Pubdate: Fri, 30 Dec 2016
Source: Los Angeles Times (CA)
Copyright: 2017 Los Angeles Times


Genaro Molina / Los Angeles Times


Andrew Modlin, left, co-founder and chief operating officer, and Adam
Bierman, co-founder and chief executive, inside MedMen cannabis
dispensary in West Hollywood. One inspiration for the shop was the
Apple store.

Andrew Modlin, left, co-founder and chief operating officer, and Adam
Bierman, co-founder and chief executive, inside MedMen cannabis
dispensary in West Hollywood. One inspiration for the shop was the
Apple store. (Genaro Molina / Los Angeles Times)

On a bustling stretch of Santa Monica Boulevard lined by vintage
stores and eateries, the MedMen shop looks right at home.

Sunlight streams in through the store's floor-to-ceiling windows.
Inside, salespeople in bright red T-shirts greet shoppers. Merchandise
is carefully arranged on sleek wooden tables lined with iPads.

It's a retail scene reminiscent of an Apple store, but the high-tech
gadgets on sale are vape pens.

After years of bullet-proof glass and burglar bars, marijuana shops
are starting to get a makeover.

Cannabis entrepreneurs, borrowing from successful retailers such as
Apple and Whole Foods, are opening dispensaries with natural light,
spacious displays and open-floor plans. With weed now legal for
recreational use in California and seven other states, such amenities
could attract an anticipated glut of new customers who are less
familiar with cannabis and may be put off by the industry's generally
dingy shopping experience.

There is an "upscale revolution in cannabis retailing," said Troy
Dayton, chief executive of Arcview Group, a marijuana research and
investment firm. "It now makes sense to invest in your property and
make it awesome for the long haul."

As more states ease restrictions on marijuana for medical and
recreational use, pot is losing its stigma -- bringing new consumers
into a legal market forecast to grow to $50 billion in 2026 from $6
billion last year, according to a report from Cowen & Co.

The biggest source of potential growth is older customers who have
disposable income but are more reluctant to patronize the types of
shops that have traditionally sold marijuana, said Vivien Azer, a
managing director at Cowen who analyzes the cannabis industry.

From 2011 to 2015, marijuana users 26 years old and up grew by more
than 30%, while those ages 18 to 25 climbed only about 4% (young
people still represent the bulk of those who admit to using pot), Azer

"The guy ripping bong hits every day is not buying higher-end," Azer
said. "It is women and wealthier consumers that under-index for
cannabis use" -- representing a huge potential market ripe for a
retail experience, she said, that is less "drug dealer" and more

MedMen co-founder and Chief Executive Adam Bierman has a nickname for
what he considers the biggest untapped demographic: "the Chardonnay
mom." These are well-to-do customers who don't currently use pot, but
might be introduced to it by friends at a party or peek in while
walking past an attractive boutique.

"They see this store and say, 'Oh, I'll try those breath mints,"
Bierman said. "They start becoming someone who is substituting
marijuana for alcohol or something else."

The company also manages growing and manufacturing operations,
including a dispensary and cultivation facility in L.A's Sun Valley
neighborhood. Cultivation facilities are in the works outside Reno, in
Desert Hot Springs and in Utica, N.Y. (MedMen is managing four
dispensaries in New York, including one in Manhattan.) But key to its
success is an in-store experience that offers the same operational
savvy and attention to detail common in more "vanilla businesses,"
Bierman said.

"There is no statute that requires tinted windows or bars -- it's
because of that feeling that this is an illicit product," Bierman said.

Co-founder and Chief Operating Officer Andrew Modlin said he looked to
retailers such as Apple and even restaurants for ideas.

Instead of queuing up, shoppers are encouraged to browse the store on
their own. Against one wall, refrigerators contain edibles such as
marijuana-infused lemon bars. On the other, open shelves and hooks
hold a variety of products, including cannabis patches for pets.

On custom-built wooden tables, cannabis strains are displayed in clear
circular containers -- dubbed "bud pods" -- with built-in magnifying
glasses allowing for closer inspection. By pulling a small tab.
shoppers can take a sniff (Modlin said sanitation is his pet peeve at
old-school dispensaries, where customers shove their hands into open
jars of product). Each pod is stealthily secured by a cable, like the
laptops at an Apple store.


