POTENT Ep. 4 - Exploring Business Opportunities and Peak Consumer Experience to be Found in the Cannabis Community.

Illustration by @max_gps

Potent Ep. 4 Info:

Wendy, Bryan and guest Maha Haq, the managing director of Highspitality, and the marketing director of StateHouse, talk about where the cannabis business now and where it’s headed; entertainment opportunities, brand experiences, its move into retail lounges, concert venues, livestreaming, and advertising on social platforms such as Twitch and Discord. 

Podcast Transcript:

Bryan Bergman:

Hello and welcome to another Nolan Heimann LOOK.Legal podcast. It's our potent podcast. I'm here with Wendy Heimann, and I'm Bryan Bergman. And today's podcast is fun. We've been talking with different consultants in the past, and today we're going to look more at what it actually is to do consumption and speak with somebody who's really got their boots on the ground in the legal industry, and is trying to help open this in a lot of different ways.

So we're very pleased to introduce our guest, say Maha Haq, the managing director of Highspitality and the marketing director of StateHouse. She also serves as a head coach with social equity development program within the city of Los Angeles for Department of Cannabis Regulations where she guides social equity business operators on their licenses and how to use them. And Maha, we are just so grateful to have you here today. Welcome.

Maha Haq:

Well, thank you for having me. I'm excited to talk with you guys.

Bryan Bergman:

Yeah. So why don't we just start by you telling us a little bit about what you're doing right now, and where you've come from, and how you got into the crazy industry.

Maha Haq:

Well, just like you very nicely introduced me, I am currently a consultant but also filling in as the marketing director at StateHouse Co. That is Urban Leaf Harborside Dispensaries. There's 14 locations and an upcoming West Hollywood consumption lounge. And it is one of the coveted lounge licenses because it is stacked with retail, medical, and delivery, and is located on Sunset. I believe the only one right now in West Hollywood that is located on Sunset Boulevard. So that has been an exciting opportunity. And of course, Harborside Dispensaries, they've been around for so long.

Bryan Bergman:

They're OG.

Maha Haq:

Yeah, they're definitely OG. So they started grassroots in the Bay Area. They got their flagship location in Oakland. So Oakland Harborside, that's part of the coveted cannabis trail that exists in the Bay Area. And part of that is related to the events that they've been having since '96. So now they're legitimate in the event-organizer space now. So there's a few exciting developments. So Harborside having that event organizer license type will eventually, start doing events at the Oakland Coliseum.

So this is very exciting for me to work on. There's a lounge and then there's an event at a traditional venue. So that's StateHouse and Highspitality, that is my consultancy, which was headed up two years ago. Definitely in the thick of the pandemic. That was the perfect time to start prepping for what will happen post pandemic. So we got to work with a couple of licensees in West Hollywood and other prospective folks looking into consumption lounges as a concept in different states.

So we are full service operations business development and marketing service focused on consumption lounges and retail. So I started off working in dispensaries 10 years ago. I was very much involved in the pre ICO dispensaries as it was transitioning from medical to adult use. So I had a good perspective from the medical and retail dispensary side, which I was able to apply into GTI, back when I was working at Green Thumb Industries where I was their director of retail strategy. So got to work in both medical markets and adult use markets at the same time, which was interesting to juggle because there were a lot of regs for each market, and they all differed, but we all had one retail chain in some of them. So that was a good challenge that I got to put under my belt.

And lastly, with this new DCR, Department of Campus Regulation Initiative for social equity licensees, I'm getting to serve them in the sense of being an advisor and essentially a support system because it is hard to navigate the different portals, and necessities, and requirements that the city asks for. So this is a new development and it's through Oaksterdam University. They are contracted out by the city, and I have been teaching for Oaksterdam for a couple years now too. So yeah, that's-

Bryan Bergman:

I'm a teacher as well.

Maha Haq:

... recent developments.

Bryan Bergman:

Yeah, I didn't realize we were fellow faculty members of oaksterdam. That's fun.

Maha Haq:

Yeah.

Bryan Bergman:

You mentioned earlier that you also worked with a multi-state operator for a long time and helped them get their first lounge up and running outside Chicago. You want to tell us a little bit about that?

