4 Must-Have Retail Strategies For Cannabis Consumption Lounges with Maha Haq

{}Introduction and Welcome

Jake Litke: welcome to the Cannabis Marketing Live podcast, where we cover the most effective marketing trends and strategies to grow your cannabis dispensary, delivery service, or brand. I'm your host, Jake Litke, and today we are discussing retail strategies for cannabis consumption lounges. This week we are joined by Maha — Maha has dedicated over a decade to the commercial cannabis space, she's an operations consultant for retailers, consumption lounges, and events through her cannabis hospitality firm, Maha Hospitality. Maha is currently the director of retail marketing for State House Holdings, and was recently director of retail strategy for Green Thumb Industries. Welcome to the show, Maha.

Maha: thank you, thank you for having me, I'm excited to chat with you guys about consumption lounges, it's an exciting time to talk about them right now.

Jake Litke: yeah, you were mentioning that a little bit earlier, and I guess we can just kind of dive into that, I was going to start off by asking about the state of things, but the state of things have changed as of today.

Maha: oh yeah, so, yeah, I was mentioning it to you guys earlier, the state of Nevada just announced their license winners for their consumption lounges,

Nevada's New Consumption Lounge Licenses

Maha: so they actually have two different consumption lounge license types, and that was fun. they have — so the state of Nevada has two consumption lounge license types, one is an independent consumption lounge license, and the other is a consumption lounge license associated with a retail dispensary. so around 100 applications were submitted in a 10-day period, and 40 were announced as winners of that, it was a non-competitive licensing round, it was essentially a lottery, so if you just put your name into the list, it just got randomly selected by a program, so it wasn't competitive like it is in other cities — city of West Hollywood, for example, they had a merit-based competitive licensing round for their consumption lounges, but Nevada did it kind of differently, and I'm looking forward to what comes out of there, because the state itself said that they are anticipating some of these lounges to open by next year, so I feel like the progress will be quicker in the state of Nevada compared to what we've seen in California so far, specifically West Hollywood. so very exciting times, like today is day one of knowing who the new license winners are for lounges in Nevada.

Jake Litke: so good stuff, and that was a pretty quick process, right, probably a very quick process?

Maha: yes, so 10 days was the application filing period, so yeah, that's pretty quick, versus what we saw in West Hollywood, I believe it was a few months to get your application in, but around over 300 applications were submitted, and this was back in mid 2018.

Comparing Nevada to West Hollywood's Rollout

Maha: so just to kind of jump right into it, and draw some comparisons to the city of West Hollywood, the license application round was in the middle of 2018, summer 2018, the winners were announced around the end of 2018, and only one out of the 14 — well, 14 is also kind of an odd number to share, because initially when the consumption lounge licenses were being given out in West Hollywood, they had separated lounges that allow inhalable products from lounges that allow edibles only, so at the time there were quite a lot more than 14, but then they consolidated those licenses, so now there are only 14 licensees for consumption lounges that allow both inhalables and edibles, the city didn't see it make sense to keep them separated, so they're now together. but only one lounge had opened before the pandemic, and that was the OG Cannabis Cafe, or the Lowell Cafe, which did end up shutting down a few months after it opened, and it wasn't entirely related to the pandemic, but because of the pandemic none of these lounges opened until way later. Artistry ended up being the second lounge to open, they opened I believe last year — or this year, around 4/20, April 20th. so it took a while, when you put it into perspective, 2018 is when they were awarded the license, and some of these lounges didn't open until this year, so the pandemic really impacted that, but at least with Nevada they are not going to be dealing with that, hopefully, so I foresee a quicker progression, a quicker turnaround, with getting those lounges up and running.

Jake Litke: that's great, so you've got some stuff going on in Southern California, we have Nevada coming online, how many states today have a program at all, and of those states, who actually has locations that are open?

States With Active Consumption Lounge Programs

Maha: okay, so at the moment there's only seven states that have legislation in place for consumption lounges, but of those seven only four actually have consumption lounges open, those states are California, there are a few open in Nevada, one of particular significance is Nuwu consumption lounge, that is actually on reservation land, Native American territory, the two other states are Colorado and — I believe it's either Washington or Oregon, I need to double check that. so it's seven states with legislation, and four are the only ones that are open, so yeah, it's kind of crazy — California, Nevada, Colorado, and Washington.

Jake Litke: yep, okay, and of those, you mentioned in LA they have edibles and they have smokable products in one license —

Maha: not anymore, they're consolidated now.

Jake Litke: now, yeah, now they're consolidated, but what does it look like in terms of how do these places deal with the smoking laws that exist, because you have blanket laws around smoking that aren't even related to cannabis, how does that — how do people deal with that?

Odor Control and Compliance

Maha: so a lot of the cities are anticipating odor control plans within the larger compliance plans that you have to submit for your application, so you need to have something connected with your HVAC system that will serve as an odor control agent, so a lot of what I get to do with some of my clients is recommend different filtration — HEPA filters, carbon, carbon-in-use, or carbon-based HEPA filters — so that is as basic as it can be, but you have to have some sort of plan, you can present that: hey, I am connecting this odor control agent to our HVAC system, come check it out when you do your inspection, and as long as it checks out, the city will be happy, and it'll fulfill as an odor control initiative in that business, and you'll get the green light to open up.

Jake Litke: and then what about neighbors, right, if you're in such a commercial area, you're gonna have neighbors, do you have to do a public notice or hearing, do people get to complain?

