Marijuana: A Store Visit

A Trip to a Retail Store in the LA Area

At the end of January, I visited some folks in LA and, since the sale of recreational marijuana is legal in that state, I thought I would visit one of the stores and check it out.

A friend who lives there and had purchased medical marijuana in the past, agreed to go with me and serve as a guide—a ganja guide.

Before I get into the fascinating and (dare I say) fun shopping spree, let’s take a look at the current marijuana situation in the US.

MedMen Venice store. Courtesy of MedMen

Some Facts and Figures

As of 2018 there will be eight states that have legalized marijuana for recreational use. Over twenty other states allow marijuana for medical use. And, both lists keep growing.

It shouldn’t come as a surprise considering the following polling results on the subject from the Gallup people:

  • 64% of Americans support legalization and this represents the highest number recorded since Gallup started asking the question in 1969. (Jan 4, 2018)
  • 45% report having tried marijuana, also the highest since 1969, and 12% claim to currently use it. (July 19, 2017)

In a study on its use by DIG Insights (a global research firm) few people are concerned about harmful effects (16%) and a majority believe consumption can be beneficial (51%). (April 14, 2017)

What About the Effect on Alcohol Sales?

Well, here the data is currently less clear, but signs point to more impact on beer than wine and spirits.

But it seems to me that just as there is “share of stomach” that beer, wine and spirits compete for, the advent of widespread availability of marijuana has to create a fight for “share of buzz.”

A Cowen Insight report (via Mark Brown’s Industry News Update on Jan 15, 2018) indicated that a study using scanner data showed, “that counties located in states that legalized medical marijuana saw a reduction in alcohol sales of 13%.” Further, the Cannabiz Consumer Group (C2G) predicted in March, 2017: “Legal marijuana will take away 7.1% of revenues from the existing retail beer industry.

With this information in mind, I set out with my friend to visit a store, see what the shopping experience was like, get an understanding of who the customers are, and learn first-hand about this product and its future.

MedMen Enterprises

The store we went to is owned by MedMen Enterprises, who currently own 18 facilities in 3 states and has over 700 employees. Unlike other retailers/dispensaries, MedMen is vertically integrated and has licenses to own cultivation facilities, retail stores, and distribution. (In the cannabis industry, distribution involves a “watch dog” and oversight function whereby quality, record keeping, compliance, and related matters are scrutinized.)

The company both owns and manages various aspects of the marijuana trade. It will be listed on the Canadian Securities Exchange in the second quarter of this year. (By the way, here is the list of marijuana companies on the CSE—around 60. You might also find this of interest.)

This is how MedMen describes themselves:

MedMen is writing the book on the modern cannabis industry, from how facilities are designed and constructed to setting the bar on quality and excellence. We are also helping shape the laws that make this industry viable.

These are true professionals with a serious set of business criteria and mission:

MedMen operates scalable, highly-efficient growing facilities using the latest in agronomic technology and sustainable techniques, and our manufacturing facilities use standards comparable to those in the biotech and pharmaceutical industries.

They are not the first company to enter this emerging business, but from what I witnessed by talking to their management and visiting a store, I think they’re top of the game and will grow.

Sun Valley cultivation workers
Courtesy of MedMen
Plants
Courtesy of MedMen

 

The Shopping Spree

We went to their Venice store on Lincoln Blvd. It was at 1:00 on a weekday and the place was mobbed. I was told that it’s always busy and fairly common to see people waiting to come in. The Venice store is small (perhaps 700 square feet of selling space) with shelves of products and showcases on the floor.

To enter, you must stop at a registration area and show proof of age (driver’s license or passport) and register, which allows you to buy. They sell cannabis in different formats including—cannabis buds, of course (various strains and potencies), edibles such as gummies and other sweets (chocolate, cookies, etc.). There is even medicated cannabis rubs (salves) meant to help with aching joints, uh, body joints.

There is a limit to the amount of product you can buy on any one visit.

What really struck me was the caliber and knowledgeability of the sales people. My friend described them as akin to the sales people at the Apple store and Daniel Yi, the Medmen spokesperson, told me that many customers come to the same analogy. These folks were friendly, happy to answer questions and serve as a cannabis escort—what you might be interested in, how much to use, etc.

