In our spotlight on Business Report tonight.

After nearly a year long wait, cannabis business owners around the state have the chance to open up a consumption lounge.

Places where you can go to safely and legally light up.

The first step applications, which opened up earlier this month.

But some insiders say strict regulations could dampen demand for a license.

And as Raven Santana found out, some unlikely businesses are showing interest in entering the market.

It's just been a journey, just a bunch of red tape going through city approvals, state approvals and of course, just actually doing actual work.

It's been almost two weeks since the cannabis Regulatory Commission opened the application portal for consumption lounges.

And Haytham Elgawly says he is finally feeling optimistic after spending more than $1,000,000 on safety measures and strict regulations over a span of three years.

Order mitigation systems, air purifying systems, noise and noise cancellation, you know, just installation, just to cancel any noises going on, ADA bathrooms, you name it, just anything to just build an assembly room just to have people here.

And then also to mitigate the smoke and make sure everybody's safe in a control, in a climate controlled environment.

The CEO and owner of Xena Lounge, a street level retail dispensary with a cannabis consumption area located in the basement level, gave me a tour of the 1200 square foot consumption lounge that can fit about 75 people.

It's going to be a security guard, an armed guard outside that's going to be checking IDs, making sure everybody is safe.

And then there's also going to be three bartenders on the main floor that's going to be helping the customers.

There's going to be two flower hosts and two bartenders downstairs.

And the consumption lounge.

Then there's, of course, the manager, the inventory control specialist, a few delivery drivers.

Elgawly admits the new requirements haven't been easy or cheap, but credits the CRC for their guidance.

The CRC has been helpful here and there and anytime we do ask questions, they've always been very helpful and they expedited my application just because I'm a minority.

You know.

Impact Zone Social Equity.

Applicant application fees costs $1,000.

Total $200 to submit and $800 upon approval.

The annual licensing for the consumption lounges will cost $1,000 for microbusinesses and $5,000 for standard businesses.

Under the rules, cannabis consumption areas will be attached to licensed dispensaries.

The regulations include restricting lounges to adults 21 and older, no unregulated cannabis and no food or alcohol sales.

The facility is required to implement odor control measures for consumption.

Limits must be enforced and the lounge needs signs clearly explaining these rules.

I think it's going to be surprising for a lot of people is that even if you own more than one retail location, you can only have one consumption area.

And so you're going to have to choose amongst those different retail locations where that consumption lounge is going.

Molly Hartman Lustig is the chair of McLaughlin and Sterns Cannabis Practice Group.

She noted just one of a few changes she noticed in the CRC application released January 2nd.

Plastic warns there will be certain issues that people may have not dealt with in the same way when obtaining a license the first time around.

Now that the.

Application portal's open and you can actually submit the application, you know, that's just the first step.

There may be some additional hurdles with respect to a consumption area on a zoning and planning level, a local land use level, a security level in coordination with.

Police, which is why Lustig foresees a decrease in applications.

I think we're going to see a decrease in the number of licenses.

I have started to see a difference in the type of person who is seeking a license.

I have started to see people who have absolutely no interest in cannabis but who have a logistics business, who have a distribution business, who have a business that has a.

Lot of crossover.

Despite the challenges, both Al-Ghazali and Lustig agree that the wait was worth it and believe the CRC application answers and clarifies a number of issues, including limiting unregulated cannabis, say consumption and employee education like consumption limits.

For NJ Spotlight News, I'm Raven Santana.