Andrew Ward, Author at Green Market Report

Andrew WardMay 24, 2022
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13min9490

New York’s adult-use cannabis market sales could generate between $2.2 billion and $2.7 billion by 2026. That figure could fall short if the Empire State falls trap to the thriving unlicensed market

A significant component of the sales could come from consumption lounges. The prospect of social consumption pot spaces piques the interest of numerous consumers and would-be operators. Many have already started buying. Consumers are unwilling to wait any longer, and finding shops isn’t a problem

Today, many dispensaries and lounges are about as out-in-the-open as possible, often using the state’s gifting laws or membership fees as loopholes. Regulators from the Office of Cannabis Management (OCM) have issued cease and desist warnings to temper the activity, but its effect doesn’t appear significant. 

How Many Unlicensed Shops Are There?

There is no public estimate on how many unlicensed lounges operate in New York City or the state. However, it’s clear that more than a handful of lounges sell cannabis and often offer a place to consume it

Those with legacy market connections may find an invite to private lounges set up at discreet stores or private residences. People unable to gain access to private lounges can still take part by breaking out Google Maps. Today, a search for a ‘marijuana lounge’ can produce over a dozen licensed and underground shops

“There are so many different types of lounges out there,” said Michael Zaytsev, Academic Director of Cannabis Degree Programs at LIM College. He likened the offering to coffee shops or bars, saying locations cater to all consumer types, from high-end gatherings to dive bar settings

The shops appear to get away without much police involvement, though often not far from the shops or trucks throughout the city. 

New York’s adult use cannabis market sales could generate between $2.2 billion and $2.7 billion by 2026. That figure could fall short if the Empire State falls trap to the thriving unlicensed market

A significant component of the sales could come from consumption lounges. The prospect of social consumption pot spaces piques the interest of numerous consumers and would-be operators. Many have already started buying. Consumers are unwilling to wait any longer, and finding shops isn’t a problem. 

 

Today, many dispensaries and lounges are about as out-in-the-open as possible, often using the state’s gifting laws or membership fees as loopholes. Regulators from the Office of Cannabis Management (OCM) have issued cease and desist warnings to temper the activity, but its effect doesn’t appear significant. 

How Many Unlicensed Shops Are There?

There is no public estimate on how many unlicensed lounges operate in New York City or the state. However, it’s clear that more than a handful of lounges sell cannabis and often offer a place to consume it

Those with legacy market connections may find an invite to private lounges set up at discreet stores or private residences. People unable to gain access to private lounges can still take part by breaking out Google Maps. Today, a search for a ‘marijuana lounge’ can produce over a dozen licensed and underground shops

“There are so many different types of lounges out there,” said Michael Zaytsev, Academic Director of Cannabis Degree Programs at LIM College. He likened the offering to coffee shops or bars, saying locations cater to all consumer types, from high-end gatherings to dive bar settings

The shops appear to get away without much police involvement, though often not far from the shops or trucks throughout the city

“Many are calling themselves CBD lounges or private clubs that have a paid membership to not draw attention,” said Kim Stuck, CEO and founder of compliance firm Allay Consulting. Stuck added that some operators choose to start underground to demonstrate a viable business ahead of licenses being determined. 

Impact On The Licensed Market

Sources say that cannabis products allegedly can come from untested, anonymous sources, unlicensed West Coast growers, or licensed operators, depending on the operation. No source would go on record to say as much. Still, several indicated that shops were financially backed by either legacy or licensed companies looking to enter the New York market before licensing was awarded

Frederic Abramson, a New York City lawyer practicing on-site consumption licensing for small businesses, reports that uncertain regulations and likely high cost of entry steers most from exploring on-site consumption licenses at this time

“The board’s very unclear about which direction they’re going right now,” he said, adding, “People don’t feel comfortable moving forward at all until there’s any kind of real regulation on the books.”

As Allay’s Stuck mentioned, some unlicensed shops hope to convert to the legal market. But, sources caution that route may not prove possible if they continue to shun regulator warnings.

Sources were torn on the fate of unlicensed lounge operators. Some speculated that those operators may find themselves out of luck when time comes to determine the state’s lounge license holders, if regulations even favored the current model taken up by most shops.

Stuck sees the outcome differently, predicting that the OCM creates pathways to convert shops. “I can’t wait to see the New York innovation kick in once these lounges are actually allowed and don’t have to hide,” she said

While excitement is high, the long struggle to launch in states like California, Nevada and other states could indicate what New York is up against. Between upset neighborhoods and to-be-enacted ordinances, the Empire State could find itself launching cannabis sales long before a lounge opens along with it

“Many are calling themselves CBD lounges or private clubs that have a paid membership to not draw attention,” said Kim Stuck, CEO and founder of compliance firm Allay Consulting. Stuck added that some operators choose to start underground to demonstrate a viable business ahead of licenses being determined. 

