Abstract
This paper examines how entrepreneurs operating in underground markets come to see laws governing marketing systems as illegitimate and explores the role identity plays in motivating entrepreneurs to challenge existing institutions. Analysis of interviews with 27 cannabis dispensary founders showed that entrepreneurs came to reject medical cannabis prohibition as illegitimate after direct experience with both cannabis and traditional medicines convinced them the factual basis upon which prohibition rested was flawed. Perception of prohibition’s illegitimacy fostered entrepreneur identification as a member of a superior in-group constrained by an illegitimate institution. Pursuing opportunities in illegal markets then became a vehicle for entrepreneurs to enact valued identities by challenging and undermining prohibition. This analysis extends work on informal economy entrepreneurship by showing that dis-identification with formal institutions does more than enable entrepreneurs to recognize economic opportunities ignored by those working within institutional boundaries; it also opens existing marketing systems to decay by providing economic and psychological resources for dismantling the laws that govern them.
Keywords
Introduction
For most of the 20th century in the United States, the marketing system in which the production, provisioning and sale of cannabis took place was an underground, illicit one. Consumer access to the product was highly unpredictable, transactions took place outside of the formal economy, and locations and times at which consumers could secure the product were uncertain and unreliable. This situation began to change following the 1996 passage of a state ballot initiative in California allowing individuals to use cannabis for medical purposes. Over the following decade a small number of brick and mortar storefront dispensaries with fixed locations began to appear in California. Change, however, was slow. In 2005, for example, Los Angeles was home to just four medical cannabis dispensaries.
Over the next four years, however, the situation changed dramatically. In 2009, for example, the Los Angeles County District Attorney’s office reported that the number of dispensaries operating in the county had jumped to 800 (Associated Press 2009). Nor was Los Angeles an anomaly. According to data available in early 2010 on Weedmaps.com, a website that enables cannabis buyers to locate dispensaries, these storefront shops were scattered throughout the state. Cities like Santa Diego, Anaheim, and San Jose each housed over 100 dispensaries and even rural counties such as Riverside and San Bernardino contained dozens. In less than half a decade the cannabis marketing system in California underwent a dramatic transformation, moving from an illegal underground market to a large semi-legal market operating visibly and in the open.
Remarkably, this transformation occurred while the legal status of storefront sales of cannabis in California remained uncertain. Federal law continued to treat all use and handling of cannabis as strictly illegal, and even at the state level, where use of cannabis by patients was allowed, laws failed to provide clear protection for those who sold cannabis to patients. During this period dispensary operators could and did face aggressive policing and criminal prosecution for their market activities at both the local and federal level. Many had their shops raided, their savings seized, and their property confiscated or destroyed. Yet, despite these risks, hundreds of small-scale entrepreneurs chose to open dispensary businesses, thereby transforming the cannabis marketing system and the larger society within which that system developed. This article seeks to understand why.
Researchers recognize that marketing systems often exist in illegal domains (Layton 2015; Pennington et al. 2009), but work on illegal markets has focused either on contexts where entrepreneurs seek to avoid legal sanction by engaging in clandestine activity (Cebula and Feige 2012; Pennington et al. 2009; Webb et al. 2009) or in which formal institutions are feeble and illegal activity exists alongside a broad range of informal economic activity that weak governments lack the capacity to effectively police (De Castro, Khavul, and Bruton 2014; Fadahunsi and Rosa 2002; Upadhyaya et al. 2014; Uzo and Mair 2014). Efforts to bring illegal activity aboveground and challenge market governance mechanisms under capable governments remain largely unstudied, and we know little about what drives such entrepreneurship. This article addresses that gap by examining medical cannabis entrepreneurs who challenge cannabis prohibition. It focuses in particular on the identity processes at play in such entrepreneurship.
Webb et al. (2009) theorize that collective identity plays a key role in entrepreneurship in illegal markets. They argue that identification with a social group that rejects the legitimacy of restrictions on certain forms of market exchange enables entrepreneurs to recognize and exploit opportunities for profit through such exchanges. Their theorizing, however, remains largely ungrounded in empirical data. Moreover, their model does not account for efforts to undo such legal restrictions. This paper attempts to address those gaps. Three questions guided this research. How do entrepreneurs come to view existing governance of marketing systems as illegitimate? How do perceptions of the illegitimacy of those legal institutions affect entrepreneur identity? What role does identity play in entrepreneur actions to challenge legal institutions aimed at keeping their market systems underground?
