Frank Dailey is poring through new rules that could allow his cannabis dispensary in Holyoke to open an on-site lounge where customers could eat, drink and smoke the products he sells.

The Commonwealth’s Cannabis Control Commission is now allowing a range of licensed Marijuana Establishments (MEs), to set aside areas where people may consume cannabis.

Dailey owns and operates Boston Bud Factory, where he manufactures and sells cannabis products. He wants to attract new business, including tourists from other states, by establishing an area where patrons can indulge in his edibles, tinctures and vapes.

“We have an opportunity to expand our client base, and that’s going to be huge for us,” he told The Republican. “That will help make us a destination, so we have a chance to survive in this industry.”

The CCC unanimously approved regulations in December that allow social consumption of cannabis. While the rules went into effect in January, it could be a year or more before the first lounges come online. State and local officials are trying to figure out how to translate policy into practice.

“The regulations have been promulgated, they’re formalized, they’ve been published. They’re good to go,” said CCC commissioner Bruce Stebbins.

A head start for some

According to the CCC, as of early February, there were 686 licensed cannabis operations in Massachusetts — but only 139 of them are eligible to apply for and potentially receive a social consumption license. Candidates must fall into these categories: economic empowerment or microbusinesses; operations that only deliver products; and entrepreneurs who are part of the social equity program, which boosts entrepreneurs “disproportionately harmed by the war on drugs,” Stebbins said.

The commission is trying to give those entrepreneurs a head start by opening lounges three years before their bigger competitors.

“There were communities and populations that were disproportionately impacted either by over-enforcement of the drug laws or might have been arrested for something that is no longer a crime in Massachusetts,” Stebbins said.

Dailey’s business is in the equity program because he is from Springfield, where the arrest rates for cannabis crimes was high. He was also discharged from the U.S. Navy in 1987 for having THC in his system.

THC is the principal psychoactive component of cannabis.

“The inequity in this business makes it hard because the big guys control a lot of the market, and it’s hard for us to get a percentage of the market. It’s an opportunity for us to be more competitive. It gives a break to the smaller guys,” Dailey said.

The CCC has spent several years developing regulations that will govern social consumption. No one under 21 may buy and consume cannabis. The establishments are banned from selling alcohol or tobacco products and consumers must be allowed to take home unused products.

While the commission has legalized and laid out a social consumption framework, cities and towns must approve licenses for businesses to operate in their locality.

“We have done a lot of municipal outreach and they have a lot of questions about what’s required. There are some communities we’ve heard from that want to hear more and are interested in taking the necessary steps to move forward,” Stebbins said.

Sidelined for now

For now, Zori Alfonso is watching from the sidelines. She manages Zaza Green Cannabis dispensary in Springfield. She told The Republican her business is not among the protected class of operators opening first.

“It’s not in the near future for us, but it’s something we’ve talked about and would like to participate in as soon as we can,” she said.

While she waits, Alfonso is watching how lounges and off-site events are being run in other states and at industry events.

“It’s always such a good vibe. We’ve seen how well they’re run in other states and it’s something we knew would happen inevitably in the industry. It’s the next step for cannabis,” she said.

The new Massachusetts regulations will not only allow dispensaries to open lounges. They also permit cannabis consumption at sanctioned events and allow non-cannabis businesses to partner with licensees.

Stebbins says he hopes entrepreneurs get creative by offering cannabis at places like yoga studios, bed and breakfast operations and even movie theaters, as long as they have local approval to do so.

But while the CCC has thrown open the door to public consumption, there are measures to make sure it is done safely.

Marijuana establishments and their employees are required to go through vendor safety training to keep patrons from becoming physically or mentally impaired by over-consumption. Businesses must have a plan that helps patrons who overindulge get home safely. And packaging must tell customers approximately how long it will take them to get high.

“We worked closely with the public health and safety community and got a lot of their feedback,” Stebbins said. “Our operators want to make sure their patrons get home safely. We’ve instituted a lot of these safeguards because, while other states are doing this, we want to be on the forefront of doing it well and safely.”

Next natural step

The CCC says cannabis businesses in Massachusetts grossed more than $1.65 billion in sales in 2025, “setting a new annual record ahead of potential changes coming in 2026 including new social consumption licenses,” according to the commission.

Based in Norwood, MariMed cultivates, produces and sells cannabis products at the wholesale and retail levels. Tim Shaw, the company’s chief operating officer, expects business to blossom as lounges begin opening.

“It’s the next, natural step to normalization,” he says. “There is now an opportunity to not feel like a criminal or have to stay in your home. This promotes the ability for people to normalize cannabis use. It’s the same as having a beer with your buddies at a social event.”

Shaw isn’t projecting how much business may increase, and he’s realistic about the cost of expanding into lounges.

MariMed will likely have to start producing smaller packages of its products, the same way bars sell bottles and cans of beer — not six packs.

“There might be some additional cost if the products have to leave the manufacturing facility in smaller packages for those locations,” he said.

Dailey, of the Boston Bud Factory in Holyoke, is also concerned the cost of opening a lounge in his dispensary could be prohibitive. CCC regulations mandate HVAC systems to filter and clear smoke from the air.

“I’ve heard reports we might be required to have a million-dollar system to ensure air quality,” he said.

While Stebbins agrees start-up costs could be high, he reminds entrepreneurs that state grants may help them find ways to save money.