Author: Joy

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Germany

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While cannabis has achieved legal status in many states, the opening of public spaces for consumers to enjoy local cannabis products are few and far between. In the U.S., excitement surrounding consumption lounges and cannabis tourism is hampered by significant economic and legal barriers. Yet as legal and public opinions evolve, cannabis business owners express hope that the U.S. cannabis industry will shift to prioritize the quantity, safety, and accessibility of its consumption lounges.

West Hollywood (WeHo) is one of few U.S. cities wholeheartedly invested in the future of consumption lounges. The Artist Tree Marijuana Dispensary is one of six dispensaries currently registered in WeHo: Kelly Lyon of The Artist Tree has witnessed the real-time transformation of the city into a cannabis powerhouse, with cannabis business owners using the Amsterdam model to design a forthcoming array of pot cafes, restaurants, lounges, and galleries. Major celebrities have already invested in the city’s cannabis industry, including Jay-Z. The city’s Community and Legislative Affairs Manager, John Leonard, states that the city could soon have up to 23 cannabis businesses, allowing customers to engage in everyday activities such as yoga classes or gallery walks – while consuming their favorite cannabis products.

prime example: although the state legalized cannabis over five years ago, consumers have yet to enjoy cannabis in a state-sanctioned lounge. Potential openings hang in legal limbo as lawmakers discuss reforms to local marijuana agreements. Inaction from the Legislature exacerbates the issue,

and local licensing corruption prevents small business owners from competing in a state market increasingly saturated with big companies. To protect both small business owners and consumers, cannabis professionals have urged the state to reduce the costs of selling cannabis products and support the entry of small, minority-owned cannabis business owners into the market.

Whether located in Nevada, Massachusetts, or California, consumption lounges will introduce innovative cannabis products to new customers, alleviate odor issues, and promote overall public health and enjoyment of recreational marijuana. By addressing certain legal and financial barriers, local cannabis business owners will be empowered to operate consumption lounges legally and confidently, increasing public venues for consumers to integrate the myriad benefits of cannabis into their daily lives.

Industry growth in WeHo is reinforced by overwhelming local support for Proposition 64, which legalizes cannabis and social spaces for its consumption, regulated by strict odor- and alcohol-related rules.

These and other regulations, while vital to the safety and public reception of consumption lounges, have slowed the rollout of consumption lounges in other states. Massachusetts serves as a

To better support smaller businesses and invest in the potential of cannabis lounges, Nevada – and more specifically, Las Vegas – is focused on social equity applicants, broadly defined as businesses owned by people adversely affected by the criminalization of cannabis. In addition to existing Nevada dispensaries, which will be eligible to apply for a single consumption lounge license, the state’s cannabis regulators can also issue up to 20 independent cannabis lounge licenses before July 2022 – at least half of which must go to social equity applicants. Clark County, NV plans to start a fund from its municipal marijuana revenue to ensure that equity applicants can meet the lofty financial requirements of running consumption lounges and other cannabis businesses. Because Nevada law only allows consumption lounges to sell single-serving products, some worry that customers will over-consume in the celebratory atmosphere of a Sin City lounge. However, leaders in the cannabis beverage space, such as Chelsea Bedard of CANN, view serving caps as an opportunity to introduce new customers to the controlled experience of micro-dosed cannabis beverages before experimenting with other products.

Takeaways:

• The U.S. is slowly opening more cannabis consumption lounges, using the Amsterdam model of cannabis cafes, galleries, and other public venues as a guide.
• West Hollywood and Nevada plan to implement a more robust network of consumption lounges for customers to enjoy cannabis products legally and publicly while supporting the growth of small and/or minority-owned cannabis businesses.
• Despite regional legalization of marijuana, Massachusetts and other states have been slow to roll out plans for consumption lounges due to ongoing legal and financial barriers.
• Overcoming these barriers and expanding U.S.-based consumption lounges are essential for the growth of small cannabis businesses and innovative cannabis products, such as micro-dosed cannabis beverages.

Adding to the complexities of cannabis regulation, today’s cannabis business owners face the challenge of marketing their products to a growing and diverse customer base. Current trends in the cannabis vapor pen niche offer key insights into successful cannabis marketing, wherein customers are empowered to select products that align with their values and goals for recreational marijuana use.

Compared to other cannabis product categories, customers who regularly purchase cannabis vapor pens express more loyalty for a single brand, according to a December Headset review of cannabis brand loyalty based on the purchase patterns of California consumers in a pre-period (August 2020 to April 2021) and post-period (February to July 2021). Noting that cannabis

variable of consideration illustrates that high brand loyalty is not always the goal. Consider the vapor pen brand Legion of Bloom: because the brand fills Pax pods, their customers often switch with other brands that also fill Pax pods. Legion of Bloom customers tend to be loyal to their Pax batteries, but not necessarily to the brand filling the pod: therefore, filling Pax pods might result in lower brand loyalty to Legion of Bloom, but strategically open up the brand up to a larger pool of consumers seeking Pax batteries. Analyzing these switches can help brand managers determine other brands and products that serve as quality substitutes for their brand, helping them improve and expand their product portfolio.

While cannabis brand managers should consider these consumer behaviors when strategizing their customer base and marketing plans, Philip Wolf, CEO of the culinary cannabis company Cultivating Spirits, implores brand managers to prioritize the intention and conscious consumption of cannabis products. Because the individual effects of cannabis vary greatly, Wolf argues that cannabis companies should empower customers to develop a constructive relationship with cannabis: one that honors the nuanced effects of the plant and provides customers a rich experience.

vapor pen consumers tend to exhibit high brand loyalty, cannabis businesses can learn how to assess brand loyalty by examining three consumer variables. The first, repeat purchase rate, references the percentage of customers that continually repurchase from a single

brand. CA data suggests that vapor pen brands have fairly high brand loyalty: 32.6% of customers will repeat the brand purchase along with other brands, while 12.6% only purchase from a particular brand. Wallet share, or how much customers spend on a given brand, is another key indicator of brand loyalty: among CA vapor pen customers, brand loyalty again skewed high, with the average customer spending nearly 40% of their wallet on their top vapor pen brand.

Analysis of switching behaviors, our third

Industry data from Headset and other analysts is essential for cannabis marketers; nevertheless, companies must remember that consumers are individuals with unique usage behaviors that may fluctuate more than aggregate data suggests. Particularly for cannabis vapor pens, which have been subject to legal scrutiny and health concerns, it is vital that cannabis companies commit to education about vapor pens and consider related product niches to empower a growing customer base.

Takeaways:

• Based on December 2021 Headset data, we review the behaviors of cannabis vapor pen consumers in California, who tend to exhibit high brand loyalty.
• As a marketing strategy, brand loyalty can be analyzed using three consumer behaviors: repeat purchase rate, wallet share, and switching behaviors.
• Assessing loyalty to vapor pen brands may help cannabis companies determine their marketing strategies to foster higher or lower brand loyalty, depending on their economic goals and their customers’ values.
• In addition to brand loyalty, cannabis brand managers are called to incorporate consumer education and conscious consumption into their marketing strategies.