Last week the Los Angeles Business Journal released a special report that the cannabis industry was showing a downward trend in tax revenue across the state of California. Scott Schmidt, the Executive Director of Emerald Village West Hollywood, a cannabis travel and tourism board, highlights West Hollywood’s upward trend as the epicenter and innovation destination for cannabis culture in Southern California.
As we celebrate the fifth 420 Day since adult use cannabis became legal in California, one city—West Hollywood, aka the Emerald Village—is bucking national trends by embracing the flower and opening new markets.
In 2022, cannabis sales in more mature markets fell for the first time ever. In Washington, Colorado, Oregon and California—the four oldest legal adult use markets—cannabis tax revenues declined between 7.7% to 21.3% last year.
However, the City of West Hollywood—just 1.9 square miles in the heart of Los Angeles—is bucking these trends, seeing year over year growth in its local cannabis taxes in 2022. Measure Y revenue for fiscal year 2021 was $1.5 million and for fiscal year 2022 was $1.9 million. West Hollywood could be a model for others looking to ensure access to safe and legal cannabis for their residents.
For a century, West Hollywood has been more open and permissive than its neighbors, earning the city the reputation as the place where Southern California comes to play. During prohibition casinos and speakeasies opened along the Sunset Strip, just out of reach of the long arm of the Los Angeles Police Department. Rock n Roll music found a home on the Sunset Strip in the 1960’s and 70’s, while the region’s gay and lesbian community settled into the city to escape the LAPD’s bar raids which were common at the time.
It’s no surprise that West Hollywood would lead the way in modern times when it comes to cannabis. The city first embraced cannabis flower and its medicinal powers during the AIDS crisis of the 1980’s and 1990’s, permitting the first municipally sanctioned cannabis buyers’ clubs in California.
Since adult use cannabis became legal in California in 2018, West Hollywood has been progressive in embracing the flower and creating unique experiences for consumers and connoisseurs.
The city’s merit-based process for assigning cannabis licenses meant that only the best businesses were able to win a coveted license. Many of these new businesses combined owners with experience in the Cannabis industry with local business leaders who knew how to open and run a business.
West Hollywood also understood that tourists at local hotels, residents in dense apartments and cannabis connoisseurs would need a place to safely and responsibly consume cannabis. The past year saw the opening of two cannabis consumption lounges in West Hollywood—the only ones in Los Angeles County—with more on the way before the end of the year.
More than just places to buy or consumer cannabis, West Hollywood’s dispensaries and lounges each offer unique perspectives, products and experiences to consumers, opening up new markets to help the city buck statewide and national trends.
The Artist Tree provides a platform to local visual and performing artists in its gallery-like dispensary and lounge. Calma’s focus on female-forward brands and products defy national stereotypes of the cannabis industry as an all-boys club. LAPCG color-codes products by their terpene profiles, making it easier for customers to understand what effects the cannabis will have on them.
MedMen’s dedication of shelf space to social equity brands owned by women, LGBTQ+ and People of Color allows the socially-conscious consumer to support their cause with their pocketbooks. The Woods’ dispensary highlights small farm, sun-grown, organic products and its lounge provides a sanctuary in the heart of the city unlike any other.
West Hollywood’s cannabis businesses, old and new, have moved beyond the days of your grandfather’s dispensary with dark windows and metal bars creating revolutionary open-facing retail experiences all while being good neighbors. In the past year, only one cannabis business in West Hollywood has received a complaint from its neighbors and none were found in violation of the city’s strict municipal code. No West Hollywood cannabis business has been cited for sales to minors either.
While West Hollywood is a success story for the cannabis industry, the local industry still faces headwinds that impact the industry as a whole.
Federal prohibition limits access to capital markets, real estate and banking, driving up costs for both businesses and consumers. State and local taxes prove a nasty surprise to first-time consumers and drive many experienced cannabis users back to illicit, black-market cannabis. State regulations prohibit the sale of food and beverage in cannabis lounges, despite their importance in providing safe and responsible consumption spaces.
Regardless of these headwinds, West Hollywood’s cannabis industry continues to grow and provide a model to other cities. As an early adopter of Cannabis, West Hollywood has been called the “Amsterdam of the Far West.” In reality, the latest trends show that the Emerald Village is in a cannabis destination class of its own attracting tourists and locals alike to its unmatched cannabis experiences.