Growing a New Market

We in the business community are ignoring a golden opportunity. As we sit idly by, a new spin on emerging markets is taking place. An entire industry is coming into the light, encountering all the usual challenges of branding, sales, customer service, and more, with an added challenge: A few short years ago, it was illegal.

I'm referring to marijuana. It might not be legal in your area yet, but there's a good chance that is about to change. Four states plus the District of Columbia—you know, where the federal government lives—have already fully legalized the possession, sale, and consumption of nature's high, and several more are looking to join them in 2015. That's in addition to all the jurisdictions that have decriminalized pot in one way or another and/or have provisions for medical use. A bill before the U.S. Senate would end federal prohibition and allow sale and taxation.

This cultural shift is going to have an effect beyond more Bob Marley on the radio and a nationwide shortage of Doritos. What was recently an illicit business, complete with smuggling, hidden gardens, and not insignificant theft and violence, is now coming to a downtown strip mall near you. You'll be able to get baked next to the bakery. Get drugs on the way to the drugstore. Buy weed with your weed killer. This will be as much of a shock for dealers as for the public.

Product awareness won't be a problem, at least. From Cheech and Chong to Snoop Dogg and Willie Nelson, there have always been famous people to associate with marijuana, and I distinctly recall the first time I saw a T-shirt with the Adidas tri-leaf logo replaced with the five-leaf cannabis variant. The question is not one of creating a market but of developing brands. The model in place with medical marijuana shops is similar to that of an Amsterdam coffee shop. Can it survive a sudden mass popularization, or are we going to see Mad Men–like differentiation of nearly identical products into megabrands? Will the branding be on the herb or the stores that sell it?

Sales techniques will be interesting to watch develop. Marijuana, like most recreational substances, is a seller's market. If you have merchandise, buyers will find you, and while haggling is possible, it tends to be brief because nobody wants to get spotted buying or selling. Fear will no longer be a factor once legal shops are up and running (except for pot-induced feelings of paranoia, of course), but it might take a while for coupons and weekly sales to come into play. We'll need to find the line between attracting clientele and destroying society—or however prohibitionists decide to present the argument.

Just because marijuana is legal someplace doesn't mean smuggling and related crime will go away overnight. Suppliers will have to be vetted and taxes will have to be paid, and no criminal organization is willing to call it a day just because the market changes. Bootleg weed that hasn't been taxed will be just like loose-cigarette sales on city streets—illegal but pervasive. Smuggling from legal states to illegal states will be another issue.

And what about good old-fashioned robbery? Credit card companies have been slow to allow transactions for medical marijuana, and that's not going to change fast enough to benefit commercial weed sales, so it's likely to remain, at least in the short term, largely a cash business. Cash businesses, especially vice-related ones, are crime magnets. Sellers will have to strike the right balance between looking legitimate, keeping themselves and their customers safe, and not scaring away business.

Lastly, there's the analyst factor. Long story short, researching this topic tends to set off red flags on law enforcement computers, legalization or no. There's a fair chance this article will land me on at least one watch list (or should I say one more). As big an opportunity for business science as legal weed represents, it is likely that we'll miss our chance to study it. At least we'll be able to fire up a joint to keep from getting too bummed out.  

Marshall Lager is the head honcho of Third Idea Consulting, dedicated to finding the premium blend of humor and insight in the CRM industry. Hit him up at www.3rd-idea.com, or www.twitter.com/Lager.