Maha Haq:

Yeah, so yeah, I was with GTI for a little over a year and a half, and I was able to open up their first consumption lounge, RISE Smokeasy in Mundelein. Worked more from in a retail operations end because it was adjacent to the dispensary, so you get to purchase your product at your table, but all of it is coming from the retail inventory room. So it was interesting figuring out what processes will play into that, how inventory control will go. But then when we finally opened, things just fell into place, and we were starting to create more experiential marketing initiatives, bringing in comedians, bringing in music performers. So that was a very enjoyable project.

And then there was also another project, which was in Nevada. So they have presence in Nevada as well. And they have cookies on the strip dispensary. There were plans prior to me leaving where we got to work on for the consumption lounge. But as it stands, if your dispensary is, or if you are trying to open a consumption lounge within 1,000 of a casino, you're out of luck. But there are some folks who are still pushing for it might get grandfathered in, but it hasn't opened yet. But I did get to work on the plans for the cookies on the strip consumption lounge. So that was a good experience to put under my belt.

Wendy Heimann:

So Maha, I have a general question to you. You're really a fascinating guest to have because you've really, I think from what I understand having met you earlier, you've spent most of your professional career in the cannabis industry. And so I'm really interested in when you talk about the notion of there being some activation in at the Oakland Coliseum, which from a experiential and immersive entertainment attorney's perspective, not a cannabis attorney's perspective, that seems very watershed to me. You also talked about in the activation in Chicago that you were having certain entertainment activation, like a comedian and whatnot, which also I really wasn't aware that these types of things were going on.

Obviously, we're doing this podcast because we are in the process of contributing to those initiatives want to foment more, but I'm interested in, you can give a little bit of your perspective as to where things started and the trajectory of where things are going in terms of the experiential aspect of brand-building and also the consumer experience. And because you're in a marketing firm, you really can speak to that. I'd just love to get your perspective as to where things were, where things are, and where you think things are heading.

Maha Haq:

So I'm going to start with where things are headed, and I'm going to work backwards. So I think right now, everyone is focusing on the intersections of traditional, like traditional venues, traditional experiential initiatives. Just anything that all these other industries are doing, cannabis wants to do it. So Oakland Coliseum is a traditional venue. They have concerts, sporting events, etcetera. They have your alcohol bar. You can purchase your drinks, etcetera. What they have now allowed is a cannabis concession stand with an area that you can consume at. So this is very new. They're incorporating cannabis into a traditional venue that has been around for ages.

So what it was like before was this didn't exist. You could not even bring cannabis into traditional venues. You would sneak into clubs. You would sneak into concerts, your cannabis products. I would always hide it in my pants or in my shirt. But now there is a pathway for having that accessible, and you can actually sell it too. So that's now, but before-

Wendy Heimann:

Can I interrupt you one second, Maha? Forgive me because I want to go a little deeper into you live and breathe this so things seem really super obvious to you. What did your client have to do in order to get into the Oakland Coliseum? I mean, what changed regulatorily? What happened that enabled this to occur? Because again, I feel like this is super watershed, and the more I understand it, and our listeners understand it, and Bryan understands it, the more we can help people avail them themselves of opportunities.

Maha Haq:

So how did this happen? Harborside has been around for so long, they have their first flagship dispensary in Oakland. So they've built such a great relationship with the city, and they're also very well known in the city. So they had that advantage, and they were able to leverage that experience, that operational experience that they've had for... It's been so long now that they've been operating that dispensary. So there's a level of trust that they are able to leverage with the city. So it's more because they've been around for a while in that area. They've contributed a lot to the city of Oakland, and that is what started the conversation.

But that is not the only traditional venue or stadium that allows cannabis events. There are other stadiums. One example is the Adelanto Stadium, where they host Kushstock and Burning Treez Festival. Adelanto is in the high desert southern California area. It is very much away from LA proper, but the local officials, the city council, all of them have to approve an event at that scale to happen at a stadium or at a large venue like Oakland Coliseum or the Adelanto Stadium.

