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April 20, 2016

Where There’s Smoke: Retailers Talk About Heating Up Sales

Adult retailers looking to branch out into other product categories have long found smoking products to be a profitable sideline. And with the popularity of e-cigs and vaping, things are looking up—not to mention the even brighter future ahead if more states ease up on restrictions that paraphernalia be limited to use for tobacco products. How likely does that look? At present, only four states and Washington, D.C., permit recreational marijuana use. But by year’s end another ten states—Arizona, California, Florida, Maine, Massachusetts, Michigan, Missouri, Nevada, Rhode Island and Vermont—are likely to have considered legalizing marijuana for some degree of use. With another 4/20 “holiday” here, AVN reached out to Eldorado Trading Company, based in Colorado, to find out whether the veteran adult distributor had seen evidence of new synergies emerging between dispensaries, head shops and adult boutiques. And though the answer was only a partial yes, we nonetheless learned a lot from retailers in other states about the business advantages to maintaining a well-stocked smoking section. According to Karla Scott of Eldorado, adult stores in Colorado “aren’t really venturing out to include more paraphernalia because there is such a high saturation of marijuana dispensaries.” However, just recently an Eldorado client in Denver opened up two side-by-side shops: one selling adult products, the other hawking weed. “I’ve been to their store three times and they’re definitely a new concept with what they’re doing, and the store looks great. It’s on a busy street in the metro area of Denver.” Though Eldorado does not carry smoking products in its inventory, the distributor has many clients who are combining the two product types. Some are head shops who are trying to bring in toys, and others are adult stores looking to add paraphernalia. Head shops, Scott said, have been “one of our targets for a couple of years now. We’re trying to get them to look at it being a new avenue for revenue to bring in the small vibes, games, things like that. We’ve had some success with that. With it being a new market for them, a lot of them don’t know what to carry.” Stores in some regions carry smoking products for a particular reason. “When you look at the Texas area, a lot of the stores for a very long period of time have carried both,” Eldorado’s Scott said. Zoning laws and city ordinances in the region often put restrictions on what percentage of store space can be adult products. Stores also carry smoking supplies “so it’s a balance and not all adult. They’ve been doing that a long time,” she explained. Other boutiques, Scott said, have become very well versed in mixing pleasure products and paraphernalia. “We have stores that are really successful and it would be nice to brag about them.” Opening the Pipe LineAnother Eldorado customer is David Eliason of Dick & Jane’s Naughty Spot in Sturgis, South Dakota. “David is just a great partner and fun to work with,” Scott said, promising that he had many good stories to tell. And indeed he does. Eliason’s saga began in 2010, when he tried to open his store but “the city initially wouldn’t give us an occupancy permit, so we had to sue in federal court.” With the help of Schafer & Associates, a member of the First Amendment Lawyers Association, Eliason finally managed to open his doors in 2011, though his legal skirmishes were far from done. “We are a very small mom-and-pop adult type store. What I call the new branding of stores with the boutique feel to them,” Eliason explained. “In the beginning I worked it a lot personally. After the first couple years I expanded,” he recalled. “I started with a small display of tobacco pipes, and people started straggling in. Pretty soon their friends were coming in—and then I had to buy a second display case.” In 2013 Eliason expanded the store further. “We decided to go full force into the pipe business as well as the adult business and the lingerie business. We brought in a huge selection of pipes—Crush glass pipes from California, and obviously Glow Industries and some other industry people. … Finding reputable companies like Crush is vital to your success. If something isn’t selling, they’ll take it back and send you something that does.” At present, “it accounts for about 30 percent of our bottom line. It’s significant.” And the additional revenue has “helped us get to the next level and hire a manager for the store.” One big marketing advantage for Dick & Jane’s Naughty Spot is that their town is the site of the annual Sturgis Motorcycle Rally, now in its 76th year. “People came for the rally each year, and they would see us and realize there’s a adult store in Sturgis,” Eliason said, noting that the town is close to the larger metropolis of Rapid City. “They would come back at Christmas time and Valentine’s and for bachelorette parties. … We’ve really used the rally as a marketing tool. There’s lots of demand for our products—both smoking and adult.” But as is the case in many states, sellers of smoking products have to be careful. “If we suspect anyone is going to use anything not for tobacco, we can’t sell to them because of state laws,” Eliason said. But despite their carefulness, Dick & Jane’s has twice been raided by state law enforcement officers during the motorcycle rally. “In 2014 and 2015 they came in and seized all our tobacco pipes,” he recalled. “We complied with the search warrant and let the officers do their jobs—we appreciate law