Neighbor Relations and Public Notice

Maha: yes, so in the city of West Hollywood there are a couple of lounges that are located close to residences, one in particular is part of State House, they have houses right behind them, but they're way far up on top of a hill, but from their window they can see the dispensary and the lounge, and there was a public notice, and they did have complaints, but at the end of the day, if the business is doing what they can to make sure there's no disturbance for those residents, then the city is going to be okay with it, especially when you're considering that this business is going to bring in a lot of revenue for the city — the city of West Hollywood is separate from the City of LA, it's a smaller city, so they are very much depending on and relying on the cannabis businesses to bring in that revenue for their city, so that does hold more leverage than the residents who are making complaints. but surprisingly not many residents in West Hollywood have made specific complaints, only the few that are located super closely, but they're not even that close to begin with, but that is something you have to do when you are pursuing a consumption lounge license, or even a dispensary license, you have to scope out your neighbors, you have to go to any neighboring businesses as well, and this is all on top of getting your landlord's approval, so you need to get your neighbors' approval as well.

Jake Litke: yeah, lots of hoops to go through. yeah, so if we talk about — you mentioned in Nevada there's two different licenses that they gave out, one for someone who already has a retail license, and then they gave out licenses for someone who's just got a new business, freestanding, it's going to be a consumption lounge — how does that work with distribution and retail licensing, does it act — is it like a dispensary license if you don't have a dispensary to begin with but now you have a lounge, how do you get your products?

Nevada's Retail vs. Independent Lounge Licenses

Maha: so this is a very interesting setup that the state of Nevada set forth, so if you are an independent consumption lounge licensee, you have to get your products from a retailer, not a distributor, a retailer, so they go to them, they purchase the products, and they buy it wholesale, but they cannot go through a distributor like a retailer does, so that is a big difference in product procurement. but on top of that, consumption lounges also have to carry different types of products in general, not just the independent lounge but also the lounges that are affiliated with retail, they have to get different types of products, so whether that's coming from the distributor to the retailer, or if it's coming to the independent lounge from the retailer, so they are all different sets of products. so it's interesting, though, because I've never heard of a case where a retailer or lounge had to not go to a distributor to get their product, so it'll be interesting to see that play out, and identifying those retail partners for the independent lounge license is probably going to be an interesting addition to operations for the lounge.

Jake Litke: and you said different products, but how is it different in what way?

Maha: okay, so there is a push for single-serve products, so for reference, in California you can buy your product at the lounge but you can take it back home as well, but in Nevada they are pushing for not allowing the patron to take their cannabis products home, they have to finish it right then and there, just like you'd have to at a bar, you can't take your drink away — actually in Nevada, if you were drinking something you can walk away with it, but they're putting that restriction on weed, which is kind of ridiculous and crazy to think about, because you get away with so much with alcohol there, but this is something that they want to push forth, to only have single-serve products, to make sure they finish it up there, and if they don't finish it they still can't take it home.

Single-Serve Product Limits in Nevada

Maha: so the details for the actual single-serve products is: the cannabis products cannot exceed 3.5 grams of smokable flower, concentrates and vapes cannot exceed 300 milligrams, and there are even rules for topicals — so let me say that again: single-use cannabis products are limited to no more than 3.5 grams of usable cannabis under the regulations, extracted inhalable cannabis products such as vaping or dabbing products are limited to 300 milligrams of THC, and all single-use products with more than one gram of usable cannabis, and all extracted inhalables, must carry potency warnings, so individual servings of ready-to-consume edible products are capped at 10 milligrams THC, which is a fairly standard amount in states that have legalized cannabis for rec use, so we see the 10 milligram increments for edibles across the board kind of, but they also have limitations on topicals, so topicals are limited to 400 milligrams of THC, and transdermal patches and all other cannabis products cannot have more than 100 milligrams of THC and must carry a written warning if they are more than 10 milligrams of THC. so that's it, it's kind of a doozy when you think of it, because there's nothing like this in other states yet, I do foresee other states adopting a similar structure for the limitations on product amount, THC dosage, etc., but to see Nevada be the first one, it's kind of ironic, just because I can literally walk out of a restaurant with a glass of wine but I cannot walk out of a consumption lounge with my half-smoked joint, even if I stowed it away, so it's kind of an interesting intersection of using some alcohol rules but not others.

Jake Litke: but on the topic of consumption, what is considered over-consumption? how — I mean this is all new, right, so nobody knows how this works, did they attempt to put some sort of parameters, what happens if someone has too many edibles, or really even a normal amount, like a normal — what would be considered a normal amount for many people would be excessive, right, 10 milligrams is not something that someone who has no experience with cannabis should probably start off with.

