PRLA Restaurant & Lodging Matters Fall 2019

4  • PENNSYLVANIA RESTAURANT & LODGING matters • Fall 2019 INDUSTRY OUTLOOK IT’S A NEW WORLD since Bill Clinton’s 1992 response to a question about marijuana. His now famous admission is that yes, he had once tried marijuana, but “didn’t inhale.” Today candidates for elected office seem to wear their experience with pot as a badge of honor. And who would have thought that cannabis would ever be such a big thing to warrant devoting an edition of Restaurant & Lodging Matters to it? Well, here we are in 2019 with 33 states and the District of Columbia with legalized medical marijuana and 11 plus the District of Columbia where recreational marijuana is legal. There are societal and economic impacts based on this trend. In 2012 Colorado and Washington became the first states to legalize recreational marijuana. The Centennial Institute of Colorado Christian University Study of November 2018 estimates that for every dollar gained in tax revenue, Coloradans spend $4.50 to mitigate the effects of legalization. These numbers are derived from 20 different factors, with the largest ones being productivity loss, hospitalizations, and car accidents. Here at home over half of Pennsylvanians support the legalization of recreational marijuana as does Gov. Wolf. So, with legalization potentially on the horizon we thought it could be interesting to learn how restaurants and hotels might be impacted. To do so, I surveyed some of my counterparts in other states that have legalized pot. Michigan’s law is new, so information from there is more prospective. Michigan’s restaurant, and to a lesser extent, hotel operators are focused on two narratives that could potentially disrupt the industry once the state finishes crafting a regulatory structure for the 2018 voter approved initiative legalizing recreational marijuana. The primary perceived threat is that the nascent marijuana industry will strangle and siphon off an already tight labor market within the industry, offering compensation and benefits that the hospitality industry simply can’t match. A lesser, though very real threat, centers on workplace safety and the prospect of increased workers’ compensation claims stemming from a workforce no longer disincentivized from using recreational marijuana. While operators are still free to implement a zero-tolerance program at their establishment, most are betting the market will preclude such a policy. Immediately after retail sales were legalized, the Colorado restaurant industry had to wrestle with labor shortages from employees going into the marijuana business. Additionally, restaurants were faced with handbook policy changes around zero tolerance drug policies (which were becoming a barrier to finding employees), educating customers that they couldn’t consume marijuana on patios, and finally figuring out how to deal with people who consumed an edible before coming to the restaurant or bar to drink and are passed out in a booth. Most of these issues have died down and restaurants have figured out how to handle it. The focus now is to keep the consumption of marijuana and the consumption of alcohol separated in businesses. John Longstreet Legalization Well, here we are in 2019 with 33 states and the District of Columbia with legalized medical marijuana and 11 plus the District of Columbia where recreational marijuana is legal.