This research makes two primary contributions. First, it contributes to work on identity in institutional theory by showing how dis-identification with formal institutions combined with the identity-based recognition of entrepreneurial opportunities can open those formal institutions to decay by providing psychological and economic resources for dismantling them. Second, it contributes to macromarketing by elucidating the individual and group-level identity processes at work in motivating entrepreneurs to transform both marketing systems and the broader society. While individual and group identity processes operate at a micro rather than macro level, changes in marketing systems at the macro level are often grounded in processes occurring at the micro level (Layton 2015), and a full understanding of marketing system dynamics requires understanding how micro level processes link to and affect macro level conditions. By focusing on the identity processes that motivate individuals to rethink the social practices they are willing to accept and to dismantle ones they come to reject, this research provides such a link.
Theoretical Context
Webb et al. (2009) argue that collective identity provides an important foundation for entrepreneurship in illegal markets of the informal economy. Drawing upon the distinction between legality and legitimacy, they define the informal economy as “the set of illegal yet legitimate (to some large group) activities through which actors recognize and exploit opportunities” (Webb et al. 2009, p. 492). They theorize that those who engage in these illegal market activities do so because they share with some large social group a view of what constitutes legitimate activity that differs from views of legitimate activity held by those who shape society’s laws. This gap between formal legal boundaries and group-defined legitimacy boundaries creates unique economic opportunities because it allows those willing to operate outside of formal legal boundaries to identify economic opportunities unavailable to those who treat legal boundaries as legitimate.
By focusing on group membership as the source of the perceived gap between legitimacy and legality, Webb et al. (2009) call attention to the importance of group identity in illegal economic activity. They argue that operating outside of formal institutions both relies upon and fosters a collective identity. This focus is consistent with work on the informal economy, which has shown how membership in distinct identity groups such as ethnic enclaves or minority communities organizes activity there (Portes and Jensen 1989; Portes and Sensenbrenner 1993). Absent legal safeguards and resources afforded by formal institutions, informal economy participants depend upon informal institutions such as the norms and values that shape behavior in trusted social groups (Portes and Sensenbrenner 1993) or local community contexts (Viswanathan et al. 2014). At the same time, participation in a common activity, particularly one seen as anomalous or deviant by the larger social body, creates a sense of identification with others who engage in that activity (Turner et al. 1987). These two processes reinforce each other, and Webb et al. posit that collective identification will be particularly potent for those engaged in activities that are illegal but viewed as legitimate within their specific social group.
Despite the prominent role that collective identity and legitimacy play in their framework, however, Webb et al. surprisingly go on to argue that entrepreneurs operating in illegal markets will abandon those markets in favor of legal ones as their enterprises grow. They theorize that because illegality constrains growth and profits due to the need for illegal firms to avoid detection, ambitious entrepreneurs will exit illegal markets in order to sidestep size constraints imposed on illegal activity.
This reasoning, however, relies on overly simple characterizations of both legitimacy judgments and identity processes. For example, there are different ways an entrepreneur might see an illegal activity as legitimate. An entrepreneur might simply believe that an illegal activity is not illegitimate, so legal sanctions are unwarranted. The entrepreneur disobeys a law that seems irrelevant or unnecessarily restrictive. Here the proposition that underground economy entrepreneurs will abandon an illegal market to pursue greater profits in the formal economy seems reasonable. Alternatively, however, an entrepreneur might believe an illegal activity is necessary or good. In this case, the entrepreneur disobeys the law because it restricts a valued activity. Here it is unclear whether the prospect of greater profits in legal markets would motivate the entrepreneur to stop the valued illegal activity. For example, in countries where abortion is illegal, a medical professional might provide abortions to women who need them as a matter of principle and not end the practice simply because he or she has found more profitable uses of his or her time.
