POTENT Ep. 2 Pt. I - Leading Cannabis Event Consultant Shares Game Changing Approaches
Illustration by @max_gps
Potent Ep.2 Pt 1 Info:
Hear how WeHo's cannabis event licenses portend a future full of business potential for entertainers, entertainment venues, and immersive experiences.
Podcast Transcript:
BRYAN
Hey Everybody - Bryan Bergman here. Before we get into this episode, I just wanted to say, we made this into a two-parter because our guest, Jackie Subeck of Hey Jackpot! had a mountain of information. So after part one, stay tuned for Part 2! And now onto the episode, Part 1 with Jackie Subeck.
Welcome. We're so happy to be back here for yet another Nolan Heimann podcast. I'm with my partner, Wendy Heimann-Nunes, my name is Bryan Bergman. And we're also here with our other partner from the firm, Nick Rosenberg. But of this special excitement, what we're really happy to talk about with today is Jackie Subeck, who we can't wait to introduce you to. She has been an advocate and warrior for most of the California cannabis industry, but the cannabis industry as a whole for many years now and has an incredibly interesting background that we're going to delve into a little bit more today. But we did want to talk more about how this intersection of out-of-home entertainment and cannabis consumption is going to be and what better place to start than using events and trying to have some sort of consumption around something you're doing out of a home. Since we are more of a California based firm, we figured California would be a great place to start. But each state has its own different rules and regulations. So other states like Michigan, we have a client there that's doing some event licenses as well, and there are other states coming online. So while we're looking at California today, it could be different in each state that you're in.
So anyway, just to remind you who I am, I'm Bryan Bergman. I'm a partner here at Nolan Heimann LLP that's been working with cannabis businesses and ancillary service providers and investors for many years now. And I've been very excited about the intersection of out-of-home entertainment and cannabis. And I know so has my partner Wendy, who introduced herself last time. But let's hear from her again. Wendy, why don't you tell us why this is so neat for you as well.
WENDY
Hi, everybody. I'm Wendy Heimann-Nunes. I head up the location based entertainment and immersive experience division of Nolan Heimann. My entire career has been focused on those areas, which is any form of entertainment that's out of home, whether it's museums, touring productions, theme parks, immersive experiences, you name it. That's been the entirety of my career and it's been a passion project of mine to merge the cannabis lifestyle, which is much more than the commodity of the weed itself. But everything that goes along with it, entertainment itself, there's a lot of connection with out-of-home entertainment. Sometimes people experience those experiences qualitatively differently when they're engaging in cannabis versus, let's say, alcohol. And so I'm very passionate about both the opportunities from the business standpoint increasing profitability, increasing market awareness, increasing the people that come through the door, ticket sales, and then also just enhancing the consumer experience by virtue of merging these interesting areas together. But before we get to Jackie, I'm going to let Nick say a quick hello and represent the great state of Maryland.
NICK
Oh, when people think of great states. They think of California and Maryland. So I'm Nick Rosenberg. I am the music partner here at Nolan Heimann. And my practice consists primarily of working, working with talent, producers, songwriters, artists in the music industry, but then also, you know, other creatives in television and personalities and influencers and, you know, people like that. And this space is really interesting to me for, you know, several reasons. I think the first of which is like there's obviously a natural sort of connection between cannabis and music. If you've ever been to a show and heard somebody say, hey, who's got a joint, I mean, you know that this is part of music. You know, the other thing that really sort of jumps out at me is the opportunities for for artists to be entrepreneurs in this space, and particularly, I think, with artists of color, because in talking to people in the industry, a lot of people are focused on trying as best they can to right the wrongs that happened as a result of sort of failed drug policy from, you know, the 50’s, 60’s 70s and onward, which now we're starting to realize and fix and as a result, want to create opportunities for not just for artists, but for people, people of color, what have you. And I think that it's potentially a really great opportunity.
