‘Marijuana’, and the social debate around the material, provides an attractive opportunity to consider the cultural origins of entrepreneurial opportunity.
Today in the United States, eighteen states and the District of Columbia currently allow its medical use. After Washington and Colorado passed sweeping laws to legalize cannabis, the pot business is, if not mainstream, at least ready to push toward it. A number of new start-ups have emerged to take advantage of the changing laws. UpToke, for instance, is a startup company that manufactures a handheld vaporizer. Others are starting up equity funds to consulate the potential market. Seattle based private-equity fund, Privateer Holdings, has designed a plan to acquire smaller marijuana-related businesses to create a ‘marijuana conglomerate’. Most notably, Jamen Shively, CEO of Seattle-based Diego Pellicer, announced plans to invest $100 million over the next three years in the burgeoning “social marijuana” market with a national chain of marijuana stores. In doing so, the former Microsoft manager is not only taking a page from the Howard Shultz playbook for building Starbucks, he’s also testing the Obama administration’s tolerance for flouting federal drug prohibition. “Yes, we are Big Marijuana,” Shively, 45, said unabashedly about ambitions to “be the most recognized brand in an industry that does not exist yet.” And in doing so, politically, Shively would also create the first consolidated economic engine that advocates for legalization.
What can these developments tell us about the origins of entrepreneurial opportunity? In this post, I’ll explore the changing meaning of ‘marijuana’ via the cultural knowledge that influences perceptions. I will briefly compare the shifting cultural knowledge around ‘marijuana’ in the United States and in the Netherlands provides some insights into the emergence of entrepreneurial opportunity that goes beyond current economic theory.
Culture and Perception
Researchers across the social sciences and humanities have found that each individual person has their own ‘view of the world’, which is sometimes shared with others and sometimes unique. Perception is the act or faculty of perceiving, or apprehending by means of the senses or of the mind, cognition, and understanding. It is the immediate or intuitive recognition or appreciation of something. For instance, as one tastes the sweetness of a cherry, one perceives the texture and qualities of the cherry. Our perception though goes much deeper than the physical senses. Research has shown us that perception has moral, psychological, and aesthetic qualities, which can be projected upon the subjective notion of objects, activities, and the like.
Strikingly, anthropologists have shown us that these moral, psychological and aesthetic qualities of perceptions are not (always) universally shared but tend to vary from culture to culture. Recent challenges to traditional psychology theories argue that people from across cultures have varying ideas and attitudes about space, place, territory, objects and actions. For example, Joseph Henrich and colleagues from University of British Colombia show that visual perception, fairness, cooperation, spatial reasoning, categorization and inferential induction, moral reasoning, reasoning styles, self‐concepts and related motivations, and the heritability of IQ all vary across cultures. Their comparative findings suggest that members of Western, educated, industrialized, rich, and democratic (WEIRD) societies, including young children, are among the least representative populations one could find for generalizing about humans (see http://www2.psych.ubc.ca/~henrich/pdfs/Weird_People_BBS_final02.pdf).
Since culture is the prevailing norms, practices, belief, and values regarding objects and subjects, knowledge about these can be described as cultural knowledge. Giving a big hug is known to be appropriate when meeting a friend in the United States, while three kisses on the cheeks in the Netherlands, or two in Italy, is known to be appropriate. More importantly, though, is that cultural knowledge isn’t limited to greeting, but can manifest in how people choose to organize their economy, political systems, education, hospitals, higher education, and the like.
This begs the question, how can we connect cultural knowledge to individual perception? The author Joan Didion, an author, is on to something when she said, “We tell ourselves stories in order to live. We live entirely… by the imposition of a narrative line upon disparate images, by the ‘ideas’ with which we have learned to freeze the shifting phantasmagoria — which is our actual experience.” Hence, one clear mechanism that transfers cultural knowledge from ‘out there’ to ‘in here’ are the stories, metaphors, symbols, and the theories of cause and effect that guide our sense of judgment and appropriateness. Whichever set of assumptions we’re given, these cultural scripts are intended not only to help us successfully navigate our own lives but also to perpetuate a set of values regarding the way society as whole functions best.