Another weakness with their argument is its assumptions that economic interests trump identity processes and that entrepreneurs can easily shed their collective identities and their ties to the illegal economy. This view of identity is inconsistent with the identity literature, which demonstrates identity’s power to shape actor behavior. According to Burke and Stets, an identity is “the set of meanings that define who one is when one is an occupant of a particular role in society, a member of a particular group, or claims particular characteristics that identify him or her as a unique person” (Burke and Stets 2009, p. 3). This definition encompasses three types of identity— role identity (Burke and Stets 2009; Stryker and Burke 2000), social identity (Tajfel and Turner 1979; Turner et al. 1987), and person identity (Burke 2004; Stets 1995). Because identity is central to an individual’s sense of self, individuals act in ways consistent with their identities, defend those identities when they are threatened, and do not easily abandon them even in the face of substantial penalties (Burke and Stets 2009; Elsbach 2003; Pratt, Rockmann, and Kaufmann 2006; Stryker and Burke 2000; Tajfel and Turner 1979; Turner et al. 1987). It is likely, therefore, that illegal economy entrepreneurs would find transitioning from illegal markets more complex than Webb et al. portray. An alternative proposition is that when collective identity is strong, entrepreneurs will either remain in the illegal economy despite limits on economic gain, or they will seek to transform legal institutions to bring laws into line with the values of their collective identity.
This latter proposition is consistent with research on identity’s role in social and institutional change. Henri Tajfel, for example, sought to understand how identification as a member of a dominated social group affected the strategies members used to maintain a positive self-image (Tajfel 1978). Although exit from the group is one possible strategy, Tajfel and his students argue that social identity can serve to mobilize group members to work towards social change (Drury and Reicher 2000; Reicher 2004; Tajfel 1978), particularly when the justification for a group’s low status comes to be seen as illegitimate. Similarly, work on social movements, which seeks to explain the conditions that give rise to collective action (cf. McCarthy and Zald 1977; Meyer 2004; Meyer and Staggenborg 1996; Snow et al. 1986; Staggenborg 1988), has drawn a strong link between identity processes and social change, showing how identity processes operating at both the inter- and intra-personal level generate action aimed at effecting broader social transformation (Jasper 1997; Polletta and Jasper 2001; Snow and McAdam 2000). Likewise, recent work in marketing shows that identity operating within consumer communities can transform marketing systems. Scaraboto and Fischer (2013), for example, show how collective identity coalescence among plus-sized women generated a movement for the fashion industry to broaden the offerings of fashion for larger women, and Sandikci and Ger (2010) show how Muslum identity among Turkish women generated a market for fashionable modest clothing. Similarly, Martin and Schouten (2014) demonstrate how the emergence of the miniature motocross market segment depended on the formation of a community identity.
Thus, the existing literature on identity suggests it can be a powerful driver of social transformation. Given that possibility, it may be that entrepreneurs will seek to transform rules governing illegal markets rather than simply abandoning those markets as posited by Webb et al. (2009). This paper explores that proposition in the context of the emergence of the medical cannabis industry in California.
Methods
Research Setting
In 1996, Californians approved a ballot initiative allowing qualified patients to use cannabis for medicinal purposes upon the recommendation of a licensed physician. The supremacy of federal law over state law, however, meant that California law could not legalize medical use of marijuana; it merely established limited immunity for patients from prosecution in state courts. The federal government maintained its prerogative to prosecute cannabis law violations, and sales of cannabis medicines remained illegal at both the federal and state level. In 2003, the California legislature extended the 1996 exemption from prosecution to include not only individual patients but collective efforts at producing and distributing medical cannabis. However, whether this extension included cannabis sales by dispensary operators remained unclear, and many jurisdictions continue to prosecute cannabis sales.
Despite this legal ambiguity and the real risk of prosecution, entrepreneurs began to build a medical cannabis market, founding retail organizations that supplied cannabis in an open and visible manner. These actions have had a significant impact on cannabis prohibition, fostering its erosion as access to cannabis has increased and become more visible. This effect has been particularly apparent in California. Hundreds of retail outlets selling medical cannabis appeared in the cities and towns of the state during the first decade of the 21st century. By fall of 2009, over 800 cannabis dispensaries operated in Los Angeles alone (Associated Press 2009). These shops operated openly in commercial retail spaces and industrial districts. They advertised in local weekly magazines and in medical cannabis trade magazines that began to appear as dispensaries grew more common. Most could be found on popular medical cannabis locator websites, which allow anyone with an internet connection to locate dispensaries, read reviews by customers, and see full product menus for an immense variety of cannabis strains, infused food products and other medicinal preparations.