Wendy Heimann:

It's interesting to me because you have these either municipality run facilities or somehow highly regulated facilities, they're motivated to do these deals. What's your impression or your thoughts as to what's motivating them to do this? I mean is it... Am I being stupid? Is it just it's all about the Benjamin's baby or what's really motivating this?

Maha Haq:

Initially I would also think it's all about the Benjamin's, but I also think it has to do with safety or can carry over into safety. You have a bunch of people sneaking in a random substances. Not everyone gets thoroughly checked to the point where they can control every attendee or every person that's coming in and out of their venue. But with allowing a legal and safe area to transact cannabis and to consume cannabis, I think it'll mitigate people trying to sneak stuff in, people bringing in, if not a cannabis product, it could be laced. There's a lot of crazy products going around. I feel like safety and security is a second component.

And I also think, just like you said, it is all about the Benjamins. I think these larger venues are recognizing that they're missing an opportunity here. They're seeing how well their alcohol sales do at their bars. Why can't you do it with cannabis? And that is the goal at these stadiums at the Coliseum, to have a concession stand for cannabis. So having six to eight SKUs available just like you do at a concert bar, they have a few drinks available and keep it basically just keep it simple, not miss on the opportunity to potentially profit on something that is otherwise snuck in, and encouraging a safer and more secure consumption practice at these venues.

Wendy Heimann:

That makes total sense. Were there any, at this stage or the journey of this emerging market, did the venues place any obligations on the part of the folks utilizing the venue in terms of look and feel? Was there any notion that they wanted a certain presentation or was it simply you can just set up tables, put a sign up, and that's fine?

Maha Haq:

So as it pertains to the Coliseum, they want a structure that is built. It should not be open air, but that also has to do once again for safety reasons. But ideally, when you refer to the Adelanto Stadium for example, that's all open air. They utilize the entire stadium for a festival that is centered around cannabis. So it depends from venue to venue, but I think the actual design and experiential aspect is up to whoever the retail partner or the event organizer licensee is. With this particular project in Oakland because we have to make a designated structure, there's going to be a lot of opportunity to make it our own, to implement any experiential concepts to it. But we also need to be mindful that it isn't particularly a lounge. It is just an area. It's not a restaurant. It's not it's not a theater. It's not a venue. It is just a concession stand that you can consume at. It's like the smoking section, but it's not open air.

So it's up to Harborside Urban Leaf to really incorporate any of those experiential standards that they already have at their dispensaries. And I think with the lounge coming up in West Hollywood, there's going to be some sort of tie in with that to encourage some sort of standard experience among the 14 locations they have.

Wendy Heimann:

Bryan, I'm sorry. I'm hijacking this, but this is really fascinating to me from an experiential perspective because, Maha, just so you know, a lot of our listeners come from the non-cannabis perspective. They come from the world of creating experiences. And I'm interested in your thoughts. Sometimes history tells us a lot about the future. And so in the world of experiential, my perspective is that a lot of the money that originally came to support these types of really cool consumer experiences came from marketing budgets as opposed to coming as standalone the business opportunities in the of themselves. And so a lot of service providers derived work working for marketing agencies and branding agencies and things like that because brands recognized that there was something powerful about further engagement in an experience, and that through social media they could gain greater exposure to deeper the experience. That's just in the traditional brand world, and intellectual property brand extension world. Do you feel that's what's percolating in the cannabis sector?

Maha Haq:

So it's interesting you brought up social media because that in itself is an experience and a way to capture experiences too. So I'm going to answer it in a little differently from a social media perspective.

Bryan Bergman:

They're not friends.

Maha Haq:

Cannabis and social media right now is so hard. They're not friends. So in a hypothetical sense, I am promoting a cannabis event that's happening at my lounge. I will very well get shadow banned if not completely deactivated from posting about an experiential initiative at a lounge, or an event, whatever it may be.

So one lounge example I can give is The Artist Tree. They're the only lounge that is open in LA County, in the city of West Hollywood. And even they are very careful with how they promote their events. They're not too heavy on advertising their events on social media. So a lot of people don't get wind of it. And it has a lot to do with just either word-of-mouth or even just signage in front of their dispensary that leads them up to the lounge. So a lot of very basic marketing practices are required, and social is not the best one.