BRYAN
Social justice is a huge part of the industry and something that's very much watched on and it's definitely a component of this. In fact, we even work with somebody out in Michigan who is doing it from a background of social justice and trying to be a minority owned business and do it in a way to address those issues and doing his events, which is really exciting. But we're here to talk to Ms. Subeck here. Jackie Subeck. Why don't you just give us a brief introduction first about who you are and what your company is. And then we can really get into this whole discussion about really what that first piece, like Nick said, which is the idea of. Well, okay, how do we monetize this space around what happens out-of-home and after you've consumed and how and where can you consume?
JACKIE
Thank you. Hi, everybody. So nice to be here today. My name is Jackie Subeck. I have a long history here. I think that's really going to be interesting to talk about today. So I'm currently and have been in the cannabis space now for a little over seven years in California. I started in, actually, the event space, ironically, and have come kind of full circle. In the very beginning, when I got in, I started throwing B2B cannabis events so that business or future business owners could meet each other and talk and we could all learn and get educated. And this was all legalization and pre-regulation. So we didn't really even- nobody understood what some of these things ultimately we're going to look like. So it was a great opportunity for us to sort of get schooled together. And so we did that. I did that for about two years.
WENDY
Those were the parties in the alleys…
JACKIE
Now, you know, growing up, you can always find us in the back alleys and that's where we are, because up until recently, no kind of legal cannabis consumption space has been even available. And so that's something I've actually been working on–my background before I go into that, is kind of relevant here because I actually come from the music industry. And so having spent a decade and a half in the music industry, in that space, understanding not just events but social gatherings and culture, counterculture, all those sorts of things come into play when you're talking about cannabis and music, which of course those dots have been connected forever, but they were never brought to the surface, partly because some of the things that Nick was saying, which was that we had a war on drugs. And so it was considered taboo and scary and dangerous and fearful. And so, therefore Wendy, we ended up in the back alley, which, by the way, you can still find us there today, because that is still sometimes the only “legal” and I use quotes, the people at home can't see me, but legal spaces to smoke, it's the least of our chances to getting busted.
BRYAN
I mean, it's a real interesting situation where we look at each state and how the idea of onsite consumption is still so early and it's in its infancy, really, as far as like allowing it to happen, Jackie, I mean, there are, as I see it, essentially two ways in California to create consumption on site. And one of the ways is through a consumption lounge. And you have to get licensed in California to get such a lounge. Lounge will be a permanent structure that actually allows for cannabis to be consumed in its various forms. And in doing that, there's a lot of hiccups. In fact, you have worked with West Hollywood, which they're now trying to call the Emerald Village, in a lot of detail and trying to work on these consumption lounge licenses. So why don't you talk a little bit about those experiences that you've had with the local municipality that is cannabis friendly and sort of what the pluses and minuses are of this license.
JACKIE
Yeah. Yeah. So West Hollywood, California, for those who don't know, is a small little city that's somewhat of an island in the middle of the city of Los Angeles. We're surrounded on three sides by L.A. and on one side by Beverly Hills. And Beverly Hills actually has a ban on cannabis. So we don't have to worry about anything over there. And the city of L.A. is gigantic. So here we are. We've got 37,000 residents, we’re 1.9 square miles, but we have a very progressive city council. And we've always been on the forefront here of new ideas. And actually, West Hollywood, just to give them a little props, was the first location in California to have a medical marijuana dispensary way back in the day. At this point, they were on the cutting edge all the time. And so back in 2015, when we saw that the legalization was likely going to happen, which it did in November of 2016, I started having conversations with our city council and discussed this idea because again, I come from the music world, so I wanted to take music and cannabis and put them together legally and figure out a way to do that. So I brought this idea to them of, Hey, how about consumption lounges? And it took a minute to warm everybody up to it. But about a year and a half later, we wrote an ordinance and we created a licensing system, and those cannabis consumption lounges became real, at least on paper at that point. And we had two different kinds originally, one was a full smoking, vaping lounge where you could consume any cannabis in any form. The other one, it was restricted to edibles only and the intention was to be able to have a chef on site, perform live infusions of cannabis into fresh food and serve that to your customers. Only California, the state, doesn't allow that yet. So, because we're just we're yeah, we're a few years away from that anyway. So because of that, I had to go back to West Hollywood with a couple of the other folks and we ran a ballot measure to get what we needed taken care of, which was to get smoking and vaping added on to our licenses. So now in West Hollywood, you've got a platform of 2 different license types that both can do the same things. But the difference between them is one is based around a retail store, so you have a dispensary, and then you have a lounge where you can buy a product in the dispensary, walk over to the lounge and smoke it or eat it or drink it. The other model is a standalone, much more like a bar, a lounge, a restaurant where you probably will have food, regular food, not cannabis infused food. You could sell prepackaged, pre tested, infused foods so that the customers could then add that to their own food. For example, if you wanted to sell and serve tacos, serve some tacos, and you could manufacture an infused hot sauce, let's say, have it packaged up, sell it to your customers. And just like any other condiment at the table, they could break it open and pour it on to their tacos. That's the way around that today. But what's unique about these is these are two legal environments for the first time in history, at least in this country, where somebody doesn't have to look over their shoulder and think, hey, who's judging me? What's the stigma? And am I going to get, you know, arrested by the cops when I step out the door? So that's been a really big deal in being able to have consumption, stand-alone brick and mortar facilities. That concept turned into what we really want to talk about today, which is the events, which is a temporary space for having cannabis consumption. So I will stop there, but I wanted to just show everybody the difference between these types of models.
