The Rise of Cannabis: What Bars & Restaurants Need to Know Now

By Sarah Engstrand Oct 22, 2021 8:36am

With 2022 slated to be ‘the Year of Cannabis’, savvy bar and restaurant operators need to embrace the industry, learning what’s legal, what’s not and where. New cannabis markets are emerging rapidly. In 2021 alone, four states passed legislation to legalize recreational marijuana, including Connecticut, New Mexico, New York and Virginia. As a result, the market is expected to exceed $30 billion in sales in 2022.

What does that mean for operators? It means opportunity. Forget about the gold rush, this is the kush-rush.

Bar & Restaurant spoke with Ben Allmand, Vice President of Business Development and Compliance for Chalice Brands, LTD about the rise of legal cannabis, and what bar and restaurants operators should be aware of now.

Las Vegas has been able to sell recreational marijuana since 2017, giving the city a head start over many others. What advice would you have for operators in emerging cannabis markets?

Our advice is to be prepared, both mentally and financially, for your launch to take considerably longer than you think it will. As states come online, it is important to remember that state regulators, municipal zoning boards, local officials, real estate agents, title companies, etc., are all learning how to work with cannabis. As such, every single piece of the process takes considerably longer than in other industries and can come with extreme financial risk as you secure assets and wait for regulatory approval to begin generating revenue.

How can on-premises take advantage of recreational marijuana, in places where there are no social consumption laws?

Any “cannabis cuisine” event must be held as a private event. While there are some of these popping up, it is still limited. The same goes for bars and drinking establishments. Statutorily, there cannot be a lot of interaction, and I have not seen many great examples of businesses creatively overcoming this, other than having proximity to dispensaries and creating partnerships to refer clientele in both directions.

What are ‘Cannabis Consumption Lounges’ and what kind of services can they offer?

Cannabis consumption lounges are just that – facilities that allow public consumption of cannabis on-site. Think of it like a bar for cannabis. In most jurisdictions, the catch is that they cannot sell cannabis products, though that model is being challenged by the new Nevada law that will allow sales of single use items. Overall, the main service they provide is a safe and legal space to consume. This is especially pertinent in a place like Las Vegas, where hotels and public spaces do not allow cannabis consumption, leaving tourists without options.

We see a lot of CBD cocktails, do you think THC-infused cocktails will become popular?

It depends on your definition of a “cocktail.” Adult-use states have been very specific in not allowing alcohol and cannabis (THC) to be combined in beverages, much like there was a crackdown on caffeinated alcoholic drinks. I expect that to continue to be the norm, however, if you are looking at “mocktails” that replace all alcohol with THC, then yes, I think that is a category that has a lot of growth potential.

What about cannabis-infused food products, do you think that could become mainstream?

100%. Edibles is a rapidly growing category in adult-use states, appealing to users who may not want to smoke or are unable to use this form of consumption. We are also beginning to see “cannabis chefs” that offer entire multi-course meals of cannabis-infused foods. Food is a delivery method we are all familiar with and is a natural landing spot for cannabis users who are concerned about inhalable products. I would expect this to become very mainstream over time.

Legislation surrounding marijuana is hard to keep track of. It varies by state and is constantly changing. What advice do you have for operators who want to stay on top of their local cannabis laws?

Make friends with your regulators early. As states come online, they invariably utilize advisory committees comprised of experts and interested parties. Building early relationships will help you get invited as either a panel member or audience member, and that exposure to the rulemaking process is invaluable. Alternatively, I would also recommend frequenting the website of the regulatory agency for your state – most have newsletters and email lists you can subscribe to for updates on rulemaking and proposed changes.

How do you see the market developing over the next five years? Do you think federal legalization will happen?

Federal legalization is an inevitability at this point, the only question is when? I feel the next five years is a very solid bet. I anticipate that we will land in a system wherein cannabis is effectively decriminalized at the federal level by being removed from the Controlled Substances Act, but that regulatory framework will largely be left to the states. Ultimately, I think the extrapolation of the market will look just like it has over the last five years, with individual states coming online and developing their own marketplaces.

What is the marijuana marked valued at now, and what is its projected growth for the future?

There are a lot of competing views on this. What we know is where we are today. The entire national market had a total of $17.5 billion in sales in 2020. However, we have seen projections that vary anywhere from $70 - $100 billion by the end of the decade.

What’s the best thing operators can do now to prepare for legalization in their market?

Focus on real estate and the real estate-centered portions of evolving regulation. Every state has a slightly different approach, but the most prominent model is to defer to local municipalities to determine their own zoning laws, and where cannabis businesses can be located. This can severely limit the number of available properties. Coupled with the fact that most states are focused on limited license policies, the result is a land grab at the beginning of any market. Staying apprised of zoning rules and understanding what is available to you early, is huge.

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