I learned, for example, the difference between THC and CBD and their role in health matters as well as in “mood change.” Also, the difference between Sativa, Indica and Hybrid strains. I was kind of envious of their retail skills and how the booze business might benefit from similar selling approaches—low key on sales persuasion and primarily focused on educating and guiding the customer.

What about the customers? Good question. It was everyone—young and old; men and women; from all walks of life; all socioeconomic levels. I couldn’t help but ask some of the shoppers about the comparison between alcohol and marijuana. One person said they were just looking for something different from alcohol. Another told me that sometimes they like a drink and sometimes a joint. Still another told me that they preferred cannabis because alcohol was chemical and marijuana was botanical. Ouch.

Here’s the interesting kicker that can serve as a predictor of marijuana legalization and potential growth—taxes.

The Tax Situation

My friend spent $517 that day. Of that amount, $411 was for various products and $62 was for state excise tax (15%) and $45 was for local sales tax (11%). That’s over 25% in taxes. The tax revenue from marijuana sales are attractive to State governments and taxpayers as well, for that matter.

Here’s an interesting article on the California tax situation. It points out that the sales tax on alcohol and marijuana are fairly similar (7.5 to 9.5 percent) but the state excise tax for cannabis is 15%, while wine is 0.25% on average and beer is 1.5%.

But it’s not totally a rosy picture. From my understanding, people in California are skeptical as to how these taxes will be used and whether they will go to where it was intended. A few states can’t seem to figure out how to proceed despite the vote for legalization. And, of course, the federal government repealed an Obama-era policy of leaving law-abiding marijuana businesses alone in those states that have legalized it.

Those of us in the booze business know firsthand that prohibition doesn’t work and that the single most important reason for the end of the “noble experiment” was the absence of taxes from booze.

Further Thoughts and the Future

As to what the alcohol industry should be doing, I found it very interesting that Constellation Brands made a play in the marijuana business last year, investing $191 million in a Canadian company. At the recent Wine and Spirits Daily Annual Summit at which COO Bill Newlands spoke, he said they believe marijuana is an emerging trend that they need to tap into because it’s going to be a big business.

A recent article from Rolling Stone had some interesting predictions for 2018 and what to expect from the marijuana situation in the US.

Let’s start with this quote: “State-legal pot markets seem poised to match or exceed the value of black market pot by 2020.” The friendly, neighborhood dealer could soon be looking for work.

They also predict that there will be legal marijuana lounges in some places, probably Las Vegas for starters and Canada will continue to benefit financially and otherwise from their role in the business.

But the most interesting of all is that the possibility of legalization of recreational marijuana in New Jersey will mean increased pressure on New York—where medical marijuana is legal—to do the same. You can get to Jersey City from Manhattan in 15 minutes or less. Also, let’s not forget that much of New England has approved medical and/or recreational sales already.

*          *          *

My takeaway is that the marijuana industry will have growing pains but, in the long run, it is here to stay and will flourish. The question for us, dear readers, is how the alcohol industry can or will adapt.

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Move over, Tequila and Mezcal

100% Agave Spirits Made in India

Back in 2014, I wrote a number of articles about Desmond Nazareth and his Agave India products, as well as how agave made its way to India. (See articles here and here.) Recently, I learned that Desmond has joined forces with Martin Grassl, the founder of Porfidio tequila.

Here is how their joint venture is described on Old Town Liquor’s website.

The joint venture was created out of the mutual respect of two entrepreneurs of disparate backgrounds but with similar creative minds. They shared a profound admiration for a botanical wonder, the “tree of marvels” as the Spanish Conquistadors called the agave when they encountered it in Mexico.

The product is called SINGLE AGAVE® 100% AGAVE AMERICANA EDITION (Code Name: S3xA). It’s not made in Mexico but in southern India— the Deccan Plateau, a geographical area where the agaves grow. As the story goes… the agave was transplanted from Mexico to India by Queen Victoria for fencing off the railways of the Raj to stop Holy Cows from being crushed by trains. The Agave Americana is the producer’s way of celebrating that 100-year-old event by distilling the wild plants.