Managing Over-Consumption

Maha: exactly, and 10 milligrams is also very little for some other consumers, so it's like the dosing that has been determined by the state is really not reflective of every patron that will be walking in and out of a lounge, so this is where training and development comes into play. the state has not given any guidance on how to deal with over-consumption, so that is something on the licensee to figure out, and these were some of the things I got to work on back when I was working on consumption lounges in — ooh, Illinois, I forgot — the state of Illinois has consumption lounges, I opened one up for Green Thumb Industries out there, so at the state of Illinois, when we opened the first lounge over there, there was really no guidance, no perspective on how lounge operations should be in that state, so we kind of just went with the flow, and we did have some people who had to call the ambulance because they felt like they were overdosing or something like that, and that can be kind of scary, and even in California, in West Hollywood, at the Lowell Cafe there would be eight to ten passouts a week, and an ambulance would be called every month, like once a month, so this is very expected if you don't have the proper protocols in place. so some of the proper protocols would entail — first off, having a 90-minute table limit, you don't want them to overstay their welcome, because if they do that, they are more susceptible to over-consuming. another factor is, if they are going to consume edibles, to only allow edibles that are nano-emulsified, slash, are fast-reacting — if they're traditionally infused edibles, they're gonna hit you like once your 90-minute table limit is up, so you don't want to leave when your edible is finally hitting you, so you want to keep only nano-emulsified, quick-reacting edibles.

Server Training and Titration

Maha: and really it's about titration, and asking questions and proper titration, so the server is not only acting as a bud tender, as a server, but they're also kind of there as your — they're kind of babysitting you as well, they kind of have to, and that's what I always try to tell servers at consumption lounges, you're taking the role of several different people, right, you got to keep a very close eye and you have to ask all the right questions so you can assess them appropriately and give them the best experience they can have. so of course you will ask questions like, how often do you consume, is this your first time, what kind of consumption method do you go for, do you consider yourself a heavy consumer, how much would you consume in a day or in a week or in a month, so you ask these sets of questions, get a gauge on what their experience with cannabis consumption is like. it can be annoying for the patrons, sometimes they just want to sit down, get their weed, and just do their thing, but if you're a newbie, or if this is your first time going there, the server has to be as attentive as possible and has to question really every part of their cannabis consumption journey, so they can better be equipped to help them find the right product and avoid any sort of overdose or adverse effects that could very well happen with cannabis.

Jake Litke: it's kind of what bartenders do too, they'll see someone who's had too many drinks and they won't serve them.

Maha: same applies for a consumption lounge server, they have to know when they have to stop serving to somebody, but the biggest and most important component of a lounge is having water accessible for your patrons, because if you're not drinking water you're not going to feel good the entire time, you have to be hydrated, that's another task of a server, to make sure they've got water, to make sure that they know to keep consuming water if they're going to keep consuming cannabis. but if you're dealing with a cannasseur then you can kind of let them be, but a lot of people that go into lounges will probably be kind of curious, or will probably be a friend of a cannasseur who isn't a connoisseur, so not everyone's the same, be abreast to any different types of people that are coming to the lounge, and just understand that you're gonna have to kind of babysit them and help titrate a perfect dose for that patron if they're not a cannasseur.

Jake Litke: yeah, and that's actually important, and then maybe you can explain titrate, which is not a word that everyone is familiar with.

Maha: okay, so titration, dose titration, is you're basically testing out little by little how much of a product you will need, so for example if I take one pull from a joint but that's not enough, I could quickly recognize that it's not enough, so I'll take two more pulls, or one more pull, depending on my comfortability and experience with the product, so testing out how much you need, but starting slow and going low, and starting slow, that is the mantra with really any cannabis product, especially if you're new, a novice, and still trying to find your perfect dose — I personally already know my perfect dose because I have self-titrated for a while, but if you haven't yet, it's just starting little by little and seeing where you can go up to, but not to the extreme limit, but to a comfortable level that you don't want to exceed, so if you're feeling great you don't want to go more than that, you want to keep that great feeling, so that's titration, starting little by little, seeing and identifying your perfect dose.

Jake Litke: yeah, that seems like the optimal situation, but maybe won't happen as much as we might like.

Maha: yeah, but this is also the duty of the server, they have to help a novice or a newbie through this titration process, and you've got 90 minutes to do so, and it's much easier with inhalables, because inhalables — joints, bongs, dabs, vapes — they hit you almost immediately, whereas edibles it does take some time, but have your server help you with your dosing, that's what they're there to do, you want to make sure you're avoiding any sort of adverse effects, and really anything else that could get you even a little close to overdosing, overdosing is very possible, and some people think it's not, because cannabis is deemed as such a safe substance by a lot of industry professionals, but that's not the case for everyone, it can react differently with people, you got to be prepared for when that happens. so yeah, that's definitely an important protocol to have, if someone is passing out or not feeling good, you have to have a set protocol for how to deal with them, one of them being make sure they drink water, second, give them a drink with electrolytes, something like Gatorade, or something like Liquid IV, something that could really help hydrate them, and if you are serving food at your establishment, even better, give them maybe something simple, a carb to eat, like bread, crackers, what have you, to help them cope with any sort of adverse effects that they may be experiencing. but not all lounges allow food and beverages, so this could be tricky, water at the very least is allowed in the majority of lounges, but food not all the time — Nevada is adopting food and beverage in a consumption lounge, the city of West Hollywood has also allowed food and beverage in their lounges as well, but not every city has.

