People have always sought entertainment out of their homes. Indeed, since the COVID-19 pandemic wound down, there has been an even greater rise in people’s appetite for immersive and out-of-home experiences as opposed to the glut of at-home purchasing of useful and non-useful commodities that ruled our economy during the pandemic.
Now that legal public consumption is becoming increasingly available in one form or another in many states, savvy entrepreneurs are recognizing that focusing on special events, setting up a business ecosystem with a cannabis consumption lounge as an anchor business, or working with ancillary, non-plant-touching businesses offering separate services in partnership with or adjacent to cannabis consumption allows further investment and opportunity to work with industries and businesses that may not want to directly profit from participation in cannabis ventures is a way to capitalize on this increased appetite for entertainment and experiences. (And yes, it may be possible to structure enterprises to really dilute the threat of over-taxation that many cannabis businesses face.)
In short, this intersection permits an opportunity to creatively navigate advantageous deal opportunities for businesses by carefully structuring such relationships to the benefit of all without having to recreate the wheel simply because cannabis is involved.
Since states have started to legalize commercial cannabis operations, businesses have mostly focused their operations on the sale and monetization of cannabis as an agricultural commodity. However, cannabis was never just about the sale and consumption of the plant itself for consumers and patients. There has always been a lifestyle and sense of community associated with the act of consumption. For instance, while people do not typically share their drinks while imbibing alcohol socially, most cannabis users in a social setting — pre-pandemic, of course, and starting back up now — will pass their cannabis product.
This shared experience creates a sense of identity and community, and has always been associated with cannabis consumption. It thus follows that businesses should focus more on how to tap into that lifestyle and sense of community as a means of creating brand stability and revenue.
In other words, the cannabis lifestyle provides businesses with the capacity to expand and enhance a consumer’s immersive experience while maximizing profit for both entertainment and cannabis proprietors. Now that legal pathways have begun to open allowing cannabis to evolve from an illegal commodity into a recognized lifestyle choice, the availability of legal consumption while attending an out-of-home or immersive experience has the potential to benefit brands by creating multiple revenue streams and business opportunities beyond the simple monetization opportunities of selling an out-of-home consumption opportunity.
Given the ever-evolving regulatory issues surrounding on-site consumption, consumption business owners are still trying to determine the most effective models, both from a liability and profitability standpoint, to implement — but the opportunities are there, and the possibilities are exciting.
While many consumption lounges have focused on providing a restaurant or nightclub-style setting, there are many other ways to make such lounges exciting to attend by creating immersive or traditional entertainment opportunities and otherwise providing services such as exercise classes, massage or whatever else the entrepreneur believes would enhance their patron’s cannabis experience. Indeed, sponsoring events in partnership with cannabis ventures that leverage a cannabis lifestyle not only serves an established audience, it has the potential to grow an audience interested in exploring enhanced immersive experiences.
Consumption lounges can also serve as the anchor for a larger, multidimensional destination offering entertainment that appeals to cannabis consumers — potentially creating an entire ecosystem of business opportunity.
Visiting a consumption lounge may enhance a patron’s subsequent experiences at, for instance, a virtual reality venue, a creative painting class, a yoga studio or other entertainment locales, which could potentially be offered on-site if structured in a compliant manner.
Similarly, for states that allow event or short-term consumption opportunities, creating temporary consumption opportunities attached to other activities, such as music, film and sporting options has also begun to take hold. Stadiums in Oakland and Adelanto, California, have directly permitted consumption facilities to be erected in the parking lots so that concert and event-goers can first stop and enhance their experience with cannabis before entering the venue.
In an industry where taxation and fluctuating market prices continue to harm cannabis business’ bottom-lines and their ability to survive, pairing out-of-home entertainment with brand-building opportunities not only creates new revenue streams that aren’t necessarily.
The catch is that companies must comply with a complex maze of cannabis laws and regulations that vary from state to state dictating whether public consumption is even permissible. In California for example, which supports the largest legal cannabis market in the U.S., there are varying rules even within different communities across the state. But the state does allow both a retail consumption license so that lounges can offer on-site consumption and a special events license where a licensee can choose a location to create a temporary consumption environment, which can be in conjunction with things like a state fair, concert, sporting event, etc. Other states like Michigan, Nevada and New York have also started to look for ways to crack this code as well.
The question becomes how to merge out-of-home cannabis consumption with out-of-home entertainment given that laws and regulations are still in their infancy and continue to develop. That’s where lawyers and industry professionals become crucial.
Perhaps the greatest challenge for the merger of cannabis and immersive entertainment is overcoming the stigma that impedes the progress of legalizing cannabis federally.
In many communities, cannabis is still feared and thought of as a dangerous drug with no positive benefit. Those of such mind refuse to believe that cannabis should be consumed in public and remind that it is still federally illegal and illegal in many states. In part, this is the result of fear around the perceived dangers of cannabis.
Of most concern is public safety. How much crime does cannabis generate? What behaviors does it inspire?
Yet, with the legalization of cannabis and all the regulations, security on the street outside and in dispensaries is tight, and the odor and health risks of indoor consumption are mitigated by strict air quality standards and technologies.
Further, it creates a safe place for consumption outside of one’s home — a must for patients who desire access to medical cannabis but live in federal housing and fear eviction due to federal illegality if they were to consume at home — as opposed to consumers purchasing the products and then consuming it in public spaces.
A cannabis lounge combined with ancillary entertainment lowers the potential risks of cannabis even further. Adjacent activities to explore after consuming helps keep drivers off the road and burn off the buzz, actually promoting public safety.
And of course there are economic advantages to creating a public space for cannabis consumption and out-of-home entertainment. In partnerships, the model is not just about the dispensary, it’s about an entire area and creating a destination, establishing new jobs, generating more revenue and promoting business development.
This is not to diminish the hurdles. Policymakers have to work through liability concerns and establish laws for intoxication, with the inevitable variances between jurisdictions. As a relative newcomer in the recreational market, at least New York seems to have learned from the fray and established consumption lounge regulations at the state level, rather than through local legislatures.
Still, as far as the cannabis industry has come in its trek from basic commodity to consumer lifestyle choice and product brand identity, the ecosystem around consumption is still nascent. All sides, from cannabis lounges to immersive event producers to government bodies, have issues to address. But they can come together, and as they coalesce, the stigma around cannabis will lessen, and the ecosystem will evolve.
The advantages of merging cannabis and immersive experience then become demonstrable. Cannabis enhances experiences, which drives up sales and price points. It can distinguish a brand, creating an associated lifestyle, furthering brand consistency, providing a unique opportunity and promoting public safety. In other words, a win-win for all.
Many in cannabis and other industries don’t recognize the potency of this potential intersection of opportunity, including regulators. As businesses slowly start to recognize these opportunities, the question is, who will crack the code first and get the advantage?