Impact On The Licensed Market

Sources say that cannabis products allegedly can come from untested, anonymous sources, unlicensed West Coast growers, or licensed operators, depending on the operation. No source would go on record to say as much. Still, several indicated that shops were financially backed by either legacy or licensed companies looking to enter the New York market before licensing was awarded. 

 

Frederic Abramson, a New York City lawyer practicing on-site consumption licensing for small businesses, reports that uncertain regulations and likely high cost of entry steers most from exploring on-site consumption licenses at this time. 

 

“The board’s very unclear about which direction they’re going right now,” he said, adding, “People don’t feel comfortable moving forward at all until there’s any kind of real regulation on the books.”

 

As Allay’s Stuck mentioned, some unlicensed shops hope to convert to the legal market. But, sources caution that route may not prove possible if they continue to shun regulator warnings.

 

Sources were torn on the fate of unlicensed lounge operators. Some speculated that those operators may find themselves out of luck when time comes to determine the state’s lounge license holders, if regulations even favored the current model taken up by most shops.

Stuck sees the outcome differently, predicting that the OCM creates pathways to convert shops. “I can’t wait to see the New York innovation kick in once these lounges are actually allowed and don’t have to hide,” she said

While excitement is high, the long struggle to launch in states like California, Nevada and other states could indicate what New York is up against. One company Planet 13 Holdings (OTC: PLNTH) has opened a restaurant within the dispensary but hasn’t opened its consumption lounge yet. NuWu Marketplace in Nevada operates one of the few dispensaries with a consumption lounge inside but that is because it is owned by the Paiute Tribe. Between upset neighborhoods and to-be-enacted ordinances, the Empire State could find itself launching cannabis sales long before a lounge opens along with it. 

 


Andrew WardMay 3, 2022
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8min15940

Companies flock to celebrities to endorse their brands despite the certainty of their return on investment (ROI). Still, market activity remains immense. So much so that influencer marketing could grow to approximately $16.4 billion this year. 

Huge returns, in some cases, bolster the fondness for celebrities. Conversely, partnerships also see brands fail to connect with audiences while burning ad budgets.

In cannabis, various noteworthy names help get the word out when most traditional digital marketing means are prohibited. The key to winning consumers’ attention and shopping loyalty appears to be authenticity. 

The desire for authentic brand ambassadors has recently seen scores of companies turn to influencers over celebrities. In the middle of the two worlds exists reality stars. While certainly known for celebrity-type shows, these media figures often appear more accessible and relatable. 

“Reality stars are kind of the new actors of the generation, influencers even more so,” said Jay Jackson, better known as reality star and entertainer Laganja Estranja.

Authentic Connections Required

Reality stars may provide more authenticity than celebrities, with reality-based TV often revealing subjects’ most vulnerable moments. 

Devlon “DJ” Howard, a project manager at Cannaclusive and Florida State Director of Minorities for Medical Marijuana, said the narrative is most important no matter the type of celebrity. 

“If your target market believes your company to be making moves for clout, their perception of the brand will be stained,” he said.

Jackson saw her star power grow on RuPaul’s Drag Race over two seasons. There, viewers saw her overt support for cannabis. The two seasons also provided a story arch that saw her go from reviled to a redeemed fan favorite. 

 

Jackson’s star has continued to shine since, advocating, performing, and embarking on numerous other shows and media appearances. In recent years, she’s forged brand deals with cannabis companies like PAX and Honey Pot Hemp

During the pandemic, “I was making a full-time living off social media,” said Jackson, without sharing figures. 

With pre-pandemic opportunities returning, the revenue is more on a supplemental level, covering roughly 20% of her earnings. She now prefers to be more selective with brands, lessening partnerships to just companies that support LGBTQ+ efforts year-round. 

“I sometimes feel like I’m an infomercial,” she said. 

Survivor star and season 3 winner Ethan Zohn is another fan favorite. A two-time cancer survivor, his recovery and several seasons on the show propelled him into endeavors, including co-founding the youth organization Grassroots Soccer and running the 2022 Boston Marathon. 

As part of his Boston Marathon endeavor, he joined MSO Trulieve (OTC( TCNNF)  as a brand ambassador for its wellness line, Momenta

“It aligned with them and me,” Zohn said of the shared vision around plant research, education and consistent products. 

He did not disclose deal figures or company ROI expectations. In a statement to Green Market Report, Trulieve elaborated that initial goals center on Zohn promoting brand awareness, stigma erosion, and health and wellness education at in-person and digital events. 

The initiative is the latest in cannabis for Zohn, an investor and chief purpose officer for Vermont-based hemp brand Montkush. Friend and Oxyclean star Anthony Sullivan founded the farm. 