Jake Litke: yeah, that actually leads into my next set of questions, which is, what does the business model look like, right, so you are selling cannabis products for people, and obviously in some places you can't sell food and beverage, is it just one line of revenue if you're not able to sell other goods or services other than cannabis, or are there some creative ways —

Lounge Business Models and Revenue Streams

Maha: that I've come across, specifically in the city of West Hollywood, and San Francisco, and Illinois, so we have device rentals, you know, you can rent a dab device, like a Puffco, or an iSee, or a Dr. Dabber, or any of those devices, or you can even rent out a bong, you have different options for bongs depending on the type of bong, it can be priced accordingly, so if it's like a very fancy bong made by a local artist you can charge upwards of a hundred an hour for it, but if it's something very basic, like a beaker bong, could be twenty dollars an hour to rent, or twenty dollars for the entire 90-minute duration, depending on how you want to lay it out. but there's device rentals, and what I've recently seen in West Hollywood, there's a new lounge that opened called the Woods, it's also a dispensary owned by the actor Woody Harrelson, and in the consumption lounge area there's these little pods, kind of like cabanas, that you can rent out, they're very beautiful, but they fit around six to ten people, and to rent that cabana or that pod out it's between 100 to 150 dollars an hour, so that's an additional rental option on top of the devices and bongs and smoking consumption apparatuses. so those are two, but not as revenue generating compared to the actual product sales, so you kind of have to get a little creative with how you are going to incorporate additional costs, just like you go to a club, you have bottle service, you can do bong service, you can have a joint roller, you can pay for that joint roller, whether it's per the hour or per the joint — people are getting creative, and that's what I get to work on, how do you get to be creative with your different revenue streams in your lounge, because it can be tricky, but it's all about experience and presentation, and you can charge for that, you can charge beyond charging for the product, you can charge for an experience, and you can charge for a presentation.

Jake Litke: what about like live music?

Entertainment and Events at Lounges

Maha: oh yeah, and you can charge for tickets too, and that's happening at Artistry, they have music nights, they have art nights as well, they have a paint and puff, so they have a lot of experiential activations going on with brands — brands sponsor certain events too, that's another way a consumption lounge can get revenue, is partner with a brand who wants to buy into being like a featured or spotlighted brand for that lounge for the night. but yes, there are entertainment routes that you can take, you can have ticketed events, but I'm actually surprised I'm not seeing it be done as often, because a lot of the lounges that are open right now don't really have a — like a large venue type of property, so hopefully in the coming year, West Hollywood specifically being the heart of Los Angeles's nightlife, there will be some lounges that have large enough properties where it can be like a music venue, it can be like a concert hall, or a stage type of space — there is one that will be opening up soon that does have a small stage, very uniquely placed, kind of like a mezzanine, so I do anticipate that lounge doing a lot more ticket sales, music performances, comedy shows.

Jake Litke: comedy seems like a good one.

Maha: yeah, so that's going to be fun, and I'm looking forward to that, but besides just consumption lounges, social consumption areas go beyond just these stationary, permanent-location-type lounges, there's also events — there's a cannabis event organizer license in the state of California, and other states are now looking at what California has done so far with it, because that actually came out before some of the consumption lounge licenses were starting to be offered by specific cities, so I guess this might go into one of your other questions about events,

Cannabis Event Organizer Licenses

Maha: but event organizer license types are significantly cheaper and have less of a startup cost compared to consumption lounge license types, but what entails for an event organizer license is that it's a pathway to allow the sale and consumption of cannabis at an approved venue, so that venue is not a licensed lounge, it's just a venue that you have sought approval for, so you can host a one-off cannabis event there and conduct cannabis transactions. so according to the Department of Cannabis Control in California, you must have two licenses to host a cannabis event, you have a cannabis event organizer license, and you have a temporary cannabis event license, at least 60 days before the event starts, so the license — you cannot sell cannabis, so they must partner with a retailer to facilitate the cannabis transactions, so they have to pair up with a dispensary.

Jake Litke: so is that a brick and mortar license, or what if you just have a delivery license, would that work too?

Maha: so as long as it's a partner that can conduct cannabis sales and is customer-facing, then yes, so a delivery works in that situation as well, and there have been delivery services that have paired up with large-scale events, which I'll get into in a bit, but the benefit to the event organizer license is not needing a permanent location or property, so it's very cost-effective in that manner. and to just kind of put it in perspective, the average lounge license application fee in California is around ten thousand dollars, similar to what the independent lounge license application fee was in Nevada, but an organizer license application fee in California is one thousand dollars, so big — big difference. and to kind of even put it a step further, in the state of Nevada, just recently, the retailers who applied for the lounge license had to pay a hundred thousand dollars for their license application fees, so that's crazy, but an event organizer license type in California is only a thousand dollars, compared to the other license fees that I just mentioned, so that's something to consider. but, as you were saying earlier, if a delivery service can do it — so Eaze actually had partnered up with a couple other brands and another event organizer licensee to head up the Grasslands portion at the festival Outside Lands, at Golden Gate Park in San Francisco, and it was Eaze one year, and it was another retailer called Embark the following year, so these retailers have even gone ahead to get their own event organizer license type, so they're the event organizer and the retailer, so I see that being a very strategic play with a couple of retailers right now, because they want to have their events, they want to have social consumption available as a pathway for them beyond just opening up a lounge, so I think that's a very solid retail strategy, is to go for an event organizer license type. so Embark is doing it, Eaze has done it, one of my clients, Harborside dispensaries, they also have an event organizer license type, which they will be able to utilize at traditional venues just like Golden Gate Park — the one in question for them is the Oakland Coliseum. we've seen stadiums have cannabis events, one in SoCal was the Adelanto Stadium, they've hosted Kushstock, they've hosted Burning Trees festival, and these are all weed festivals, which you can buy weed at legally, and it's all done through this license type.

