How hoteliers can best incorporate legal marijuana
How hoteliers can best incorporate legal marijuana
23 AUGUST 2018 8:36 AM

There are several states in the U.S. that are loosening laws on recreational and medicinal use of marijuana, and hoteliers are exploring ways to capitalize from the trend—but there a legal concerns to be aware of.

NASHVILLE, Tennessee—As more states in the U.S. are legalizing the medicinal or recreational use of marijuana, hoteliers are seeing opportunities to attract those consumers to book at their properties.

But to run a business associated with marijuana, there are plenty of legal concerns that must be taken into consideration, according to panelists speaking on the “Higher performance? Hotels and the marijuana phenomenon” panel at the Hotel Data Conference.

“We think that generally it’s creating a boom for the (hotel) industry,” said Michael Blank, principal of Woodmont Lodging.

How hotels are accommodating users
Blank said marijuana in hotels has been sporadically seen, such as at the Standard Hotel in Los Angeles, which has partnered with a high-end edible gummy manufacturer to distribute in the hotel. He said right now it’s more about making it an amenity instead of the soul essence of a hotel.

“First and foremost, it still has to be a hotel, so we’re looking at every investment as a hotel first and then factor in the cannabis component to make sure that if—for whatever reason—the cannabis component does not work, the hotel still does,” he said.

Blank said fundamentally the hotel business is challenging and the margins can be tough, so it’s important to maintain a profitable operation regardless of marijuana-related amenities. Woodmont—which has been actively exploring the hotel investment space as it relates to the cannabis industry—has spent the past two years understanding the legal and voluntary rules, he said, to figure out how to add cannabis offerings.

Vipul Dayal, *a former director at large for the Asian American Hotel Owners Association, agreed it’s a niche that needs to be treated as an amenity right now. He said boutique hotels will have more luck than brands would with incorporating cannabis, but “five years from now it’s going to be a booming economy.”

Grant Dupart, director of hospitality investments at Denver-based McWhinney, said it’s key to focus on ways to design new-builds that will create an experience that caters to marijuana users. For example, he said one of McWhinney’s Denver properties has balconies on some of the guestrooms.

He said that has created a lot of demand for that property, especially each year when Denver hosts a weed festival on 20 April. There’s not a lot of properties that have balconies, he said, and the hotel’s GM thought that would help drive a premium on the rooms.

Smoking in public spaces is illegal, Dupart said, and the use of tobacco in guestrooms isn’t allowed. And he said the easiest way he’s found to manage that in his Denver property is “to just say you can’t smoke in your room and if you do, it’s a $420 fee. We thought that would be a funny way to embrace it, but if you want to do it, go for it, that’s what it will be.”

Blank said it’s ultimately about creating the right environment for that user to feel welcome and comfortable.

The legal concerns, training staff
Karen Dinino, senior counsel at Brownstein Hyatt Farber Schreck, said hoteliers must look at the federal, state and local laws for marijuana use. Because as long as it remains a schedule-one drug, it is illegal under federal law, which creates problems at all levels, she said.

An owner or operator must also look heavily into liability and workers compensation insurance as well as dealing with banks.

“If banks accept money from a business that is engaging in either the sale or distribution … of an illegal product … the bank could be involved in money laundering,” she said. “So there’s the practical and legal (sides) and it all boils down to your comfort level and how much risk you’re willing to take and where you are.”

She said California is an “incredibly risky place” because there’s so much enforcement and testing of the regulations compared to other states. Owners and operators should get advice on what the reality is in the city where they might be looking to operate, she said.

Dinino said the liability is unclear as there aren’t laws yet for marijuana like there is with alcohol—though it is in the works. For example, some states limit the liability on bartenders. If a customer drinks too much, leaves and gets into an accident, the bartender isn’t at fault unless there are clear signs of recklessness, she said.

“You want to show that you’re not being reckless, that your staff is trained to recognize any signs that might show someone is in distress or needs medical help, and that you’re prepared to respond,” she said. “So even though there’s not the laws protecting you specifically, you can show, at best—if anything happens—maybe there was negligence, but there certainly wasn’t recklessness.”

She recommends training staff to treat marijuana use similar to alcohol use.

Are employees treated the same way?
Dinino said hotels that might consider welcoming marijuana on-property need to carefully consider how to draft drug-testing policies for employees. Ultimately, will the staff be treated the same as guests, or have different standards?

“There are currently 11 states that have a nondiscrimination requirement for medical marijuana use, so that if someone tests positive for medical marijuana, you have to consider whether you need to accommodate a disability before you immediately fire them for not passing your drug test,” she said.

If an employee’s termination has anything to do with marijuana use, a hotel needs to consider if the employee could possibly bring a claim for wrongful termination, violation of public policy, termination due to off-duty conduct and invasion of privacy, she added.

She said it’s also key to be upfront with employees prior to hiring on whether they would be comfortable working around marijuana because of allergies, breathing issues or just general concerns of being exposed to it.

How to inform guests, first-time users
When it comes to questions that guests might have about marijuana recommendations or usage, Dinino said a concierge should provide informational resources like pamphlets from the California Department of Public Health—which a hotel cannot get in trouble for handing out, she said. This way, the information is coming from other sources, not the hotel staff themselves, which could decrease liability.

“Another thing a concierge can do is say things like ‘a lot of our guests found that (this cannabis) shop is a wonderful place to visit,’” she said. “So you’re not prescribing medicine, you’re making recommendations (and) giving approved pamphlets.”

Dupart agreed it’s smart to push the liability off of the hotel and recruit experts to give advice to guests. He suggested a “budtender,” or if demand isn’t calling for that type of staff member, “then you just provide the resources to find the right people.”

Looking ahead
Blank said if legalization expands to more states, it will create different opportunities for more territories. But he doesn’t see pot tourism as a significant destination driver but more as an additive.

“I think that it will change the way it impacts the industry, but it won’t hurt,” he added.

Dayal said five years from now he sees marijuana as being treated the same way cigarettes are.

*Correction, 30 August 2018: This story has been updated to correct the title of Vipul Dayal.

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