Zohn also emphasized the importance of endorsement authenticity.

“There needs to be a little bit of a personal connection from celebrity to the consumer,” he said. Zohn, a former professional soccer player, feels athletes can deliver a similar impact.

Alignment And Trust Key

Sales remain a critical metric, with social media reach and engagements also pivotal. Still, it isn’t entirely clear how effective reality stars or other notable figures are. 

Anthony Scotti, founder of Colorado cultivator Cherry Cannabis, partnered with hip hop star N.O.R.E. 

“When teaming up with a celebrity to push the brand, it allows us to reach a large audience that we wouldn’t have the opportunity to get in front of otherwise,” said Scotti. He cited media coverage as a critical ROI.

Scotti stated that brands should feel confident the celebrity will endorse the company correctly. 

“A company must trust that the individual will conduct themselves in a way that uplifts and supports the brand,” he said, reporting no issues so far. 

Scotti added, “The more trust you build, the better it is for the brands in the cannabis industry.”


Andrew WardApril 5, 2022
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8min12310

Part 2 of Green Market Report’s series on California‘s war on cannabis

 

The troubling trend of regulatory problems persists in California as the state targets legal cannabis but lets illicit businesses thrive. In recent months, operators have warned of an industry on the verge of collapse as regulations and the unlicensed market throttle legal operators. Meanwhile, with high taxes and little incentive to go legal, many operators and consumers remain on the unlicensed side of the supply chain.

On the surface, numbers can be deceiving. California has raked in $3.44 billion in tax revenue since legalizing adult use. Still, many concerns continue to mount in the Golden State, ranging from inconsistent enforcement of the illicit market to raids on tax-paying ventures to alleged corruption and theft from law enforcement.

As it currently stands, the state appears to have few achievements and many shortcomings, leaving the entire supply chain in possible peril. 

Few Pros, Many Cons

Sources tell Green Market Report that law enforcement is the central pain point. Guy Rocourt, CEO of cannabis brand Papa & Barkley, feels that law enforcement isn’t heading in any direction and that it may have an ax to grind against the market.  

 “It seems that law enforcement is so upset by adult-use cannabis that they are not enforcing the regulatory policies and allowing non-compliant dispensaries and vendors to thrive,” said Rocourt.

Eddie Franco, senior compliance manager for California wholesale shipping platform Nabis, said illicit activity enforcement remains a concern. He said Prop 64, which legalized cannabis in the state, aimed to bring the unlicensed market into a regulated space, providing safer access to cannabis. He feels enforcement has not lived up to the measure, noting that illicit ventures outnumber licensed operators

“California still has work to do in finding the right balance between access for legal cannabis businesses and enforcement against illicit operations,” Franco stated. 

Jungle Boys Raid Underscores Ongoing Enforcement Concerns

Legal ventures still find themselves in the crosshairs of state officials. LA-based cultivator collective Jungle Boys found this out in early March 2022 when officials raided company headquarters, seizing $66,000 in the process. The raid had nothing to do with pot production. Instead, the raid and taken sum stemmed from a disputed late fee to the state. The collective already had a court date to appeal. Despite the alleged late payment, Jungle Boys paid $18 million in taxes in 2021.  

Rocourt called the state’s regulation process “fear-based and biased against cannabis.” He felt the raid said “nothing and everything at the same time.” He detailed the disparity between licensed and unlicensed enforcement in the state. 

The Papa & Barkley CEO said, “With hundreds of non-licensed shops throughout the state and tons of cheap, non-regulated cannabis products available to consumers, it is incredible to me that they find the time to raid a licensed producer.”

Brooke Butler, VP of partnerships for compliance software platform Simplifya, feels the raid indicates that state enforcement may be confused.

“Jungle Boys is not even close to one of the primary threats facing licensed and unlicensed cannabis operations,” said Butler. She added, “The state’s vigorous enforcement against the company looks erratic and vindictive, rather than effective and comprehensive.”

Efforts Ongoing

California hasn’t thrown in the towel on the cannabis market. At the start of 2022, the Department of Cannabis Control (DCC) awarded $100 million in grants. The grant provides local jurisdictions financial aid to help transition operators from provisional to annual licenses. 

Butler feels the decision is “woefully behind” in providing local support, noting that hundreds of municipalities still lack the funds to address unlicensed actors. 

“I think that far more of the municipalities that have not yet permitted cannabis are led by people who, quite legitimately, wonder if the hassle is worth the effort,” she posited. 

Morgan Davis, the owner of state-by-state cannabis law database Cannabis Complete, said lawmakers continue to offer little incentive to go mainstream. She feels that the state’s treatment of licensed operators doesn’t encourage integration into the mainstream market.

