POTENT Ep. 2 Pt. II - Leading Cannabis Event Consultant Shares Game Changing Approaches
Illustration by @max_gps
Potent Ep.2 Pt 2 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 - It’s Bryan Bergman. Welcome back, here we are with Part 2 and some hypothetical situations with Hey Jackpot’s! Jackie Subeck. If you haven’t listened to Part 1, please go back and find out about how she helped pioneer an ordinance and a licensing system for cannabis consumption lounges in the City of West Hollywood. And now, here in Part 2 we get to talk about some exciting things about the myths and misconceptions about cannabis consumption when you’re out of your home.
WENDY
Let's build a hypothetical because and I'd love for you to address the hypothetical. Both Nick and I represent various developers and producers who are creating immersive experiences. And obviously, without sounding crass, the more money that we can generate for everybody that goes through the experience, the higher the margin and the better the business model is for our clients. And so obviously utilizing the event license, as a couple of things. One, to help my clients, our clients, monetize greater, but also two, I want to throw this in there so people are aware of this as well– a lot of the experiences are very conducive to cannabis consumption, whether from a branding standpoint, because the intellectual property is very consistent with that lifestyle, or the experience itself is enhanced by consumption. Just a quick example. I went to one recently. I was under the influence of THC, the person I was with was not, And I was willing to pay quite a bit more for the experience than that other individual because I had a qualitatively different experience. And so I'm interested– if our clients are creating these immersive experiences and they are, let's say they're touring, okay? So they're resident in a fixed location for three months and their business model is primarily ticket revenues from admissions plus onsite food and beverage, including alcohol. Okay. How would one of those clients, if at all, tap into the potential of an event license from your vantage point?
JACKIE
That's a good question. Well, you know, a lot of this stuff is it– sounds trite to say it–but it's pioneering. So we are definitely in the cannabis industry creating, you're building the boat as we're on the water. And that remains true in this event space. People like yourselves are some of the forerunners and forefront people in this space really trying to dig in and see the future. On how cannabis events can be again, destigmatized and normalized and then be able to actually have them as a revenue generator. I think that the way to do it is what Nick was saying, which is you step outside of the sales and you charge VIP tickets. You can definitely upcharge for VIP tickets, which is then going to create a whole nother revenue stream. You can create an event inside the event. Let's say it's a screening of a film, right? You're going to show Ferris Bueller's Day Off, right? You can charge for that. And your clients could profit and receive profits from the sale of that part of the ticket, but if somebody goes and buys a pre-roll from X dispensary, who's got a booth set up there, they won't be able to take money off of that. Although, I take it back. I take it back. Let me let me take that back. Because actually, the only person who can't receive money from the sale of cannabis is the cannabis event organizer, the one who's holding the license. Everybody else actually could cut deals. It's not going to be the smartest way to do it is to take it off the sale of the product anyway. You're probably going to want to create more of a sponsorship package. I mean, this is where event stuff comes into play. It's like we can get creative and there's nothing right now that says you can't do it, right. So, we know the things you cannot do. But so, I think it's much more like who wants to take the ride to go down this path and experiment with the different ways, different revenue generators.
BRYAN
Yeah. And it's also fun to try and watch, too, about whether or not cultivators can start to use these events for sampling their products or not. That's still kind of something that they're trying to work through with the regulations right now in California. You know, Wendy, I think you've got another question. I'd love to hear it. But then after that, I'd love to have Nick and Wendy, since you guys are coming at this kind of outside of the industry, more so than Jackie and I, would love to maybe address and debunk some cannabis myths or misconceptions surrounding events. But Wendy, if you had a question, you might have to ask before we get into that. Love to hear that first.
WENDY
I think that that will lead great into what you want to talk about, because there is this challenge, internal challenge among many of our entertainment related clients of wanting to appeal to their core audience, many of whom are cannabis users, or are engaging in an event that is a cannabis lifestyle adjacent event. Let's say, for example, I'm a Pink Floyd freak, okay? I just love Pink Floyd. There are various Pink Floyd experiences around, and it would make total sense to have a cannabis related event associated with that type of experience, not just for revenue generation, but to engage the customer in a more holistic way from a branding standpoint. And so that's really where I come from on this. I guess my question to Jackie is, if someone is interested in just driving people to their experience and less concerned about generating revenues from the actual consumption at the event, but rather creating a more holistic experience for them. If they're in a venue, a fixed venue, let's say, and it's an exhibition of some sort, and there's a parking lot or some type of open air area adjacent to it. Is that something that your event license can work towards to create a situation where they're not necessarily affected directly by the regulation? But there's a halo opportunity to create a strategic partnership between what you do and what our clients do?