However, rather than cultural knowledge deterministically explaining all human behavior, they represent a guide of how to probabilistically act in certain situations. Individuals have the ability to act in ways other than those that reinforce the existing cultural knowledge, assuming they have some power to do so. They can make a difference, whether intentionally or not by drawing on cultural knowledge from another realm of life. An individual acting outside of existing cultural knowledge may not by herself change an existing cultural knowledge (nor create a new knowledge) if the original cultural knowledge continues to be enacted by other individuals. Nevertheless, if other individuals follow the lead of the individual acting outside of existing cultural knowledge, whether in direct and explicit defiance (e.g. as in collective action) or in tacit ways, they may together bring about change by reinforcing not traditional cultural knowledge, but new ones.
What is intriguing, though, is that cultural knowledge is constantly in flux; waiting to be challenged and overthrown. Changes to cultural knowledge creates new stories, metaphors, symbols, and the theories of cause and effect that guide, which replace taken-for-granted practices. Paradoxically, over time the new cultural knowledge becomes taken-for-granted myths that we all ‘know’ are true. Thus, our individual perceptions based on a set of values change over lifetimes, generation to generation, to bring new knowledge about how society will function best. On the other hand, cultural knowledge can shift the definitions of what is deemed inappropriate or undesirable, and vice versa. Some of the best research of the previous century shows how the entrenched cultural knowledge of what constitutes ‘whiteness’ and ‘blackness’ can be challenged, though often with considerable push-back.
Applying this cultural view of opportunity to the current debates around ‘marijuana’ and entrepreneurship provides some truly fascinating insights. Let’s start with the America’s cultural knowledge of ‘marijuana’.
A Brief History of ‘Marijuana’ in the United States
An excellent article titled ‘The Mysterious History of “Marijuana”’ published by NPR in the USA tells a story of how marijuana has been intertwined with race and ethnicity in America since well before the word “marijuana” was coined. Throughout the 19th century, news reports and medical journal articles almost always use the plant’s formal name, cannabis. Most of the pre-1900 press references to cannabis relate either to its medical usage or its role as an industrial textile. But then, in the early 1900s, you start to see accounts in major newspapers like this Los Angeles Times story from 1905 (“Delirium or death: terrible effects produced by certain plants and weeds grown in Mexico”).
Numerous accounts say that “marijuana” came into popular usage in the U.S. in the early 20th century because anti-cannabis factions wanted to underscore the drug’s “Mexican-ness.” One account, published in The Washington Post, draws a distinction between “Mexican marihuano or locoweed” and Indian “hasheesh,” aka “cannabis indica”. The article actually erroneously conflates a poisonous weed (that really is called locoweed; its clinical name is astralagus, not cannabis) with marijuana.
Cannabis was outlawed because various powerful interests (some of which have economic motives to suppress hemp production) were able to craft it into a bogeyman in the popular imagination, by spreading tales of homicidal mania touched off by consumption of the dreaded Mexican “locoweed.” Fear of brown people combined with fear of nightmare drugs used by brown people to produce a wave of public action against the “marijuana menace.” That combo led to restrictions in state after state, ultimately resulting in federal prohibition. In sum, ‘marijuana’s’ illegality was created by introducing the word ‘marijuana’ that was meant to play off of anti-immigrant sentiments.
‘Marijuana’ in America today has undergone a new revival with new parties struggling to redefine it as an illegitimate category. Cannabis advocates hope to legalize personal use in another 14 states by 2017, mostly among the 16 states besides Washington and Colorado where medical pot is legal (it’s also legal in Washington, D.C.). Industry estimates say today’s $1.5 billion legal market could quadruple by 2018. Importantly, the public is trending toward legalization. In a Pew Research Center poll released Thursday, a majority of Americans (52%) favored legalization, the first time that threshold has been reached since polling on the issue began in 1969. For the first time, a majority of Americans now support legalizing marijuana. Commercial marijuana sales are estimated at $1.5 billion today which could quadruple by 2018.
In sum, the cultural knowledge about the causes and effects of marijuana are being uprooted due to a lack of scientific evidence. Moreover, its links to institutionalized racism have begun to be more commonly understood. Marijuana is the reason for more than half of the drug arrests in America. A deeply disproportionate number of marijuana arrests (the vast majority of which are for possession) befall African-Americans, despite similar rates of usage among whites and blacks. The revolution of cannabis may be happening in the country, bringing the substance into the light and allowing entrepreneurs to seize new opportunities.
