Gotham aims to bring NFTs and art to cannabis retail. Can it succeed?
"People are walking in to buy cannabis, and not candles or NFTs," said global cannabis consultant Andrew DeAngelo.
The post Gotham aims to bring NFTs and art to cannabis retail. Can it succeed? appeared first on Inside Retail.
Gotham, a new, high-end cannabis concept store, has opened an experiential two-storey space in the Bowery in New York City, featuring a retail floor and art gallery.
Gotham offers premium cannabis products, including flowers, edibles, vaporizers, pre-rolls and tinctures from brands like Edie Parker, Flowerhouse, House of Puff and Gotham Goods, Gotham’s own line of CBD products and accessories, as well as a selection of skin care, home decor and lifestyle products.
Founder Joanne Wilson has said that Gotham is a reflection of New York’s rich history and influence. The business has partnered with Strive, a nonprofit that provides a career pathway for those facing societal barriers to employment.
For its first show featuring New York artists, Gotham is working with Bright Moments to present an NFT gallery. It will also showcase a permanent installation by NYC-based multimedia artist Molly Lowe.
High-end is not new
According to Andrew DeAngelo, a global cannabis consultant based in the US, the approach that Gotham is taking is not new in the cannabis industry, but in terms of the New York area, where recreational marijuana use just became legal in 2021, it’s still quite innovative.
“There are a whole lot of luxury cannabis dispensaries in the United States. In fact, my favourite one is The Woods, owned by Woody Harrelson and a few other celebrities. It’s very luxurious, very high design. So, it’s definitely a trend these days,” he told Inside Retail.
But while DeAngelo admires these brands’ high-end approach, he cautioned that they risk losing touch with what makes cannabis culture unique.
“What I worry about with Gotham is that they are so in touch with trying not to be like cannabis, that they ultimately lose touch with being cannabis. That’s a risk, because people are walking in to buy cannabis, and not candles or NFTs,” he said.
The underground market
One of the immediate challenges that Gotham has to contend with is the huge underground market of unlicensed dispensaries in New York. According to DeAngelo, the competition is intense and the underground market has a vast selection of cannabis strains and offerings at much lower prices.
“I think there are only six or seven dispensaries in the entire New York area that are licensed and open. They have to compete with a lot of unlicensed storefronts and a lot of delivery services, as well as underground market dynamics in this space,” he explained.
When it comes to retail merchandising, the 80-20 rule is “pretty rock solid” in the cannabis industry, according to DeAngelo.
“Usually, 80 per cent of your sales comes from about 20 per cent of your inventory, while the other 20 per cent comes from 80 per cent of your inventory,” he said.
It’s a brave new world
DeAngelo has been in the cannabis industry for more than 20 years, and while perceptions are changing, he believes there is still a stigma around the use of cannabis as a recreational drug.
“There has been a lot of pushback by people who complain that New York smells like weed now. But generally people are quite tolerant and are not judgy,” he said. “Creative folks and even those on Wall Street are using cannabis. New York is probably the most cosmopolitan place on Earth, so it’s ok. But outside of NYC, there is still a lot of stigma.”
In his experience, communities are initially very concerned when dispensaries first open, but after about two years, they tend to come around. He believes that high-end cannabis stores can go a long way towards removing the stigma around this space.
“Gotham will have on-site consumption in their upstairs gallery area, so people can consume cannabis and look at art. Cannabis enhances art and art enhances cannabis. This marriage of art and dispensaries is a good thing and there should be more of this,” he said.
Radical differentiation
In order to succeed in the cannabis industry, DeAngelo believes that ‘radical differentiation’ is essential. At the same time, entrepreneurs need to localise their offerings. This will be important as the market becomes more crowded, and people will be spoilt for choice in the future.
“Eventually in New York, there will be at least one dispensary in every neighbourhood, and people will go to the one closest to them. They’re not going to go across town to get weed. There’s going to be weed everywhere. So it’s going to be exciting to watch this space,” he said.
The biggest challenge that dispensaries continue to face, according to DeAngelo, is the cost of doing business, due to the tax codes, both at the state and federal level.
“There is enormous pressure on entrepreneurs to maximise their revenue per square foot, have amazing luxurious experiences, and ultimately thread that needle between experience and profitability. Hopefully, federal tax codes will change, and then the industry will get more profitable across the board,” he said.
Interestingly, the biggest trend in cannabis retail that DeAngelo is seeing right now is the rise of special licences to attach consumption experiences to bricks-and-mortar stores. This is already happening in places like San Francisco, Oakland, Denver and Las Vegas.
“It’s already happening in New York, as the licences are being given outright, and it’s basically about keeping weed off the streets. Another trend is CBD-infused drinks. But refrigeration costs, weight and bulk are going to be a challenge for dispensaries to manage,” he concluded.
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