JACKIE
Absolutely. Absolutely. In fact, that's probably much more along the lines of something that's practical and realistic and achievable at this point. I think that one of the challenges I've seen with talent on the talent side, is they're used to getting paid by big brands, by big alcohol brands or whoever. And the thing is, the cannabis brands aren't that big yet.They are in a little box of California, or in a little box or something. But these are not gigantic brands yet. They're not multinational brands yet. And so a lot of talent, for example, your Willie Nelson, Wiz Khalifa and so forth, have created brands. You know, they've licensed their brand out to a cultivator to create a strain and or a line of products that they then get a licensing fee from. Right. There's not really Willie Nelson growing weed in his backyard and you're smokin Willie's weed. It's he's licensed his name out, he might be involved with the genetics.
That's been the typical way for talent of any kind to sort of profit and participate in cannabis. But now we have these events that they can come in and actually be a partner on or like you say, a strategic partner on and help create the actual event itself. What is the event? What's the culture around the event? What are we trying to do? The consumption of cannabis is almost ancillary at that point. It's no different than the consumption of alcohol, which is you go to an event for the event and then, oh yeah, I can go grab a beer, or oh yeah, I can go buy a pre-roll and I can smoke it here, I can drink it here. But the event is still the event, right? That doesn't have to change. But it's what changes is that we're losing alcohol, we're bringing in tobacco, we're bringing in cannabis. So all of those same revenue opportunities that exist are still there. All the same branding opportunities to exist are still there. It's that cloak, that veil that you're talking about of cannabis compliance has to be on top of it. And that's the thing that I think people have a difficult time understanding is that there's law and there's regulations and then there's a whole other layer on top that's cannabis. So I've heard a lot of people say, well, I know how to run hospitality events, I know how to do these things you do, but you've never done cannabis compliance on top of it. And that's just a whole other beast to deal with. But is it possible? Yes.
And that's why I'm here today, is because. These things are the future. I believe cannabis consumption events are the future. You know, people say, oh, we've been doing it in Amsterdam. It's like, well, yes, Amsterdam has been ahead of the game, but it's been a decriminalized look the other way situation over there. It was never actually officially legal. Here we are in California, we can have a legal event with legal cannabis sales and legal consumption. It really changes things. And I think that five years from now we're going to look back at this and say, wow, you know, because five years from now, I think there's going to a lot more cannabis events or cannabis at events is maybe even a better way to say it, because that doesn't the event doesn't always have to be just a cannabis event, right? Or a cannabis themed event. It can be absolutely any event with any music talent, sports, doesn't really matter, immersive, and we can add cannabis to it. So maybe that's another way to think about this for your clients. It’s not like you have to throw an event that is cannabis themed, you're throwing an event and you're hopefully going to be able to bring a cannabis environment into it in a legal way.
WENDY
So maybe with the time we have remaining with respect to Bryan's comment about fear, I think that would be a really great way to wrap up this podcast because our firm is an unusual firm in that we don't lead by fear. We lead by possibility. And that's why we're so excited about the intersection of cannabis and entertainment, because we know not only is there possibility, but as you said, Jackie, the train has left the station and that is where things are headed. So let's talk a little bit about where fear might come from the current client base, and just talk about it openly so that if anyone out there is listening and has that fear, maybe we can dispel it, at least start to dispel it. And the way I break down fear is two parts. One is actual. I don't want to wind up in jail or I don't want to wind up paying penalties, or having a bad reputation business wise. And then the second fear is, I don't want something bad to happen that's going to affect my brand negatively because I'm scared of cannabis itself. So Jackie, would you mind addressing fear and two parts, one being helping people understand how we collectively, you and the firm collectively, can help them navigate that type of regulatory fear in blue skying, and getting creative about how to incorporate it in their events. And then secondly, your perception as to what the consumer thinks in terms of cannabis events and how people perceive it. These are the other people's brands.
JACKIE
Absolutely. Really good questions, Wendy. I think on the first part, fear is obviously a big piece of cannabis stigma. It's one of the reasons we are fighting to reduce the stigma and eventually get rid of it completely. Fear comes in many ways here, and one of the big ones is I don't like the smell. The smell is going to waft into my neighbor, into my you know, and there's the neighbors. It's basically neighbors, right? Whether it's you're in a commercial space and there's neighbors next door, it's about that smell. And so, ironically, the cannabis regulations are so strict that we've had the former chief of the Cannabis California Cannabis Regulatory Association walk into a lounge and say, I can't smell a thing. And that's simply because our air filtration and odor mitigation regulations are so strict. They're stricter than any restaurant. You know, they're stricter than any cigar lounge. They're stricter than anything. So the truth is the smell, which is one of the biggest pieces of the thing we hear from everybody, is likely going to be almost nonexistent. People are putting in double doors and all kinds of different state of the art procedures. And that same philosophy of heavy regulation goes across all of the fear issues with cannabis.