Jake Litke: and that license, I mean it sounds similar to an event license you could get for beer and wine, I know that when you get those, those are one-off licenses, like you apply for it, it's inexpensive, but it's for a specific day or set of days.

Maha: exactly, you have to be very prepared, so that's a part of being an event organizer licensee, you have to be very prepared, you have to have all your approvals set, so if you're going to do something at the Adelanto Stadium, you have to ask for the local city of Adelanto's approval — hey, I want to have an event over here, a cannabis event, here's my license, here's my retail partner, we are all good to go — and they'll give you the green light or not, so it really is dependent on the city, there are cannabis-friendly cities like Adelanto, but something like the Rose Bowl — I'm from Pasadena, so doing something at the Rose Bowl I don't think is going to happen anytime soon, but hopefully that could be something that happens in the future, because that would be crazy.

Jake Litke: it's a thousand dollars fee for the event, so you have to apply for a license for each event you want to have, and it'll be a thousand dollars, and that's assuming you have everything else all taken care of.

Maha: yes, and actually for the thousand dollar fee for the license, you actually are able to do up to four or five events for the year.

Jake Litke: oh okay, so you just have to schedule it appropriately.

Maha: exactly, you just have to schedule it appropriately and have a plan, and because there are hurdles in getting these licenses sometimes, especially in a time where there's backlogs happening right now with a lot of these cannabis governing authorities, there's a lot of time in between the license application submission and the license awarding, so people are trying to come up with — I don't want to say loophole, but people are coming up with crafty ideas on social consumption, and that is having private events that don't require a license, and private events that you can't sell cannabis at, but private events are selling sponsorship opportunities to brands, so there's a couple of examples in LA, and also New York, this is popping up in New York as well — there's Green Street, there's Infused Social House, these are private venues that allow cannabis consumption, they don't charge you for cannabis, but you can go there and consume weed, you can bring your own, or there might be brands that are giving it out, and this is due to there not being any legal pathway in that city for consumption lounges, so the city of LA does not have any legal pathway to get licensed for a consumption lounge, so you're seeing these private, members-only venues opening up, or these private events kind of just popping up all over LA, but West Hollywood, honestly, I'm not seeing a lot of that, I'm seeing more emphasis on just developing the lounges itself as opposed to having a private event, a private cannabis event, there. so I just saw in the Q&A, are you familiar with Hazy Events, here in California? so Hazy is another event organizer without a license that does private events at their HQ, and private events at any other privately owned venues, they just have to get landlord approval, and they just can't sell cannabis, so that's something being done popularly, and same in New York, you have Astor Club NYC, it's just a members-only venue that you can smoke at, but it is not bound to any sort of license and does not have to really report to any cannabis governing authority out there.

Jake Litke: so you probably can sell food and beverages there.

Maha: yeah, yeah, you can definitely have some food and beverages there, yep, but you can't sell weed.

The High Times Cannabis Cafe

Jake Litke: fair enough, we had another question here about, someone's asking about the High Times Cafe revamp — so the High Times Cannabis Cafe revamp in Weho.

Maha: yes, so the High Times, for people not from California — oh yeah, West Hollywood — so the High Times Cannabis Cafe was previously the Lowell Cafe, then Lowell backed out, became the OG Cannabis Cafe, and then the licensees of the OG Cannabis Cafe sold their stake to High Times, so that particular lounge has gone through many changes, and it was the first lounge to have opened that allowed food and beverage, which is very significant, but at the same time they did shut down for reasons outside of the pandemic, they had a lot of administrative and management issues, which thus they sold to High Times, and we'll see how that goes, it should be opening up soon, and maybe it won't be like the previous two lounges it was before, but it will be opening up soon.

Jake Litke: and, soon, that's a relative term, especially — yeah, like people say a month and it ends up being four months.

Maha: but hey, that's the state of the industry right now, you submit something to your city and state and they don't get back to you for like another three to six months, it's a very common practice right now.

Jake Litke: yeah, well let's circle back to Nevada then, we just — licenses just got approved today, you're thinking we'll start to see things next year, next year is not very long away.

Maha: I also would assume that some of these license holders have been planning ahead for this, primarily the retailers have been planning quite a bit, because they have a location and a property already, and if they just have extra space, just like Green Thumb Industries did, they have Cookies on the Strip, which is currently a dispensary, but they also have space for a lounge, are they going to be doing it at that location? I do not know, they might be doing it elsewhere, but just for example they already had additional area for a prospective lounge, and there were plans being made for it, but now nothing — I don't think anything has been executed among the different retailers who got the lounge license, but it's go time now, and if they have property next to their retail, then they're set.

Jake Litke: and is there — so they got the license today, or the approval, yes — is there anything holding them back from opening their doors tomorrow, or is there some sort of secondary inspections that need to happen before?

Maha: there's most likely some inspections that they'll have to go through, just to make sure everything is solid, you know, got to make sure they got all the bells and whistles in the appropriate places, that includes security cameras, that includes having the appropriate HVAC odor control systems, making sure that it is ADA compliant, but other than that, if there was a spot that was already being prepared for and it's ready to open tomorrow, they can request that final inspection and be good to go in theory.

Jake Litke: and is there a public posting, or has someone put out an article yet of who won, it was 40 licenses got —

Maha: yeah, I've actually got a couple of links, I can share it in the chat, is that cool?

