequently called consumption lounges, was placed on the backburner. However, as the industry continues to evolve and governments look for ways to address emerging consumer demands in a standardized and regulated manner, the topic of consumption lounges is coming around to the forefront of discussion.

A number of provinces, Manitoba being one, have begun to look more seriously at the viability of licensing and opening consumption lounges by commencing public consultation processes. The general purpose of these consultation processes is for governments and regulatory bodies to obtain a better understanding of what the various industry stakeholders’ perspectives are, what issues need to be considered and how to best address these issues in a controlled manner.

Nevertheless, as we have seen throughout the evolution of the industry, both governments and regulatory bodies have tended to err on the side of caution when it comes to changes to the regulation of cannabis in their jurisdictions and as a result, we have yet to see many notable changes come out of these consultation processes in relation to consumption lounges.

However, a recent announcement by the Manitoba provincial government suggests that change may be closer on the horizon than we originally thought. In a statement to news sources in December, provincial Justice Minister Cameron Friesen indicated that the Manitoba Liquor, Gaming and Cannabis Authority (LGCA) intends to further its consultation process on consumption lounges in early 2022.

What happened previously

During the 2020-2021 financial year, the LGCA conducted preliminary consultations with both the public and stakeholders to discern the level of consumer and entrepreneurial demand for the on-site service and consumption of cannabis products.

Typically, these consultations would take the form of in-person meetings such as town halls. However, due to the ongoing COVID-19 pandemic, the LGCA adapted its consultation process and relied primarily on online surveys which targeted various stakeholder groups within the cannabis industry as well as related industries. Regardless of the format, the consultations sought to consider and potential of a regulatory framework for licensed premises that could serve edible or ingestible cannabis products (i.e. no smoking or vaping) to their customers for consumption directly on the premises.

The LGCA summarized the findings of its preliminary consultations in its 2020-2021 Annual Report. These preliminary consultations garnered a total of 800 online surveys with mixed support for these types of licensed premises. The LGCA noted that approximately 43 per cent of those surveyed disagreed with the idea of consumption lounges, 39 per cent agreed and 15 per cent were neutral on the matter.

Those against licensed consumption spaces expressed concerns around increased enforcement and public education needs as well as meeting consumer demands, whilst those in favour emphasized the new business opportunities and sources of revenues for small businesses.

The finding that 43 per cent of stakeholders agreed that if consumption lounges are permitted, these spaces should remain separate and apart from those serving alcohol, whilst only 29 per cent disagreed and 23 per cent remained neutral, provided only slightly more clarity.

Ultimately, the first round of consultations did not provide the LGCA much certainty. Instead, the findings made it evident that there are persistent polarized opinions on whether consumption lounges should be licensed to operate in Manitoba. The LGCA acknowledged that the COVID-19 pandemic and restrictions surrounding in-person experiences such public socializing may have influenced the feedback received and noted that given these mitigating factors, the only way to move forward would be to continue to follow up and consult with stakeholders as the cannabis industry advances and the effects of the pandemic continue to change.

This brings us to the present day, where we are already seeing this follow-up in action.

This is part one of a two-part series, originally published in The Lawyer's Daily