So with Instagram for example, that's where everyone is posting all these events and activations going on. So Instagram, you're going to get shadow banned. However, there are now more platforms out there where cannabis brands are utilizing nowadays. What one platform we talked about was Twitch. And Twitch is a livestreaming platform, and they allow you to post cannabis content. And you can even potentially, monetize on that content. So one of the newer suggestions I am making to some of these clients I'm working with is, why don't you livestream your event so people can see what's going on so they know to come next time-

Bryan Bergman:

That's great.

Maha Haq:

... because they missed out on it, but they got to watch it. So a lot of folks or a lot of non-cannabis industries, they livestream their event on Instagram. But if I were to do that at a cannabis event, not going to work out. But Twitch, that is not a new opportunity and a very, very big recommendation I am setting forth for all these different clients that are trying to utilize social media in a better way, optimize their presence, and really just get the word out.

Because I think that's the key to customer acquisition is if you are doing your outreach in a very effective way and not getting your stuff deleted. So Twitch is my new favorite spot. Even I livestream on there and brands want their product to be tried on Twitch now instead of Instagram. Because Instagram, I can't even link the cannabis brand on there. I can't even link the dispensary on there without having the post be shadow banned. So that is, I think part of my customer acquisition and marketing outreach strategy is why not livestream your event if-

Bryan Bergman:

That's great.

Maha Haq:

.. you want people to come?

Bryan Bergman:

So Maha, I mean, this is just all such wonderful information. Thank you. One of the things that I'm curious more to hear about, talk about a little bit more is we've talked on the podcast a few other times about the different ways you can legally consume out of the home right now. And it varies from state to state. There's different liability rules and everything else, depending on which state you're in. And we've talked somewhat about there being event licenses that are a little bit limited to local jurisdictions and fairground-type spaces here in California, and eventually, hopefully, with more private events, but we're not there yet. And also the retail consumption lounge we've been talking about a lot today, and I know they've got other type of event consumptions in Nevada and elsewhere like we talked about.

So we have some regulations. We have some ways to do this, but it's still really young in the industry and not really well known. What do you see the industry doing? How are they working within these events and the structure? How are they doing this today? How's this working out for the actual operator?

Maha Haq:

So like you said, there are a couple of municipalities that have regs, have a pathway for consumption events, consumption areas, but I'm going to use the city of LA for example. There is no nothing. There is no licensure pathway for lounges. And if you want to utilize your event organizer license in the city of LA, good luck because that's not going to happen. That's why you got people going to Adelanto, which is an hour and a half north into the desert, high desert. So there's no pathway for that in the city of LA, likewise in other states.

So New York is another example. That's a crazy scene right now. But in terms of lounges, events, and just general consumption areas, New York and in the city of LA we are... I'm seeing this influx of private events, members only membership, model venues that are privately owned that don't really have to follow the regs because they're not licensees. They just have a property or a space that's privately owned. Either they own it or they have their landlord's blessing, and they're hosting full-blown cannabis events or function as a full-blown lounge without really having that license. So this is-

Bryan Bergman:

Are they making sales or are they just providing products?

Maha Haq:

Well, they're not making sales, and that's what makes it, I don't want to say legal-

Bryan Bergman:

Private.

Maha Haq:

...but yeah. So they're not breaking any rules. But yeah, there's no cannabis being sold, but there are cannabis products being handed out for free or gifted. So because of that, they're allowed to do it. No one's going to stop them. But this is also on the city/state that's missing out on an opportunity to potentially standardize this, create a legal pathway for it, and make sure it's safe because you don't know what's going to happen at these private venues. Although most of the times it's fine, and it's safe, it doesn't fully ensure that there are compliant things going on. But that that's becoming very popular, has been popular in LA there. There's always been these private venues, these members only venues where you can smoke at, but now they're getting that level of popularity that they're even more popular than the legal lounge establishments that are open nearby. So it's interesting to observe.

Bryan Bergman:

Is that more a matter of word-of-mouth or is that more a matter of it's just because they can serve alcohol kind a thing?