enforcement and call them when we need them.” Though Dick & Jane’s Naughty Spot faced no criminal charges, the business was hardly unscathed, thanks to asset forfeiture laws, which allow police to seize and keep property even if the owner is not convicted of a crime. Eliason was told after that first raid that there would be no criminal charges filed—unless he filed to get his $30,000 in property back. “We decided to let it go and chalk it off to a lesson learned in politics and restocked our shelves. It hurt us financially, and it was a psychological blow.” Before the 2015 motorcycle rally, Eliason took his pricier stock off the shelves. When the state officers came this time they seized about $6,000 in small pipes. “It’s part of the politics surrounding the industry, whether you’re in the tobacco side or the adult products,” Eliason said, noting that in nearby Rapid City, the local police raided a Spencer’s gift shop and confiscated vibrators. And fighting to get back property can be a losing proposition because the legal expenses may exceed the value of the assets. “Or you can put your tail between your legs and go the other direction and mind your p’s and q’s,” he said wryly. “We’re cautious—we make sure we don’t try to get to far outside of the mainstream. We’re not carrying anything too hardcore, just your Wickeds your Vivids, your Digital Playgrounds,” he said, adding, that the store “obviously experienced interesting growth patterns with the Fifty Shades revolution.” Despite the legal woes, he said, “We’ve been fortunate. We do our marketing correct, we do our signage correct. We make sure it’s not offensive to the community. We’ve been invited to bridal fairs because we’ve built a reputation as a nice store with an educated staff. They attend a lot of the training sessions that Eldorado and other people do.” Dick & Jane’s Naughty Spot is located at 1543 Lazelle Street, Sturgis, SD 57785. Call (605) 720-0049 or visit DickAndJanesNaughtySpot.com.Love Bud Just one state—Nebraska—separates South Dakota from Colorado, but they’re light years apart in terms of marijuana laws. Taking full advantage of Colorado’s “green rush” is Alexa Elliot, who in February opened up Passion Head Shop, which sells both adult items and paraphernalia. And right next door, opening soon, is Passion Bud, a marijuana dispensary. Why passion? Turns out, according to Elliot, certain strains of kush intensify the sexual experience. Passion Bud will carry those strains and will also feature a “Passion Room,” equipped with other sensual essentials. “We have certain vibrators and certain lubes that go well together,” Elliot said. “We have fun little things for couples in the Passion Room.” What makes some pot induce passion? In large part it’s the THC content. “For sex, it’s better to be under 14 percent,” Elliot said. Higher levels of THC tend to be over-stimulating, especially to women. “If it’s 26 percent THC content, we’re not relaxed enough for a good orgasm.” So how did a former deputy sheriff turned real estate agent embrace this new career? One of her clients had seven marijuana retail stores, Elliot recounted, and he needed security. She and her boyfriend, also in law enforcement, ended up opening up a security company. “That’s how I came across this industry. And through that I made all the contacts.” When a deal for the location became available, she jumped on it. “I was trying to think what I could do different with my store, and that’s when I decided to do Passion Bud with the adult novelty store right next to it.” Just a casual pot smoker herself, Elliot has been surprised by how many people partake. “A lot of business people I’ve known for years and years are now trying marijuana. One friend has ADD and anxiety … he smokes at night and it helps sleep and calms anxiety during the day.” Patients with chronic pain, epilepsy and cancer have turned marijuana for help with symptoms, she explained, and for women with severe PMS issues, the new THC/CBD suppositories relieve cramping. Done up in red and black with crystal chandeliers and black leather couches, the Passion Room will serve as a backdrop for events. “You can host a bachelorette party there. We have deals set up with limos and VIP bottle service at nightclubs and strip clubs. We can plan the whole thing.” Elliot is also looking to host “passion parties” for couples to teach them how to spice up their relationships, and also toy parties to teach customers about e-stim, interactive toys and more. “We are here to show people what’s available in a discreet, fun, couples setting.” In addition to what she stocks, Elliot is also focused on the look of Passion Bud. “I don’t know if you’ve been to a dispensary, but they’re kind of a sterile environment,” she mused. “We’re also a themed destination dispensary. It’s like a tiki hut. Also, we have a big huge aquarium and a mural with an underwater scene. It’s more of an experience.” In terms of clientele, “It’s a range of people. It’s kind of interesting. We’re at LoHi and it’s all being renovated. All the buildings and houses are being knocked down and they’re putting in million-dollar houses. Our demographic is blue color and high end, and we have a lot of LGBT people in the area.” And there are more potential clients every day. “There are so many people moving here—it’s just insane. I don’t know if marijuana has a lot to do with it, but I don’t know what else it could be,” Elliot said. Passion Head Shop is located at 2525 Federal Blvd., Denver CO 80211. Call (303) 933-1664 or visit PassionHeadShop.com.

 
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