So every time somebody comes with a new fear, you're bringing drugs, you're bringing gangs, you're bringing– it's like, no, we have multiple security guards that are required to be on site roaming the premises, roaming this the two block area around you. We've got noise control in place. And then, of course, all of the cannabis lounges and the events are going to be pushing shared rides. Right? Nobody really wants anybody driving impaired. So they're going to be pushing shared rides, which is in everyone's application and in everyone's educational plans. And so I think overregulation is unfortunate and California's overregulation is actually going to knock out almost every single fear that somebody could have. I'm going to have an answer for it, I would say, oh, well, this regulation covers that, right?
WENDY
So what you're saying is in a really weird way, is if someone's interested in exploring incorporating this opportunity into their out-of-home entertainment experience, by virtue of working with someone such as yourself who has a license and understands the regulatory landscape, they will quickly see that because it is so hyper regulated, the fears they may have are dispelled by virtue of the regulations and by virtue of working with someone such as yourself and – little plug for our firm, that understand the laws.
JACKIE
Yeah, exactly, exactly. Wendy, it's like we are almost…I would almost go so far as to say that the cannabis lounges and events are going to be like the safest places possible because of the overregulation. So I think on that side, regulation has officially checked off every actual fear. Now, on the brand side of things, that is a culture based kind of situation. I'll give you an example. Several years ago, we were trying to look into security companies and this was pre legalization and came upon this great security company and they said, well, you know, we're really not supposed to work with cannabis companies. Well, why is that? You guys provide vaults. You do all the things they said. Yeah, but you know, our stockholders or... Yeah, you know, our other clients, they don't feel so great about it. And so if you were a type of a brand that has your base is already fearful, you can do a couple of things and you want to move forward with cannabis. You can do a couple things. One, you create your own educational platform and talk to your fans about it, talk to your clients about it. Talk to your customers. whoever it is that is following along with your brand and you're thinking they're going to be scared. They're going to think I'm terrible and my brand is terrible because I've now associated it with cannabis. Well, you're already associated with all kinds of other things, not even just alcohol. There's all kinds of things out there in the world to be associated with that people have issues with. So I think that a lot of it is an education and a lot of it is confidence. It’s being able to say, I confidently believe in this. I absolutely know that what we're doing is legal. We're following all of the regulations. And the truth is, if you don't like it, you don't have to come to the event. Right.
NICK
I think that is the point that everyone seems to be making in thinking about the risks of doing events. Right. Forget about cannabis. Okay. If you're doing concerts or whatever it is in my business, I'm thinking about concerts. There's risk. If you're doing Shakespeare, there's risk. You have people in a room, you don't know what can happen. So immediately there's this risk that is both of injury. You know, if you're the sponsor, the Wall Street Journal, sponsoring the opera, something can happen. Right. And it's going to impact their brand. So this is just another one on top of that. And, you know, what I sort of keep coming back to is, you know, you look at the tragedy that happened with Travis Scott at the Astroworld thing. Right. And one of the things that always occurred to me or I sort of thought of and I don't know if it's correct or not, was would that have happened in California or did that happen because it was in Texas? Right. And they're much more loosely regulated than California. And they sort of gave too much authority to the promoters and the people who were putting on the event. They didn't have to have as much security police. And it might be one thing if you're thinking about doing an event in Texas, a cannabis event, if that ever happens, as opposed to California, where it's like, you know, you can feel pretty comfortable that across the board it's going to be good. I mean, look, Coachella has happened year after year. It's been good. And I would imagine it's because of the regulatory regime that exists in California and around that event to a certain degree.
JACKIE
Well, on the Coachella thing, I'll just say that that's unfortunately not the case with just specifically Coachella, and that's because the owner of Coachella is anti weed. So you have a we don't want weed anywhere around here. So that's why everybody at Coachella goes and gets a house across the street or down the street and has all their parties there. And that's because they've never allowed cannabis on their grounds.They don't want it. It's active. But the regulations that you were just talking about, the regulations are going to cover all of those things that you just mentioned, because it's like you're not going to have the same situation. I don't think it has anything to do with Texas, much less than it has to do with California's heavy regulation–it’s really the winner in that story. It likely wouldn't happen at a cannabis event in California. It's almost not going to happen at all because of the heavy security that we have to have.
