Cannabis consumption has turned a corner — and now it’s on Fifth Avenue.
Shoppers walking along the iconic New York stretch of retailers can pick up jewels from Cartier and new threads from Saks, as well as pre-rolled, New York state-grown marijuana joints from a new dispensary.
In the 3½ years since New York state legalized adult-use marijuana, licensed cannabis sales have taken off, topping $100 million last year. And now, legal avenues for cannabis consumption are gaining traction in the luxury market.
As New York officials crack down on the hundreds of illicit shops throughout the city, 166 licensed dispensaries are open to shoppers across the state, including over 50 in New York City — and one just across the street from Lululemon and Ted Baker.
The Travel Agency on Fifth Avenue is an adult-use recreational marijuana dispensary outfitted with white interiors, glass cabinetry, a host of “budtenders” and a lot of marijuana.
The retailer’s exterior fits in with the chic storefronts of its neighbors, and with its sister locations in Union Square and Downtown Brooklyn. All three stores opened in the past year and a half, and founder Paul Yau said a fourth is coming soon to one of the city’s other high-end shopping districts, SoHo.
At The Travel Agency, Yau said the average purchase includes two products, largely gummies, marijuana flower or pre-rolls, at the average price of $80 to $90 a ticket. Products range from $3.50 THC seltzers to flower selling at $150 per ounce, and accessories go for even higher price points.
New York City’s first licensed dispensary, Housing Works Cannabis Co., sells products at rates that are similar, but a shopper can spend even more there, paying up to $240 on one ounce of marijuana. All of Housing Works Cannabis Co.’s proceeds support the Housing Works nonprofit in NYC.
The Travel Agency’s Union Square location donates 51% of its proceeds to the Doe Fund, which supports formerly incarcerated people transitioning to life outside of prison. The Fifth Avenue and Brooklyn stores are run by owners with a past in the justice system related to cannabis.
While the elevated interiors get legacy and new shoppers through the door, Yau said the ethical mission keeps customers coming back. “It’s huge, it just provides such a halo,” he added.
Reaching the ‘canna-curious’
New York has always had what the industry calls the “legacy” customer base, or those who used marijuana before it was legalized.
Now, with The Travel Agency locations in high-traffic, high-spending areas, Yau said he’s reaching the “canna-curious” with curated product offerings and an architecturally inspired space to ease onboarding into the legal market.
“The 40-year-old female shopper is a really strong demographic, and that demographic is just emerging in New York,” Yau said, adding that the stores were designed with that kind of new shopper in mind. “When people came into our store, they knew immediately it wasn’t an illicit store.”
One such female patron, Katie, a 37-year-old advertising executive working in New York who declined to give her last name, said the atmosphere and the employee expertise keep her coming back. “You feel like you’re in a boutique,” she said.
THC seltzer company Cann is also hoping to appeal to curious consumers, particularly those who have had a negative experience in the past with marijuana. Both Yau and Cann founder Jake Bullock told CNBC that marketing is key to navigating that headwind in onboarding the canna-curious.
“Part of the reason we made these cans, little and small and pink and pastel, is because we’re trying to communicate approachability to the consumer, like you can drink the whole thing. Don’t worry, it’s just 2 milligrams,” Bullock said.
A 12-pack of 8 ounce Cann seltzers with 2 milligrams of THC costs $49.95. By comparison, shoppers can find a 12-pack of White Claw alcoholic seltzers for well under $20.
The upscale marijuana experience isn’t limited to THC products.
Luxury home designer Jonathan Adler sells marijuana home decor items like marijuana storage canisters and bowls for nearly $300 a piece. Lifestyle brand Edie Parker sells everything from smoker-friendly handbags to rolling papers, giant colorful glass pipes and $450 table lighters, many of which can be found at boutiques and legal dispensaries like The Travel Agency and Housing Works Cannabis Co.
Actor Seth Rogen’s lifestyle and decor brand Houseplant also caters to the luxury cannabis user. Marble rolling trays and ash trays go for well over $200, and the company recently collaborated with high-end apparel retailer Kith.
The collaborations will likely keep coming. Yau said he thinks dispensaries like The Travel Agency offer promising partnerships for fashion brands hoping to tap into the “coolness” of the burgeoning cannabis industry.
Finding luxury consumers where they are
THC seltzer company Cann has backers that are high-end themselves, including actress and lifestyle entrepreneur Gwyneth Paltrow and two-time NBA All-Star Baron Davis. The beverage company is trying to catch consumers where they’re willing to spend.
At the Montauk Surf Lodge in New York, where guests pay a minimum of $3,000 for a one-night table, they can now purchase a hemp-derived version of Cann’s seltzers alongside local rosé and high-end liquor.
Cann co-founder Jake Bullock said his brand’s target audience is a premium, largely millennial consumer, and its competition is alcohol. Bullock and his co-founder Luke Anderson view the Surf Lodge partnership as an ideal introduction to that audience — via the wealthy Hamptons crowd that’s already indulging and spending big.
“It kind of has that very classic customer that Luke and I thought about the brand as fitting into their lives,” he said.
Yau, who spoke to CNBC while working remotely near the Hamptons, is also aware of that target audience. “We think we’re still in the first inning of New York’s legal cannabis,” he said.