Jake Litke: yeah, you can share it in the chat, I think it'll go out here, and we can also put it on the post later, I think for the playback we can add it there as well.

Maha: so this is the link from the CCB, and — actually I can just post — are the names — like can you tell who the companies are, because sometimes the name of the company is not —

Jake Litke: oh yeah, so it is everyone's LLC, this is actually from the official CCB of Nevada, and here I just put the link in, and it says every entity's name, it does not help you identify which dispensary or which cannabis business it is, but I can recognize a few because I've either worked with them or I'm familiar with them, but it's kind of hard to identify who is who if you're not from Nevada or have not worked with any of these folks. but you can also see the location that they have their license in as well, so there's a lot of unincorporated Clark County, and a lot of city of Las Vegas.

Jake Litke: but does that necessarily mean the Strip?

Maha: no, because you have to be a thousand feet away from a casino or bar, and that's kind of hard to do on the Strip.

Jake Litke: yeah, I remember when Planet 13 went in, they kind of found a little spot in the city that just happened to be far enough away from everything.

Maha: yeah, yeah, exactly, and that was very strategic of them, they're not on the Strip, but they're fairly accessible to the Strip, so it'll be interesting to see how some of the lounges who anticipated there to be some on the Strip deal with the fact that they can't be on the Strip — for example, and I don't believe this applies anymore because they ended up being below a thousand feet away, but Cookies on the Strip is on the edge of the Strip, it is next to the Sahara Casino and Hotel, and they anticipated being a thousand feet away, but they just weren't quite there, so not sure what will happen with that, but that was the last I knew of when I was working on that project.

Nevada's Social Equity Licenses and Maha's Background

Jake Litke: yeah, and let's talk a little bit about that, you're mentioning a lot of different projects that you've worked on, maybe you could spend a few minutes talking about — Maha Hospitality, is that how you pronounce it?

Maha: Hospitality, yes, but yeah — I did not give my background, I'm sorry, we just kind of went right into it —

Jake Litke: well, you're so excited about Nevada.

Maha: yeah, it's very relevant right now, and I'll add one more piece of information about Nevada, they also awarded social equity licenses, so that was very unique, the social equity applicants are now given an opportunity to open up a lounge, and this has not happened anywhere yet, so this is the first of its kind, it has not happened in the city of LA, even though the city of LA is restricted to only social equity applicants and licensees, they have not done anything for lounges for them, but to see Nevada be at the forefront of social equity opportunities within lounges, that is awesome. but just real quick, a quick background on me — I first started working at medical dispensaries in the Los Angeles area 10 years ago, worked my way into other aspects of the supply chain through vertically integrated micro-businesses, I then worked on business license applications in 2018, got involved in the consumption lounge license applications when it first opened in the city of West Hollywood in mid-2018, and then since 2020 I've worked on retail and lounges through my firm, and lounges in the Illinois and Nevada markets through Green Thumb Industries, and now in California through State House Holdings, who has a consumption lounge license on the Sunset Strip in the city of West Hollywood, it's an Urbn Leaf lounge, and Urbn Leaf is a dispensary chain that is primarily in the San Diego County area. so yeah, Illinois, Nevada, and California, those are where I've done lounge work.

Biggest Challenges: Compliance, Operations, and Marketing

Jake Litke: and what part of the lounge — there's a lot of different pieces to opening any business, right, and this has extra hoops and forms and whatnot that you have to fill out, what is the part that you see — someone who wants to open a lounge, where do they need the most help, and what are the things that they're least likely to be aware of that they're going to need help with?

Maha: right, oh man, so compliance is a big thing, I feel like everyone needs help with compliance, that is like the number one question, it's like, what HEPA filters do I need, or can I have an ice machine in here — so previously in California you couldn't have water and ice in the same area as the consumption area, so it's like, how do you navigate that? so compliance is a big thing, operations — how are you going to do your day-to-day, like what are some policies and procedures that need to be implemented for day-to-day operations, and really it's primarily compliance, it's like how do you keep the devices clean, especially in a post-pandemic world, sanitation is like a huge component of any social consumption area, like a restaurant, a bar, anything, there are now additional protocols set in place for sanitation, and for just general waste management, like how do you deal with that, and that all falls under lounge compliance, so I think that's one of the biggest requests I've gotten, and the biggest questions that are kind of head-scratching too, because some of the rules and regulations are just like, what — like I can't serve water and ice in the same place I serve my weed, but hey, that's changed now, but that was an issue back in 2018, 2019, and that's why you're getting people passing out, because we couldn't give them water unless they were in a different part of the lounge. so compliance is a big issue, operations related to sanitation and waste management, but then some of the lounges that have been open — for example, Artistry, right now their biggest hurdle is marketing, how do we effectively market that we're here, like a lot of people are not aware that lounges are an actual thing, like people just think you can just sesh out at a house, but it has to be made appealing, like customer acquisition strategy is a frequently requested piece for consumption lounges, how do you get foot traffic, how do you get people in, and how do you perfect the overall experience you're providing. so I think those three things, compliance, ops, and then marketing, in that order.

Sanitation Protocols for Shared Devices

Jake Litke: okay, so I have a couple of questions, one is, what's considered the appropriate level of sanitization for a bong that is going to be shared maybe among 10 people in a day, like what are the rules?