A Brief History of ‘Marijuana’ in the Netherlands
Similar to the United States, prior to the 20th century, the Dutch had access to hemp plants for food, fuel, and fiber. As the Dutch language evolved into its present form, one word came to describe any and all sorts of plants: hennep. Dutch farmers stretched their expensive imported tobacco with the leaves and flowers of the hennep plant in the early 1500s.
By the mid-1970s, many citizens began to experiment with drugs and this period saw a widespread use of marijuana, speed, heroin, LSD, and other recreational drugs that presented various degrees of health risk to Dutch citizens. The then-Minister of Health and Interior, Irene Vorik, examined the medical and social studies of the harm cause by the various substances. Vorink proclaimed that young people often experiment with tobacco, sex, alcohol, and other drugs as a natural part of the maturation period, though the minister wanted to reduce any potential harm that Dutch youth faced. Thus, smoking cannabis is a part of what the Dutch view as “youthfulness” or freedom to grow up. The government decreed that cannabis was considerably less harmful than the other drugs and that the most common way to be introduced to drugs “harder” than cannabis was directly through the drug suppliers themselves. Vorink led the way towards recommending the authorities stop persecuting people for the consumption and sales of personal amounts of cannabis.
‘Coffeeshops’ quickly emerged from existing youth centers as places to permit the sales of small amounts of hashish and marijuana. These youth centers were transformed by entrepreneurs towards more commercial operations, and the coffeeshops of today were born. New entrepreneurs moved into the marketplace and developed new relations to offer marijuana, each coffeeshop with its own signature brands, reputation, and milieu. As Doysevsky would have said, “I know that my youth will triumph over everything – every disillusionment, every disgust with life. I’ve asked myself many times whether there is in in the world any despair that would overcome this frantic and perhaps unseemly thirst for life in me, and I’ve come to the conclusion that there isn’t…”. The ‘youth’ had triumphed.
However, cannabis remains a controlled substance in the Netherlands and both possession and production for personal use is still a misdemeanor, punishable by fines. Coffee shops are also technically illegal. The Dutch policy of non-enforcement has led to a ‘de-criminalized’ cultural category where norm of non-enforcement has become common.
Cannibis is still illegal because the Dutch Ministry of Justice applies a gedoogbeleid (tolerance policy) with regard to the category “soft drugs”: an official set of guidelines telling public prosecutors under which circumstances offenders should not be prosecuted. This is a more official version of a common practice in other European countries wherein law enforcement sets priorities regarding offenses on which it is important enough to spend limited resources. A November 2008 poll showed that a 60% majority of the Dutch population support the legalisation of soft drugs. The same poll showed that 85% supported closing of all cannabis coffee shops within 250 meters walking distance from schools
In the subsequent years, international tourism exploded in the Netherlands with visitors from all over the world coming to visit the famous ‘coffeeshops’. Since the countries climate is not ideal for growing cannabis, Dutch entrepreneurs experimented with greenhouses and growing techinques that have greatly increased both the quantity of supply and the quality of product (i.e. the quantity of THC – the chemical marker that makes a person high). These advances however have led to a more recent refinement in the categorization of cannabis. In October 2011 the Dutch government proposed a new law to the Dutch parliament, that will put cannabis with 15% THC or more onto the list of hard drugs. If the law comes into effect, it would prohibit “coffee shops” from selling cannabis of that potency.
The Cultural Origins of Entrepreneurial Opportunity
What does this mean for opportunity and entrepreneurship? Comparing the cases of cannabis across cultures sheds light on the cultural processes that create new opportunities. Scholars in this area tend to view opportunity as a function of some out of equilibrium markets – some demand is not being met for some reason. This creates potential for an individual to recognize this imbalance and work to meet demand, adding new value to the market, and possible to society and the economy as a whole. Re-examining this premise from a cultural perspective we see that opportunities arise as cultural knowledge is created, changes, or is destroyed. As perceptions move to build new sub-cultures of knowledge, they gain influence and appropriateness, even to the extent people are willing to spend money on a new product or service. Contrarily, changing cultural knowledge can illegitimate a business opportunity that seemed to have stood the test of time. Consequently, a potential market is being formed and reformed, emerging or destroyed, through the changes or creation of new stories, metaphors, symbols, and the theories of cause and effect. Entrepreneurs are fascinating since they are people that embody and usher in these changes – whether for better or for worse (See my other blog post on the types of entrepreneurship).