An upscale retail experience is key to MedMen's business model.
(Genaro Molina / Los Angeles Times)

The processing room, where gloved employees prepare orders from
shelves of stainless steel bowls, is sheathed in clear glass similar
to the open kitchens at trendy restaurants such as Trois Mec and Bestia.

"I have been in so many dispensaries, and you go into the back and
there are bags of product on the floor and a used bong right next to
it," Modlin said. "That's not the environment we want to create."

Retail analysts said weed entrepreneurs are embracing a strategy
familiar to anyone who has spent $5 for a cup of coffee: it's easy to
persuade shoppers to spend more at a store with upscale ambiance.
Creating an attractive retail experience will become increasingly
vital as marijuana prices drop in coming years as more growers jump
into the market.

"I'm more inclined to go to a store that looks better," said Ron
Friedman, a retail expert at Marcum in Los Angeles. "It's more than
just going in to buy a product, it's creating an environment where
somebody enjoys just being in the store."

Shoppers at MedMen such as Ira Levine, a 64-year-old editor and
writer, is happy the industry is moving past security doors and
fluorescent lighting.

"It's a legal product -- this is how it should be," said the MacArthur
Park resident, who spends about $400 every two weeks on pot to help
relieve symptoms from a nerve condition.

Some pot entrepreneurs are eyeing older Americans as a prime business

Ray Taylor, who opened the Healing Center in March in San Diego,
initially expected the majority of customers to be "young stoners, the
20-year-olds looking for a buzz, the Rastafarians." Instead, he said,
about 60% of his customers are age 40 and up.


Product processor and regional retail manager Ari Roughton fills an
order for a customer at the MedMen shop.

"Most of them are professionals, your normal everyday people you see
at Vons grocery store," Taylor said.

Inspiration to open a "decent" pot shop came after Taylor brought a
relative with epilepsy to a dispensary that he thought looked unsafe.

He leased a storefront in a building owned by a pain management doctor
who now send him referrals. Taylor rakes in an average of $15,000 in
sales a day, he said. He's looking to expand into the space next door
and hopes to start giving presentations at nursing homes and senior
living facilities on the medical benefits of pot.

"Seniors and people in that category are going to start using it more
and more," he said. "I think there is a huge market."

Taylor attributes part of the store's success to its look -- a mix of
silver accents, a purple wall inspired by his favorite Rainbow Kush
bud, and the feel of a bakery. He ended up hiring High Road Design
Studio, a design firm that specialized in pot shops, to make over the
335-square-foot space.

"I want it to be the Rolls Royce of dispensaries," he said. "I didn't
want to open a psychedelic orange place with posters."

For years, dispensaries had a signature look of tinted windows,
security doors and sometimes graffiti murals. A green cross outside
was often the only clear sign of what was sold. Operating in a legal
gray area and serving a demographic consciously seeking out their
wares, few opted to sink money into aesthetics.

Many shoppers, such as Jonathan Smith, 30, remain partial to these
no-frills stores. The West Hollywood resident said he cares much more
about quality and price, and would feel uncomfortable in a dispensary
that caters to a wealthier clientele.

"If you're someone into the L.A. lifestyle, with money, of course
you'd want to go somewhere nice," Smith said. "If you're a regular
Joe, you'd feel kind of out of place."

Megan Stone, the owner of High Road, said she started the pot-specific
design firm in 2013, the year after Colorado and Washington passed
bills legalizing recreational pot use. Stone had worked as a
"budtender" at a Santa Ana dispensary while she went to design school.
After becoming general manager, she got the chance to do a low-budget
remodel, replacing the carpet with wood-like vinyl and painting the
walls a dark brown, a nod to high-end jewelry stores and clothing
boutiques, she said.

Those few changes thrilled customers -- burnishing the shop's
reputation and enabling it to charge premium prices.

"People used to walk in and call us the Tiffany's of dispensaries,"
she said. "When the bar is set so low it takes very little effort to
have a dramatic impact on people's perception."

Her design business has grown to about 15 clients last year from three
in 2014, Stone said. This month, she hired a design assistant to help
with the workload.

Stone said she's seen the industry -- and her clients -- evolve from
mom-and-pop shops to multi-store chains with more investment backing.
That's just par for the course for an industry that has become
increasingly sophisticated as it emerges from the shadows, she said.

"The future of this industry is geared toward a demographic that looks
like mainstream society," she said. "It looks like the customers at
Starbucks or Whole Foods or Apple."
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