Maha: so I've seen all different sorts of solutions, but one solution that I actually was very fond of is having like a kitchen-grade washing machine, but made for bongs and devices, like that is the most legitimate piece of equipment I saw, but very expensive, and not entirely necessary if you have a basic washing machine, and if you're also hand-washing as well. but in terms of other sanitation procedures, you have to make sure you're using a bunch of isopropyl alcohol, and soaking your glass in that, just what you'd basically do at home to clean your bong — if you clean your bong, because not everyone does at home, but if you clean your stuff at home you're often using isopropyl alcohol, we make sure that we soak device glass pieces overnight so it's ready for the next day, but in between patrons, oh man, you have to also use isopropyl, but you have to do a quick turnaround if you have limited pieces, so making sure it's cleaned three times, that is what I try to implement within basic policies and procedures, clean your piece three times if it was used before and it's going to be reused for the next patron, and use isopropyl alcohol, hot water, make sure you are wearing gloves, and make sure that it is dried appropriately on the drying rack, and some lounges I've seen have UV lights, for antibacterial properties, but there's so many creative ways that I'm seeing, especially with the customized washing machine — Ecolab creates washing machines for restaurants and bars, for wine glasses or cocktail glasses, but Ecolab has also made a washing machine for bongs, or Puffco glass tops, so it's really cool to see that, and if you have the funds, definitely go for it, it makes it much easier.

Cannabis Waste Disposal

Jake Litke: yeah, so let's say you've got — we'll go with Nevada, they're going to have, ideally, let's say they've got these single serves, so little pre-rolls or whatnot, now you've got hundreds of people coming through, you've got a giant bag of like mostly smoked joints, what do you do with that?

Maha: oh man, so how you throw it away, you just throw it in the garbage, right, I would assume — yeah, so you gotta — oh man, so when you throw weed away you have to make it unidentifiable and not reusable, so you have to put things within — you have a bin, you're putting all your weed waste in there, you have to put like mulch, you have to put paint, things that will ruin it to the point that you can't pull up that half-smoked joint and smoke it yourself, so yeah, you gotta mix it up in this bin, and for reference, dispensaries have to do the same thing too, when their product expires, if that product doesn't get retested and expires, you can't sell it, so you have to throw it away in a bin, you have to put all different things in it, like paint, mulch, dirt, powder, whatever, and that bin has to be tracked, or given to the local regulatory authority so they can dispose of it, or the retailer has to dispose of it, but there's a number on the bin that they have to report to the state and local governing authority, so dispensaries already have a process for this, now lounges have to do it.

Jake Litke: okay, so there's like a body of work that you can — some methodology.

Maha: but for the dispensaries it only pertains to expired product, but now for lounges there's going to be a lot more waste than what dispensaries have been doing, so what dispensaries do, they have those basic buckets that you get from Home Depot that will be filled in a month, but for lounges I anticipate that bucket being filled on a weekly basis.

Jake Litke: yeah, I could see that, lots of interesting problems to solve. let's go back to what you're talking about with marketing, what have you seen be successful, how have you gotten people in the door — and I know it's challenging, we work in marketing for cannabis, you know it's difficult to do, but —

Marketing Strategies That Work

Maha: it's hard, man, I'm sure you guys know advertising is hard, but — sorry, go ahead, you didn't finish yours —

Jake Litke: no, no, that was my question, I just wanted to know some tactics that you've seen work, and I know that a lot of ways your hands are tied, but what has worked for you?

Maha: oh, what has worked — oh man, ah, so what I just previously worked on — so for the lounge that will be opening up on the Sunset Strip, because it's so well located, like it's right next to the Andaz Hotel, Soho House, like it's a lot of nightlife, the Comedy Store, like it's so strategically located around all these different businesses, hospitality businesses, entertainment, nightlife businesses — the first step that we thought that we needed to do was reach out to our neighboring businesses and come up with a plan, and kind of convince them, like, hey, let's figure out a deal where all your patrons, if they come to our spot, they'll get a discount or something like that, kind of, I scratch your back, you scratch my back — I think those partnerships and those relationships are very helpful and can help with the overall customer acquisition strategy, so I think that has been very effective. I have not seen other lounges do it just yet, this lounge on the Sunset Strip is not open yet, but the conversations have already begun, and there's already signage of "coming soon" within those businesses, not the actual lounge property, but in the hotels, like "lounge coming soon, check them out." I think that's like partnering up with local businesses, neighboring businesses, being a friendly neighbor, I think is really going to expand your reach, so that's one thing I recently worked on. but in terms of other marketing strategies, really having as many activations, brand partnerships, getting the brands to market your lounge's initiatives or events, or really anything that's going on, just keep attracting people to come through for any one-off event, is what brands are helpful in doing, so working with local, neighboring businesses, working with the brands that you're already carrying, and expanding your reach in those ways. other things, really — it's been, I'm not gonna lie, like the lounges out here in West Hollywood can definitely improve their marketing, because not a lot of people know that they're open, I walk in and there's not a lot of people there all the time, but the weekends have been slowly but surely filling up, and it is because of the comedy shows, it's because of the musical performances that are going on, it is because of very top-performing, popular brands hosting an activation — 710 Labs is a very popular brand, flower and concentrate brand, they do activations at some of these lounges, and a lot of people come because of that brand loyalty, so there's a few brands that have established brand loyalty that lounges and retailers should look into partnering up with, and utilizing their base to increase the lounge or dispensary's base. so I think it's really very collaborative at the moment, advertising — I think you can't do billboards, kind of a headache and very expensive in major cities, but even digital promotions, like making sure those digital promotions are going to the right people, whether it's through newsletter blasts and collecting emails, or finding an avenue through Weedmaps, which could be very expensive — I still think partners, strategic partnerships, hold more value than these other traditional advertising routes.