WENDY
Jackie, I have a question because I think West Hollywood being so cutting edge, it lends insight into where we all may be heading in the future. What were the greatest motivators in allowing these propositions to pass? Was it economic impact, job creation, induction of tourism? What were some of the things that motivated these politicians to allow this new type of business to enter their community?
JACKIE
Yes, it was all of those things in the case of West Hollywood. So again, we've got 37,000 residents. But pre-COVID, we had four and a half million visitors every year. So West Hollywood in itself is a tourist destination. We have hundreds of bars and restaurants here, dozens and dozens of hotels. We have an environment that is ready for such a thing. And we border again, we border L.A., we border Hollywood. We are really close to the studios. So it is a great place for people to come stay, whether it's temporary or long term, and while they're working or just visiting. And so, that was part of it, yes, we wanted to bring in more tax revenue. Every city wants to do that. But yes, we also, as West Hollywood, were so connected to cannabis culture because of the AIDS crisis back in the eighties and nineties, which then led to medical marijuana being legal or partially legal in California, which created the dispensaries, which created what we're doing today. So having all of that passed, it just seemed like a logical thing for West Hollywood between the tourism and the history of medical marijuana, it was just a logical place to do this. So I think everybody was on board once they understood what the concepts were.
BRYAN
Yeah. And in California, it's really interesting because a lot of the way the California regulatory scheme is set up and it might not be the same in every state, some states do it more at the state level, but there is a state level to licensing that's really important. But then the state has allowed each of its local jurisdictions, its counties, its cities, its unincorporated areas, and what have you, to have its own set of regulations and determine whether to ban or regulate cannabis activity. And, you know, there's other places beyond West Hollywood in California, for instance, where they're very bullish and very much talking and looking into cannabis tourism and as a whole. And one of those components is the onsite consumption, and that's what the lounge is for. The idea of a “bud and breakfast” where you can actually be at a hotel where smoking is encouraged, or but then there's also other things that come up as well, besides that, what if you want to go on a tour or what if you want to like try and do something like a wine tasting? Somewhere where you go to a cultivator and their facility, you get a tour and you actually would then be able to try and test and taste what you actually got to see at a farm or something like that. That we're still behind here in California, and they're starting to get to that. But in general, right now, what we do have besides the lounge licenses is what you can think about as the set site permanent consumption lounge area, which is coming online in some places. But it's still very slow because some jurisdictions are still not sure what that means and they're worried about creating places of consumption and how it's not going to be a nuisance. So that's one thing that we're working on as an industry. But secondarily, it's like, Well, okay, what about the idea of an event? What about the idea of a temporary thing where you go to an immersive experience like that Van Gogh museum that was out there for a while showing that sort of neat experience going on and maybe even before that
WENDY
Client.