“Licensed cannabis operators often complain about theft and are given little to no help by local law enforcement,” said Davis, adding that banking issues, high taxes, and extremely cumbersome regulations all compound the problem. 

Rocourt said that some communities, like Eureka in Humboldt County, could serve as an example. He feels the city has made it so legacy operators “Have become active in building the local community as they are recognized as legitimate businesses.” 

 


Andrew WardApril 4, 2022
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9min20780

It’s a well-accepted anecdotal fact that cannabis and music go together. From the jazz clubs to the headbangers ball to underground hip hop shows and beyond, where there’s music playing, pot’s often being consumed. 

That long-lasting bond has recently come in handy for brands looking to connect with legal consumers. Federal regulations prohibit cannabis from online ads, forcing marketers and brands to ramp up creativity. In recent years, cannabis brands have become increasingly present at music festivals and concerts through sponsorships, activations and other consumer-facing endeavors.

“When executed correctly and compliantly, live event marketing collaborations can absolutely drive sales and brand awareness, as well as form lasting consumer relationships and promote brand loyalty,” said Andreas Neumann, Jushi Holdings Inc (OTCMKTS: JUSHF) (CNSX: JUSH) chief creative director and 2020 Grammy award winner for Best Album Package. 

While short on data, cannabis leaders say they’ve witnessed the potential in live events marketing and partnerships with cannabis-friendly artists. 

Live Event Marketing Grows In Cannabis

Like cannabis and its various medical claims, most seem to accept anecdotal feedback regarding the return on investment (ROI) for live event sponsorships. While additional findings would conclude the debate, most already agree on its efficacy.

“While legal cannabis is still a relatively young industry, the effectiveness of event marketing has been proven over and over in many other industries, including CPG,” said Glass House Brands Inc (OTCMKTS: GLASF) President Graham Farrar.

The uptick in cannabis at events has been noticeable, particularly in states with legalized adult-use and/or relaxed public consumption laws. 

“While we have more regulations to contend with, it doesn’t change the value that live events can bring,” said Farrar. 

Additional regulations, like bans on sales and onsite consumption, can prove detrimental, but brands have not let them thwart live music marketing endeavors. 

Associating With Live Acts Reportedly Pays Off

As cannabis becomes more widely accepted, its presence grows at significant live events. So much so that the plant is sometimes front and center. 

In October 2021, Eaze’s Grass Lands served as the hub for all things cannabis during the three-day Outside Lands Festival. Grass Lands came complete with its own stage and a three-day live music and comedy lineup. Event partners included Cookies, PAX, and Autumn Brands.

In January 2022, Veritas Fine Cannabis sponsored the 10th anniversary of the Winter on the Rocks concert held at Denver’s Red Rocks Amphitheater. Diplo and Talib Kweli headlined the event. Veritas’ featured onsite activations to improve the concert experience, including free shuttle rides and live paintings by artist Morgan Mandala.

“Live event marketing enables us to position ourselves in front of a new audience, as these events bring people from various backgrounds together,” said Veritas Marketing Director Jordan Plunkett. 

The company also offered dispensary workers exclusive perks, including a performance by funk band Lettuce, catered meals, and early access to new products. 

Taylor Saralli, the company’s presentation manager, noted that Veritas engages in various live events each year, including activations with electronic artist Pretty Lights and art exhibits from Meow Wolf. 

Saralli, who considers live music one of the company’s most effective marketing tools, added, “Live events allow us to interact with, celebrate and create genuine relationships with our consumers and the budtenders who sell our products.”

Plunkett noted positive results from the Red Rocks event, including over 5,000 new consumer signups, 5,700 unique website visits, approximately 12% increase in social media engagement and roughly 300 new social media followers.

Others are reporting the benefits of live events. Juanjo Feijoo, COO & CMO for WM Technology Inc (NASDAQ: MAPS), didn’t offer financial figures but noted that activation partners had seen increased numbers from live event activations.

He noted that a 2021 live event collaboration at the multi-day Aftershock Festival with Sacramento-based dispensary and delivery service KOLAS paid off immensely. Their endeavor, the Loud Lounge, allowed guests to kick back while waiting for delivery orders. 

Feijoo said sales boomed for KOLAS, resulting in “The equivalent of two or three weekends of orders for them.” He attributed the success to finding consumers in one collective event.

Thinking Beyond The Show

Opportunities exist beyond the venue, offering brands and performers ample opportunity to collaborate. 

One example includes the September 2021 partnership between Denver’s Seed & Smith and electronic artists Big Gigantic. The company featured strains chosen by the band as part of the release of the company’s DART pod system. The company reported seeing a worthwhile ROI from the deal.

“Having that name attached to the DART certainly influenced some purchasing,” said Robbie Wroblewski, director of community outreach for Seed & Smith. The company did not provide financial data to support its report.

 


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