I spoke with Desmond Nazareth or DesmondJi, as his brand is called, and here are excerpts from the interview.

BB: How did your relationship with Martin Grassl and Porfidio come about? How did you and he meet?

DN: The relationship was born out of respect for each other’s achievements and each other’s product quality. Martin noticed articles about Indian agave spirits appearing around 2012 in the Mexican press and contacted me.

It was both Martin’s and my opinion that agave spirits— be it tequila, mezcal or other— are unique precisely because of the botanical uniqueness of the agave plant (“the inulin factor”), the true and only star of the equation, not because they are Mexican-made.

The idea, of course, is not new, as it simply mimics what Baron Rothschild did for the world of wines 50 years ago by creating the first non-French wines in Chile and Napa.  It was revolutionary idea at the time.

Both Martin and I strongly feel that Indian agave spirits, made in our craft distillery (India’s first), should be viewed in the same league as Mexican agave spirits like mezcal, by nature of being made from naturally grown and foraged agave plants, as opposed to plantation-grown agave plants. The fact that my products are made from 100% Agave Americana, rather than 100% Blue Agave, takes our premium products intentionally beyond tequila, along the lines of Mexico’s finest mezcals.

BB: This is a special edition product, how is it different from your other Agave brands?

DN: It differs in terms of product formulation from our other agave spirits products. Certain adjustments were made to the hydrolysis, fermentation and distillation process to create a product which is more attuned towards international taste profile preferences, rather than India’s domestic preferences. For this first special edition, a traditional process of heat hydrolysis has been used, the oven cooking method.

BB: Can you discuss the nature of the business relationship between the two companies?

DN: Single-Agave 100% Agave Americana is a joint venture product between DesmondJi and Porfidio. It forms part of Martin Grassl’s brainchild “world series” of non-Mexican made agave spirits, such as agave spirits made from Agave Cocuy (Venezuela), Agave Australis (Australia) and Agave Karoo (Africa). Agave spirits can be made wherever agave is grown, same as high quality wine can be made wherever appropriate grapes are grown. France certainly never liked the idea of the coming into existence of wines from Napa Valley, Barossa Valley and Mendoza, I guess it could not be helped, as it is the natural progression of things.

Agave India is essentially the ‘field-to-bottle’ producer of Indian craft spirits and Porfidio is a premium global co-branding and marketing partner We jointly decide what is an appropriate craft offering for the global market.

BB: Where do you see this joint venture going in the future?

The idea is to expand quickly into super-premium barrel aged expressions Indian Agave spirits, similar to Mexican Reposados and Añejos.  Ours is a step-by-step approach, with the Blanco-style expression simply a starting point.

BB: Tell us more about the story behind the idea— “the agave was transplanted from Mexico to India by Queen Victoria for fencing off the railways of the Raj to stop Holy Cows from being crushed by trains.”

DN: There are two happenstances which brought about the existence of Indian agave spirits. For one, the general nature of the so-called Colombian Exchange, by which the agave, among many other plants and animals, “went international.” In addition, the Agave Americana arrived in India as a cost-effective means of fencing off the British rails to protect its trains from killing or maiming animals.

While the British probably single-mindedly aimed at protecting their financial assets— their trains—the concept of this fencing idea was equally a culturally-sensitive decision by the British Crown in protecting India’s free-roaming Holy Cows, one of our spiritual and cultural assets.

So, the “agave solution” was embraced by the colonizers and the colonized, as benefiting both. Neither “them” nor “us” grasped the true dimension of this pivotal fencing decision as the Mesoamerica-sourced Agave Americana proliferated beyond anyone’s wildest expectations on Southern India’s fertile soils, the Deccan Plateau Highlands. Why the Empire chose the Agave Americana towards such purpose—used in Mexico to produce some of the finest Mezcal—rather than any other variety, is a mystery still to be fully uncovered by botanical historians. Whatever the reason for the choice, it unquestionably benefited us.