BRYAN
Yes, it was a client. Or, you want to go to one of Nick’s client's festivals and you want to have an experience tent where you get to go and have a place to consume and like, maybe do something else related to cannabis before you go into the concert itself. Well, how would you do that in California? Not so easy still, but we're working on it. We have what's known as an event organizer license, the event organizer license, which is something that our good friend Jackie has, and it's really exciting as somebody who helps maintain the space, hire security guards, the required signs, lets the Department of Cannabis Control, which is our state regulation authority, know what's going on and show the layouts of the event. But we still see they still have to work with other distributors for transporting the cannabis. Only licensed retailers that are signed up can do events and sell the goods during events. And there's still a lot of packaging displays and sampling and rules and regulations that still have to be followed. And in fact, you have to get a temporary event license at least 60 days in advance. But here's the kicker. It can only be places that are actually locally approved by the jurisdiction, which is typically a fairground or some other set place. So, Jackie, you have an event license. Why don't we talk a little bit about what you can and can't do in California today with one of those? And before we do that, though, please tell us your company.
JACKIE
Okay. Well, my company name is HeyJackpot! and that is me. I will answer to Jackpot. So, yes. And what Hey Jackpot! does essentially is I'm a cannabis consultant and I'm a cannabis advocate. So those things to me go hand in hand. I can help other businesses get started. I also help advocate and lobby for the policy to support those businesses. So that is my general day to day work. In addition to my own licenses, I do also have a consumption license in West Hollywood, but we're at least a year or two away from being open. And I have an event license, which is a state license, which in 2017 we had this big realization that the state was developing the cannabis regulations, but all of the events were locked to brick and mortar, except that the regulation for a dispensary was you can't have any consumption on its floor. So you had this catch 22 where nothing could actually happen. So we and another woman in the industry, presented this idea to the state and said, Hey, what if we had a cannabis event license that you could do events anywhere because they're not going to be locked to a brick and mortar? And we ended up writing the regulations for the state. They adopted a good portion of them, and off we went. And so the idea is to be able to have a cannabis event at all levels. So you've got your big 30,000 people for the weekend, kind of Emerald Cups or Cannabis Cup sort of events, High Times, whatever they are. But what happens to all the events that are 100 people, 200 people, 500 people, smaller events, even 50 people? What if you want to be able to have a cannabis event? Well, your challenge, you are the first question everyone needs to ask themselves. So they're having an event– Do I want to sell cannabis at the event? Meaning can cannabis be retailed at the event or is it simply going to be a consumption only event?
BRYAN
Yeah. And that's a good point. If it's an educational or non-consumption event, I should point out real quickly, you don't need a license for that. So if you're doing non consumption, but it's cannabis related, no license necessary but come on.
JACKIE
Well, right. And the truth is that you don't really need a license if you're only going to do a consumption event too. And what I mean by license is a state license. You may need a local permit, so you may still need to be talking to your local jurisdiction. But if you're only going to do consumption and there's no sales, the state doesn't actually care about it because the state wants their tax revenues. That's it. They only care about the revenues that are coming off the sale. There's no regulation in California for cannabis consumption. It's left up to each local jurisdiction. So, you know, which presents an interesting scenario. So if you want to have an event like the kind you were talking about, let's say it's, you know, where as opposed to going to an event, you have some food, you can go buy a glass of wine or a beer or a drink. We want to be able to take away that alcohol and say, no, I'd like to be able to go buy a cannabis beverage or a pre-roll, or a dab, you know, one dab or anything like that. We want to be able to have that retail ability at the event itself, that's when you're required to have a cannabis license, an event organizer license.
BRYAN
There might be some more questions about that if it's a public facing event with tickets versus a non ticketed event, there might be some if it is a public event. And also you can't have alcohol and tobacco sales in the same place as your cannabis.