Maha Haq:

So it's that too. They can also serve alcohol. It's word-of-mouth, and they are able to showcase themselves in clever ways on social media. They have also stepped in... These venues that I'm referring to, the privately owned venues, they have innovative ways to also share their events. They're utilizing other social media platforms like Twitch, like Discord. So Discord is another. I like to call Discord, the Zoomer's Slack. So people are sharing addresses, times of events in these creative ways that traditional venues or restaurants, what have you do not utilize. It gives it another layer of exclusivity as well. So people are eating it up. People enjoy it.

And another thing I do want to mention is I did go to Puffcon recently, and it was a full-blown concert. They had these very well known rappers come and perform at this huge park in LA that they just had for the day. And Puffco, that's not even a cannabis brand. That's an ancillary product. That's a device. And they were able to host such a huge event, and it was a consumption event, but did not have an event organizer license because there was no sales of cannabis happening, and it was on a privately owned park area, but they had major acts. One of them was Schoolboy Q, who is a very well known rapper out here in LA.

And it was a great experience, but I feel like if there were cannabis transactions taking place, that would've been a great opportunity not only for the cannabis business, but even for the city that would be collecting the taxes on those. But there's a missed opportunity in that, and I think that's what it's about. We don't need overregulation, but we don't want to miss opportunities either.

Bryan Bergman:

Absolutely. And I know that LA is coming up with that, just to let you know. LA is... They're aware of it. I know that they're looking into it. I can just say that.

Wendy Heimann:

So Maha, something you're talking about, again, fascinates me from the perspective of my industry, which is the experiential providers who may not be cannabis users, who may not understand the lifestyle at all... You're describing these guerilla-style events where it's not even about the sale. Can you describe for our listeners who are not that familiar with the drive for people to get together and have this shared experience, what is that all about? Because I think that a lot of our listeners would be really interested in understanding why is this even a potential business opportunity?

Maha Haq:

I personally think it's brand recognition and building the brand loyalty. So I recently went to Hall of Flowers as well, which is a big marketplace convention for retailers to meet different brands. And the last Hall of Flowers... This recent Hall of Flowers, I could really tell that brands were putting a lot of effort and a nice budget into their marketing, even though they are hurting right now. The economic state of the cannabis industry is very poor right now. But there was still just massive efforts towards the experiential booth settings and even trying to have events, one-off events just like this PuffCon concert that I just went to. I think it's just a way to stand out in this extremely saturated market.

There are too many brands right now and very few shelf spaces for them to be on. So that's why there's these big efforts of having events, conventions, guerilla marketing, doing exclusive events, exclusive drops, what have you, to maintain that level of brand loyalty, awareness, and acknowledgement. Because I'll tell you now, half of the brands maybe even more, they're not going to exist two years from today. They're going to be wiped out. So I think that's the motive, is to stay relevant and make their mark so they won't be gone in two years.

Wendy Heimann:

And what's the consumers' motivation? What's the audiences' motivation? If they can't buy, what is drawing them to these experiences?

Bryan Bergman:

I mean, I want to... Because that's exactly where I was going to go too. I want to answer that one first, Wendy.

Maha Haq:

Yeah, go.

Wendy Heimann:

You go.

Bryan Bergman:

Yeah, no, what I just immediately thought of when the minute Maha brought up Puff Con was this idea of experiences are what we crave as society right now, especially post-COVID. And I think the idea of having the opportunity to go out and have a neat experience and really enjoy something, you're going to remember it. And then you go back to the store and you go, "Man, there's that product. I absolutely loved that. It was the best day. I got to have that remind myself of that day." It's an opportunity to really just create more than just a recognition of the brand, but a connection to the brand, in my opinion.

Maha Haq:

So true.

Wendy Heimann:

Why does the consumer care? Okay, so I'm going to ask you guys. I'm going to out. What drives you to want to have that experience with a brand? What are the things that would draw you to something like that?

Maha Haq:

Just from this experience at Puff Con, and it was truly a very well put together event. It was a traditional concert. It was a free concert. I didn't have to pay a ticket. My ticket was my device. And that in itself is an experience. I don't have to pay for a ticket. I don't have to worry about RSVPing in a weird way. I just have to bring my Puffco, and I'm good to go. And I am getting a full-blown concert experience that I would have otherwise needed to pay for if it was just a concert and not a cannabis-adjacent brand convention. So I feel like that was a big, big incentive was, "You bought our product. You're loyal to us. Have fun at this big concert that we're organizing."