BB: Other than in the US are there other countries where you’re working together?

DN: The US is the world’s biggest market for agave spirits. So, we thought it a good idea to do the initial special edition product launch in the US. Our next target market is Japan and China, based on Porfidio’s existing distribution platforms in these countries.

Thank you, Desmond.

Indian Agave Americana
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The Missing Prosecco: A New York City Story

This can only happen in NYC

The City of New York has a building ordinance called Local Law 11, described as follows:

To keep buildings safe, owners of properties higher than six stories must have exterior walls and appurtenances, such as balconies, inspected every five (5) years – and they must file a technical façade report with the Department.

Recently, the building in which I live was inspected by our engineering firm and it was determined that we needed to inspect the building—particularly the balconies—and that repair work needed to take place.

So, starting in July, a pedestrian bridge (also known as a shed) went up all around the sidewalk of our building, scaffolding was deployed, and a team of workers began to prepare the façade and mainly the balconies. It’s a complicated process so I’ll spare you the details. It’s sufficient to say that we could not use our small balcony in the summer or fall and it took until mid-December for the work to be completed.

Despite the slight inconvenience, I was in awe of the men riding the scaffold each day to do the job. Imagine going up and down a 31-floor building, doing this for more than eight hours a day, and getting on and off to work on balconies. I get dizzy and wobbly getting on a step ladder to change a bulb. There is not enough money for me to even contemplate getting on a scaffold—including what Diageo paid for Casamigoes.

Now on to the story…

One day last week, our balcony was finished and I opened the door, partly because I wanted a close look at the work (fabulous) and mainly because I could, for the first time in six months. I didn’t stay there long; it was freezing out.

It just so happens that on that particular day we had a small group of friends coming over for a cocktail party. I bought what I needed from the nearby wine and spirits shop—hey, it’s NYC and there’s one every other street. Included in my order was four bottles of prosecco… Mionetto Prosecco to be exact. Sparkling wine is fun, celebratory, easy to serve, and some folks prefer it to other drinks.

My order arrived but the problem was how to keep the prosecco cold; the refrigerator was full of food and I could only get two bottles in. How to keep the other two bottles cold was a bit of a dilemma.

I know, I thought, now that the balcony was accessible, I’ll do what most of my neighbors and I do in the winter and store two bottles out there. If you live in an apartment in the city, you don’t have room for an extra refrigerator, so a balcony, or even a fire escape, when the temperature is low enough, will do the trick.

Two bottles in a plain black plastic bag were put outside to keep cold. But different types of alcohol freeze differently. An 80 proof (40%AbV) spirit will not freeze but a wine at 8 to 14% AbV will first turn to slush then freeze after just an hour or two. I had visions of frozen sparkling wine and shooting corks taking out neighbors’ windows.

So, around fifteen minutes before our guests were due to arrive, I went out to the balcony to check on my cache.

The balcony was empty.

No booze. Gone. Disappeared.

I live on the 11th floor of the building so, unless Spider Man was in the upper east side and decided to climb up to my balcony and take the prosecco, there was only one other explanation—the workers took it.

I called the building superintendent, a good friend, and laughingly told him the situation. He immediately deduced that they were on a scaffold going down and finished for the day, so they must have thought the wine was a gift for them. Hmmm. Made sense to me. “Never mind,” I said. “Let them enjoy it.” His reply was a terse, “Let me see what I can do.”

I shrugged and immediately called the liquor store and, reminding them what a good customer I am, I begged them to send up two more bottles asap.

Ten minutes later the doorbell rang. Two gentlemen were standing outside. One was the delivery guy from the store and the other was one of the building employees. Each had a bag containing two bottles of prosecco. We now had six.

The aftermath

I felt really badly about the building taking the assumed gift away from the workers. These fellows worked long and hard and a couple of bottles of booze was small additional compensation. But my friend the super thought he was doing me a favor. I shouldn’t have called him.

What really pissed me off was that of the six bottles of prosecco, only one was consumed. A couple bottles of Eagle Rare Bourbon, seemed to be the preferred libation.

As we say in New Yawk, go figure.

My building
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