JACKIE
That is correct. I still want to use your example a minute ago of the fairgrounds. One of the things that the fairgrounds used to do to get around the alcohol situation, too, was create a beer garden in the center of the event. And when you submit your diagrams for the premises for what's going to be your licensed cannabis premises for the event, you would carve out that theoretical beer garden, meaning no, cannabis goes into the beer garden, no beer comes out, right? It's just a one stop shop. Do your business and go back to the event. Same thing. Could be done the other direction. If you have an event that already exists, a music festival, and of course you're going to have beer and a liquor license at your music festival. Well, in the state of California, cannabis and alcohol cannot be sold or served in the same place. So you're going to have to create somewhat of a pop-up outside of the premises diagram that has been submitted for that event. And then you are now in a 100% cannabis controlled, cannabis regulated, compliant space that has everything from air filtration, odor mitigation to security. Right? So then, then you've got a great cannabis space to be able to have people go in and purchase and consume all in the safety of that one area. And that's what I'm looking to do in the future here, is to be able to start working together with these music companies and big festivals, who really want to push the envelope a little bit, to actually create one of these things, build these things up, and start to make it so that it's more normalized.
BRYAN
Yeah. And the other thing that's really going on right now at the regulatory level is groups like Cannabis Travel Association International and others out there are really working to try and get a more private temporary event license as well so that you're not being limited to just the large scale venues and trying to find a way to create a more smaller, almost a catering license, if you will, which, again, this is all something that cities and other states have. They're still far behind and looking at. But some states are looking into this. And I want to keep bringing that up, because I know we have listeners from all over. And while we're talking about California today as a test study, if you will, there's obviously plenty of other things going on in different states. And the idea here, though, is get creative and think about how you would want to work with these types of licenses and use them in ways other than what's already being done. So there are those out there doing that. You know, Wendy and Nick, this is exciting and I'd love to hear kind of your thoughts on things more from looking at what maybe more immersive experience companies are doing or some of the artists that are looking to monetize this. Otherwise, what kind of questions would you have for Jackie?
NICK
One of the things that just sort of jumped out to me when you were describing how you could have kind of the sale and cannabis consumption at an event. And you said that it would have to be in a different footprint outside the event. Does that necessarily have to be outside of the gates of the event? Like besides the ticket? Like, where does it go?
JACKIE
Yeah. And so if you think of a..you have a space. Let's just make up space here. Let's say it's a big giant football field and you want to carve that space up and you're going to have an event. You're going to have to submit a drawing of what your floor plan is going to be for that event to your local jurisdiction. Say, hey, here's our plan. Here's where cannabis is going to be. Here's where, you know, alcohol is going to be and they're going to be in separate spaces. So the licensed cannabis premises, let's say it was a corner of that football field, is not controlled by anybody who's doing the rest of the football field. You are in 100% control of that little corner and you have to be in full compliance in that corner of that field where the rest of the event is happening in the rest of the field. So you're still within the gates. But when they submitted those drawings at the beginning, they left out that corner, they didn't draw that into their diagram. Right.
NICK
So, it could be run by the same person who's running the event, though.
JACKIE
Absolutely. Absolutely. It can be run by the same person. However, it gets a little sticky because a cannabis event organizer license doesn't allow the cannabis event organizer to collect any revenues from the sales of those of the cannabis that happens unless they are also licensed as a state licensed retailer or micro-business or any of the state licenses. So, if you have somebody that just has an event organizer license and they don't hold any of the other licenses, they're not actually allowed to receive any monies from any sale of product. So if you have a company that's sitting on top of those two things, it could get, little hairy on how to deal with it. So it's always best probably and I would leave it to the lawyers on this, but probably always best to have two separate companies operating that kind of environment just for compliance purposes.
NICK
But you could bring in a vendor though.
JACKIE
Absolutely,
NICK
And could I charge the vendor for being the vendor in there?
JACKIE
Yeah. You just can't collect off the actual retail sales. Anything that's going to sell a ticket upcharge for people to get to go into the cannabis space. Yes. I just couldn't make money from the actual sale of the product to transact anything that's going to be logged into the state's track and trace system into metric. You cannot take any revenues from. But yes, you could find all kinds of other avenues to collect those revenues. And when you might be able to talk about that, too, with some of these immersive experiences. There's probably countless other ways to create revenue from this situation.
That was Part 1 of our interview with Jackie Subeck of Hey Jackpot! Catch you in Part 2 where we present some hypotheticals to Jackie, and debunk the myths and misconceptions surrounding cannabis events.