Article Summary
In Colorado, recreational marijuana is legal but smoking in hotels is not. Former Wall Street lawyer Joel Schneider found a way around this legal conundrum by opening a bed-and-breakfast (B&B), which he refers to as Bud+Breakfast. In Colorado, B&Bs are considered private property and therefore not subject to the no-smoking laws, and Schneider does not allow guests under the age of 21, the legal age to buy marijuana in the state. With six suites ranging from $299 - $399 per night, revenues in 2016 averaged $110,000 per month. His success has allowed him to expand to three properties, with hopes of franchising to other states where recreational marijuana is also legal.
Source: Jane Wells, "Weed entrepreneur brings in over $1 million a year running 'bud and breakfast' hotels," cnbc.com, January 18, 2017.
Refer to the Article Summary. By marketing to recreational marijuana users, Joel Schneider is trying to set his business apart from competing hotels and lodging establishments. All else equal, if his concept remains successful, in the long run we would expect Schneider to experience
• increased competition and lower economic profits.
• increased competition and higher economic profits.
• government regulation and no additional competition.
• rising average costs and long-run economic profits.
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