NICK
I wonder, do you think that if you're doing a cannabis event, if you're doing a concert, you might have your cannabis space. People are going to be using cannabis everywhere. Do you think if you have a cannabis event licensed, you're going to be potentially running a greater risk in terms of people using cannabis outside of the specific cannabis event?
JACKIE
Nope. That's another regulation, like I said, we have to have a roaming security guard and so you have to post signage. So you've got all this signage that says, hey, you're buying, here's where you can smoke, here's what you can consume and here's where you can't. So I think that that's a really important part here to our security plans, it's one of the number one pieces of every license application is security. There's very strict rules about it, so much stricter than other locations, especially here in California. So I think that we're weirdly –we're safe because of the overregulation.
BRYAN
It's a double edged sword, for sure, Jackie. The big takeaway here is where there's a will, there's a way, and there's plenty of opportunity out there. And, you know, Jackpot is one of those great businesses that are out there right now getting ready to help you put those event licenses out there so that you can start doing these California events. And we'll make sure that we have Jackie's information up there. And of course, we here at Nolan Heinmann are more than happy also to help really navigate all those creative ways to get going through an event like this or even something a little more permanent. It's always a good idea to look for ways outside the box.
JACKIE
I just want to say something about that real quick– it's so valuable to have a firm like you guys on this, because I talk to all kinds of people in the industry. I talk to lawyers every day. Right. Most of them are not ready to do these things. And why we've all come together and identify on this is because you guys see the future and are willing to do the steps that take us there. My old investor from my previous business used to say, You know, Jackie, what happens to pioneers? They get shot in the ass with arrows, and, but you know what? I'd rather take the arrows and have like a really cool event that is compliant but is pushing the envelope. And because eventually these are going to be normalized one day.
WENDY
Well, and so I just wanted to kind of wrap all of this by saying this gets me even more excited because people often wondered why would an entertainment and intellectual property firm have a cannabis practice? And I said, it's because, again, cannabis is a lifestyle, and the merger of the two is inevitable. Unfortunately, most people lead with fear, and we want all of the listeners out there to really understand what Nolan Heinmann is about, which is making sure that we help people navigate fear. As Bryan likes to say. What is your catchphrase, Bryan?
BRYAN
Helping, navigating the fear of the known. Leaving the pitch basically is like, you know what you like, you know what you do, but how do you get outside of your comfort zone? I like to help navigate the fear of leaving, the fear of the unknown.
WENDY
That's right. And so for anyone out there interested in exploring this in terms of business opportunities, it could just very well be an initial exploration. Don't don't get too concerned that once you dip your foot in the water, you're stuck. But if anyone's interested in exploring these opportunities and really staying abreast of how these opportunities become more ubiquitous, more done–less fear driven and more business driven, please continue to listen to this podcast, because that's what we're exploring and that's what we're staying abreast of. We're very pro-business. We're not pro jail, we're not pro penalty. We don't want any of our clients to suffer one millisecond of pain and the arrow in the tush–we'll take it for you. We do not want you to take it. We will do our due diligence and make sure that you are absolutely protected. How we optimize business opportunities, which is really what we're all about. So Bryan, I'll let you wrap up tonight.
JACKIE
Can I squeeze in with one thing on that? Just a fast one. No one no one's going to jail in California at least anymore for cannabis. So that is just not an issue anyway, we fixed that with Prop 64. So I wanted to say that.
BRYAN
Yeah... I wouldn’t say no one, but the risks have been ameliorated immensely as long as you follow the laws and there's plenty of avenues to do that now and sleep well at night. So Jackie can't thank you enough for being on here. It was just so good. We just couldn't even stop it. But we'll just have to have you on again another time. And thanks so much for taking the time with us this afternoon.
JACKIE
And absolutely, I had a great time. Thank you so much.
WENDY
Yeah. Thank you. And to any listener out there who is interested in exploring this more at a more personal level, a personal meeting or a specific business level. Please feel free to reach out to us. We have a super close relationship with Jackpot and Jackie, and we're happy to all get together in a room. And if you want to hear subjects that are ancillary to this, related to it, in addition, take a deeper dive, please let us know. We're here to really serve you as a source of information and opportunity. And so the more feedback and suggestions we get, the better. So thank you to everyone and Jackie, thank you so very, very much.