The newest of the major license type on the scene, consumption lounges, also known as cannabis hospitality locations, take a few forms. Some are ‘Bring-your-own-Bud’ spaces that allow on-site consumption in public or private venues, while others sell cannabis and cannabis products for on-site consumption. Both often operate under strict limits governing product types and dosages.
Keys to Success
Build Your Brand
Consumption lounges sell an experience. Whereas alcohol bars serve a consistent set of atmospheres, consumption lounges are already taking the form of art galleries, performance venues, and more. As this market continues to grow, brand awareness, excellent service, and a strong brand identity are likely to be key differentiators. Are you looking to host BYO pottery classes in an art space or looking to create a relaxed lounge atmosphere that attracts local professionals from cannabis and other industries? These types of questions will inform not only the strength of your cannabis hospitality concept but also the initial and ongoing capital needs and overall strategy of a cannabis consumption business. Ultimately, no cannabis lounge concept is yet tried and tested, so there’s both the opportunity and risk that comes with a brand-new business model in this sector. Businesses that commit to carefully researching and developing a differentiated business model will maximize their chances of success.
Customer Service
While many dispensaries, especially in busy locations, can run the gamut from less than 5 minutes per customer to boutique locations spending 15 minutes or more per shopper, lounges will have different customer service demands. We can expect anything from club-like atmospheres to Dave & Buster’s style canna-bar-and-grills to crop up in the coming years, but regardless of form these establishments should anticipate significantly higher touches per customer and potentially much more demanding calls for product knowledge and dosages.
Further, Lounges introduce over-serving concerns as well as other service-related security needs. Any place where an intoxicated individual can leave the premises must keep public safety top of mind.
Product Selection and Partnerships
Product selection—and indeed the need for product at all—is a major factor that bears consideration from the beginning of the licensing process for cannabis hospitality businesses. BYO licenses have a lot less cannabis-related cost and oversight, but require much stronger brand identity and presence than, say, a lounge that serves small quantities of flower, edibles, and dabs. Where one business might put on concerts or private events or pizza-making seminars or painting nights, the other might be more suited to industry events, music nights, and- vendor pop-ups. One may focus on being a retro arcade gaming lounge while the other charges cover at the door or hosts after parties. These choices will inform everything from cannabis and non-cannabis vendor relationships to the need for event coordination staff and more. Dispensaries across the country would envy the ability of a consumption lounge to distribute vendor samples or steep discounts to the end consumer. The cannabis equivalent of $1 Coors Light night is on the horizon. There are even cannabis event licenses popping up that allow for further evolutions on the live cannabis service market.
Marketing
Regardless of how you make your revenue, you are selling an entirely new experience in a market that does not yet exist, and for that, you need razor-sharp marketing. While these days there are plenty of limitations on marketing and advertisement for state-level markets, many cannabis retail companies make do through targeted local campaigns and strong loyalty programs. For a lounge, key marketing opportunities could include sponsoring local events and driving repeat customers through service, atmosphere, and discount events. Regular, scheduled events, which I know we keep harping on here, is likely to be a major factor in driving sustainable revenue for cannabis hospitality businesses of all types.
To reiterate, a strong local presence and targeted SEO for websites and social media, as our good friend and colleague Eden Sayers emphasized in our recent Dispensary Overview, is key to any business’s marketing. Beyond mere presence though, there is a unique opportunity in the consumption lounge space to set trends in a new market. A carefully researched cannabis hospitality concept will be the difference between a thriving BYO event space and a struggling OTC weed bar.
Conclusion
Consumption lounges are one of the newest license types in the still green cannabis industry, and innovative concepts have the opportunity to define the landscape. For more on how Fire Business Strategies can help you research and develop your brand identity, please visit our contact page to schedule a free initial consultation!