And then my second answer to that is I very well remember while I was in the middle of the pit at the concert, I took a dab with someone, and I remember exactly what I dabbed or exactly what I smoked or dabbed and consumed because I was having such a great time. And I even made a post and said, "Oh, I'm enjoying this particular product and strain as I am watching my favorite act of the night." So it's really the pairing of the product, of the experience, and even the communal aspect because cannabis consumption is so communal.

Alcohol isn't. I'm not going to give you my drink. I'm not going to share my drink with you unless you want a sip. But cannabis is so communal. You're passing a joint. People were passing joints all throughout the crowd. And this sometimes happens in lounges too, which I am very, very excited to see because now in a post pandemic era, people are getting a little more comfortable with sharing, are either more cautious also because they're now sanitizing as well. But it's a communal substance. You can share it, and I think that builds the experience.

Wendy Heimann:

It really is. It's been an amazing podcast because I think it really distills the forces that Bryan and I have been witnessing and creating these, lack of a better way of saying it, we're lawyers these deals for us to work on, is that there really is movement afoot of number one, you've market forces that are necessitating that brands distinguish themselves. It's just a market force. They have to do something to distinguish themselves. Number two, as Bryan was saying consumers want things to do. We were stuck at home for two years. We were streaming everything imaginable, and now we want to get out. And so there's that natural force. And then what you said, Maha, is a real lifestyle-driven component, which is, you said cannabis is about community. It's different than other products. And so community is really consistent with experiences that we have together.

And then on top of everything you're saying, you're witnessing legitimate establishments like coliseums, and fairgrounds, and whatnot in certain districts actually allowing these forces to be integrated and actually host these experiences. So it's really very validating, I have to say, and Bryan, I imagine you feel also to see that these forces. As I always say, the train's not going back in the station, and it's only going to pick up momentum. And what's really exciting I think for us, for Bryan and myself, is that the intersection, again, of creating experiences and entertainment opportunities, brand experiences, helping brands just with their intellectual property, and integrating that into the cannabis community in an authentic way that really appeals to the true cannabis consumer that's tired of not being listened to, and heard, and served really-

Bryan Bergman:

And can be done. And can be done without having 280E as an issue on a lot of these experiences, and not having revenue streams that are subject to cannabis tax because the experiences are non-plant touching. So there is a cannabis component perhaps in using the lifestyle, but just the fact that there's a way for both operators in the industry of cannabis, but then in other industries to work together and do things as alternative revenue streams, to me, it's exciting.

Wendy Heimann:

Exactly. It is. And dare I say in closing, this is why Bryan and I get so excited because our firm, Nolan Heimann in general is really, the heart of our firm is about business optimization. How do we help our clients in a very authentic way maximize their business opportunities? And this is very exciting. I think the integrating of folks in my industry, both from the operator perspective and the service provider's perspective, and Bryan's clients, the brands that he represents, the operators, the people, the dispensaries who want to create traffic flow, and all these things, the intersection is really super exciting.

Bryan Bergman:

So Maha, this has been awesome. I'd love to hear your closing thoughts and maybe what you'd like to see happen with the industry in the next few years.

Maha Haq:

Oh, man. Well, it's inevitable that cannabis will be incorporated in traditional venues, maybe even your local pub or restaurant. So that is truly inevitable. And it will coexist with alcohol, with food, with all the things that we are all used to seeing. But there is an opportunity there, and I hope local government recognizes it, and works towards it because this is ever-growing. And I'm just excited for the future because in this post pandemic world, we're going to see a lot of different formats, concepts, and opportunities within consumption, whether it's at a lounge or a traditional venue. We're going to have consumption areas regardless.

Wendy Heimann:

Wow.

Bryan Bergman:

Yeah. Well, Maha, we can't thank you enough for joining us, and we'll have to have you back because there's just so much more we can talk about. But-

Maha Haq:

Oh, yeah.

Bryan Bergman:

... we hope this was great for our listeners and thanks for listening.