As marijuana products gain popularity in states that have legalized it, there is an increasing need and consumer demand for public lounges where marijuana products can be bought and consumed socially—similar to bars people visit to buy and drink alcohol. Unfortunately, governments, even in states with legalized marijuana, have mostly regulated this market out of existence.

In most adult-use marijuana regimes, the state government legalizes the sale and possession of marijuana via designated business licenses, such as dispensaries and delivery companies, but gives full discretion to local governments as to whether marijuana businesses will be allowed. Many local governments have exercised this power to reject marijuana deliveries and ban public use.

The main issue is that, in most legal states, smoking is not permitted in hotel rooms, public areas, or really anywhere else outside of private residences. For tourists without a local, private residence, or even residents who wish to consume socially outside their homes, these provisions make them susceptible to fines or even criminal charges. Essentially, marijuana remains illegal for anyone who does not have a local residence.

This has resulted in some less-than-desirable outcomes. With no designated area to legally consume, people end up smoking marijuana in prohibited places such as public sidewalks and parks, casinos, and bars— imposing externalities on those around them, who then complain to local officials. Some observers have dubbed this outcome a “market failure,” even though it results entirely from the way government regulations are written.

The issue of public marijuana consumption has a market solution—marijuana lounges represent an effective market solution to navigate this issue if only government regulations would allow them to exist.

Simply put, the main benefit of the lounges would be that smokers have a place to legally consume rather than light up in places they shouldn’t. The likelihood that individuals would risk a criminal charge by lighting up in a public park or on a sidewalk would be greatly reduced if they knew there was somewhere nearby they could legally perform the same activity while enjoying the company of those with similar interests.

There may be some externalities that could develop with this concentration of smokers, and it’s understandable that some business owners would not want a marijuana lounge next door due to odors and smoke contamination. Yet somehow cities have bars and lounges that allow tobacco and cigarette smoking and have overcome this problem.

Furthermore, technological advances also promise to ease the tensions between lounges and adjacent owners. Odor-reducing devices and special ventilation systems show promise that marijuana lounges could ultimately be of minimal disturbance to neighbors. And since the product is legal and highly regulated, it is highly unlikely lounges would become a hub of crime, as opponents originally claimed about early marijuana dispensaries (they were wrong).

There is also an economic argument for allowing marijuana lounges—as with the marijuana industry generally, this business type would create more jobs and entrepreneurial opportunities.

The current lack of marijuana lounges increases the burden on police and detracts from some of the benefits of legalization. Following marijuana legalization, law enforcement should not have to dedicate resources to police a multitude of complaints about outdoor smoking.

There is simply no valid justification for banning marijuana lounges. The few lounges now in existence have proven their ability to solve some of the current, legislatively-driven kinks in the market. There is a balance between protecting the rights of smokers and the externalities they impose on the individuals around them. But refusing everyone the ability to legally consume marijuana anywhere but their private homes is an unnecessary and unjustified restriction which seems to impose more costs on non-smokers than there would be if marijuana lounges were permitted.