The Last Mile of Cannabis Legalization
Why social spaces are the most vital step towards the future of cannabis that nobody’s talking about
Quaint little coffee shops, nights with live music and eating like kings… these are a few of my favorite things. Now imagine these cafes, music venues, and restaurants serving your favorite cannabis products as well. This may be a reality sooner than you think, and it’s hard to understate the transformative impact this will have on the cannabis industry and our broader lives.
Legislative shifts in U.S. states and across Canada are beginning to allow for the social consumption of cannabis within retail establishments, food and beverage locations, and at events. With the increasing commoditization of cultivation and retail facilities, catering to the emerging social consumption layer could represent the next wave of substantial business opportunities that are currently being underestimated.
Unlocking Economic Impact
At the end of alcohol prohibition in the U.S., the opening of licensed bars and retailers created a major economic impact. In the first year alone, the U.S. government collected over $258 million in alcohol-related sales taxes — or $5 billion in modern money. Much of that value is being accessed in legal states, but a robust social environment is key to truly accelerating its potential.
Across the sector, we are beginning to witness the emergence of brands that are valued and trusted by consumers. However, the ability to build a truly global brand relies heavily on trust and mind share of products cultivated by a robust infrastructure. In the consumer packaged goods space, we have seen this phenomenon mastered by such brands as Red Bull, Coca Cola, and Bud Light, where event and sampling efforts supported category captain status in their competitive environments. This will prove even more important in the cannabis industry, as consumers with limited information rely heavily on their trust in a product in driving their purchasing decision.
Professionalizing Business Models
Some brands are already benefiting from early efforts in venues for social consumption. The Original Cannabis Cafe (formerly Lowell Cafe), located in West Hollywood, is demonstrating its worth to brands served there. One beverage company witnessed over 1,800 of its products sold through Lowell Cafe in the first month of operation. Hall of Flowers, a B2B brand-focused trade show located in Santa Rosa, has similarly made a name for itself as the first event with legal recreational sales of cannabis products. In doing so, it has created immense value for brands and retailers with a first-of-its-kind ability to sample products, catapulting to become one of the must-attend events in the industry.
These new opportunities allow retailers to make informed purchasing decisions and give brands the chance to let their products speak for themselves. This value can’t be understated, as it represents a powerful go-to-market strategy that is more controllable than today’s retail environments. In the same way that some brands have extended into retail operations, many brands will likely create or partner with licensed cannabis consumption venues, allowing them to fully own the customer experience with their brand.
Redefining Social Experience
Picture: for every bar where you can sip on a delicious beer, wine, or cocktail, there’s a potential corresponding venue that allows you to enjoy your favorite joint, edibles, or THC-infused beverages. What’s more interesting: with the number of use cases for cannabis products far outweighing those of alcoholic beverages, these locations have the opportunity to take on new structures and business models beyond our traditional social environments. This can help create a new realm of untapped social experience.
While some envision the dispensary turning into a social hub for cannabis consumption, the crossover between retail and hospitality has only been infrequently adopted in other industries. With two distinct business functions, it seems likely that the dominant players in the cannabis hospitality space will not necessarily rise from existing retailers.
This combination of immense economic, business model and cultural implications makes the burgeoning social consumption space one of the most exciting sectors within cannabis.
Social consumption is coming. But what needs to happen first?
The Grove Space is a cannabis events company focused on providing anything from cannabis-friendly venues to full event production services for cannabis brands. The Grove Space hosts a variety of ticketed events for attendees through When You Know Events at wenyuno.com.
At Cannablurbs, we’re excited to share the varied perspectives of different leaders across the industry through interviews and Guest Articles. If you’re active in cannabis and think you have a strong viewpoint to share, shoot us an email to talk about collaborating.