Jake Litke: you know, advertising should usually be part of an integrated marketing plan, right, just advertising on its own, if it's not part of a — it's not part of a holistic strategy, usually you don't get the best return, but kind of like what you were saying, across our industry we see that still, which is, I'll just plug one here, is that we actually are able to do cannabis marketing on digital formats, right, and that's something that still people are not aware of, and they don't know that you can actually advertise in places other than Weedmaps.

Maha: exactly, exactly, like they think Weedmaps is the only way, and it's very expensive, can be 13 to 15,000 a month, you know, that's a lot, and not everyone can afford it, but those who can, good for you. but other initiatives I've seen — a lot of influencer marketing, so the Woods, which is owned by actor Woody Harrelson, he brings in his celebrity friends, he has also prioritized cannabis influencers, so there's a cannabis influencer by the name of Koala Puffs, and she just goes there, posts up at the lounge and smokes, posts content, and it actually attracts a lot of people to come in, so that's been working out for them, and I imagine Las Vegas lounges are going to be doing something similar, especially with all the nightlife and entertainment that goes around, they'll probably try to pair up with nightlife and offer, like, here's a cannabis after-party location, or here's a cannabis pre-party location, then you guys can go to your alcoholic club, but, you know, there's the Sunset Lounge that I'm working on, there's Soho House, like there could be an event there, but they could all be redirected to go to the lounge afterwards, so it's going to be very interesting to see traditional venues, traditional businesses, coming into play for cannabis consumption lounge marketing efforts, there's gonna be a lot of collaboration with non-cannabis businesses for sure.

Live Q&A

Jake Litke: yeah, great, thank you so much for your time, I want to just see if there's any other questions, if anyone who's listening in has some questions for Maha, we're kind of wrapping up on time here — oh, there's one, we've got another one here, this is getting back to the destruction of waste, third-party companies — do you have a preference for a third-party company, or to do it in-house?

Maha: I actually didn't know that there was an industry of third-party candidates for that.

Jake Litke: yeah, no, there are indeed third-party companies who do that.

Maha: I think if you have a well-rounded staff, you're not short-staffed, I think it is better to do it in-house, I prefer, if I have enough staff, I prefer to do it in-house, just because I have visibility, you can hold your staff accountable, and in certain cities — I'll give Pasadena as an example, the city of Pasadena does very frequent checks in dispensaries, and they prefer it to be done in-house, it's not required, but it's preferred, so if the city is telling you what they prefer, I'm going to follow that, but that's why that is my preference, just because there's a couple cities who would prefer that too, but third-party waste — that is done quite frequently, but if you have staff, keep it in-house.

Jake Litke: okay great, yeah, thanks for that, and thank you for the questions, Lindsay. you co-founded Comma across the street, Comma is an awesome dispensary that is right next to the High Times consumption lounge that will be opening, which is also very interesting to see, it's not entirely a competitor, but you have two cannabis businesses on the same corner, one's just a lounge and one's just a dispensary, so I'm sure there could be a lot of cross-marketing, strategic partnerships that can form in that as well.

Maha: yeah.

Closing Remarks

Jake Litke: great, thank you. all right, so, we've gone for the hour here, and I want to wrap it up, but I wanted to give a chance for you to tell everyone how to reach you, if you are interested, obviously, in cannabis events or lounges, and you have not been turned off by all of the problems that it sounds like there is in getting these things off the ground, Maha can help you with that, what's the best way for people to reach you if they want to ask you more questions?

Maha: so I've got an email, I'm going to put it in the chat, so I'm maha@mahahospitality.com, I'm also on Instagram, I'm "hi maha" on Instagram — I know we didn't get to talk too much about this today, Jake, but digital advertising solutions — I'm also on Twitch, so Twitch is a live streaming platform, and they allow cannabis on there, you don't get banned like you do on Instagram, so that might be a topic for another day, but I'm also on Twitch, easy to get in touch with me there, but I put my email and my Instagram — oh, and my LinkedIn, oops, on my LinkedIn — we are on, streaming on LinkedIn right now, so I'll put my LinkedIn link there too.

Jake Litke: yeah, well, maybe we can do a follow-up on Twitch.

Maha: oh, that would be awesome, good streaming, no, that would be awesome, but I just put in all three ways that you can reach me, I'm your girl if you have any consumption lounge questions and retail — so yeah, dispensaries and lounges, that's my jam, I am looking forward to the future of lounges, looking forward to traditional integration of entertainment and more into cannabis consumption lounges, so yeah, let's keep looking forward in a time that's kind of economically tough on us right now.

Jake Litke: yeah, although I did see, well, a little bit of good news, some stuff was going out about — we did have some double-digit growth from last year to this year over the holidays in the industry, which is, it's nice to see a number going up and not down.

Maha: yeah, nice, that's awesome.

Jake Litke: yeah, right, great, well, thanks everyone for joining us here at Cannabis Marketing Live, I'm Jake at MediaJel, we do digital marketing for cannabis brands, and we've had a great time listening to Maha and all of her insights, thank you so much.

Maha: thank you for having me, bye you guys.

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