This background makes California’s medical cannabis market an appropriate setting for addressing questions raised above. Medical cannabis entrepreneurship constitutes a prime example of institution-challenging illegal entrepreneurship. Cannabis use remains banned at the federal level, and even within California, where criminal penalties have been removed for use of cannabis as medicine, sale of cannabis has not been legally recognized. Many government officials, particularly within law enforcement, believe commercial activity involving medical cannabis remains illegal, and medical cannabis entrepreneurs continue to face prosecution by both state and federal authorities. Despite these risks, medical cannabis entrepreneurship persists, and participants in the industry both publically and privately identify themselves as part of a community of users who reject the legitimacy of existing laws.
Although 23 states currently allow use of cannabis for medical purposes, I focus on California for three primary reasons. First, California was the first state to allow patient access to medical cannabis, and at the time this data was collected (between 2009 and 2011) California’s medical cannabis market was the most developed in the nation. Moreover, because California was ahead of other jurisdictions, medical cannabis entrepreneurs undertook their actions under the greatest legal ambiguity and risk. Finally, California is the most populous state in the country, and in 2011 the medical cannabis market in California likely represented three quarters of the market nationwide (See Change Strategies 2011), larger than all other state markets combined.
Sample and Data
The study relies for its data primarily on semi-structured interviews with 27 medical cannabis dispensary founders and on ethnographic fieldwork in various contexts related to medical cannabis. Prior to initiating interviews and fieldwork, I read extensively on the history of cannabis in the United States and traced the evolution of medical cannabis policy through articles in the New York Times, Washington Post, San Francisco Chronicle and Los Angeles Times. I also read various print and online media, online discussions, and trade journals from the medical cannabis community. Ethnographic field sites included business planning and political strategy meetings of cannabis entrepreneurs, meetings of cannabis law reform organizations, trials of dispensary operators, city council meetings where medical cannabis was up for discussion, and a variety of medical cannabis related events such as conventions, trade shows, and rallies.
Finding entrepreneurs willing to provide interviews regarding their illegal activity was challenging, but effort was made to ensure that the 27 entrepreneurs chosen for the study encompassed the diversity in the field. I included dispensary operators from both Northern and Southern California, from urban, suburban, and rural locations, and from operations of varying size. Twenty of the entrepreneurs interviewed were male, and seven were female. Twenty four indicated they had used cannabis recreationally before becoming involved in medical cannabis. Thirteen had been frequent users (at least three times a week). Five had been occasional users (on average less than once a month), and six had used cannabis in the past but not in the years leading up to their involvement in medical cannabis. The remaining three used cannabis for the first time in response to a medical condition. One had been vehemently opposed to medical cannabis prior to becoming a patient.
I conducted interviews between December 2009 and November 2011, the majority between March 2010 and May 2011. The interviews were semi-structured and lasted approximately one hour. The shortest interview lasted 25 minutes; the longest was three hours. I began the interviews by explaining my general research interest in the relationship between entrepreneurship and social change and in my more specific interest in understanding why individuals would start a business that challenged existing laws and that some part of society opposed. Initial questions focused on when the entrepreneurs first used cannabis, when they first used it medicinally, how they understand the value and dangers of cannabis use, how they became involved in this industry and why they decided to start a medical cannabis dispensary. Early interviews revealed emerging themes that spurred the addition of new questions. For example, when it became clear that my informants’ opinions about the nature of prohibition played a key role in their decision to open medical cannabis dispensaries, I added questions about prohibition, why they believed it existed and why it continued. A similar process yielded questions about entrepreneur opinions on traditional pharmaceutical medications.
Analysis
Because I sought to build theory regarding the role of identity in motivating illegal entrepreneurship, this study employs grounded theory methods, which are well suited to analyzing complex emergent phenomena not well explained by existing theory (Charmaz 2006; Glaser and Strauss 1967). Analysis was an iterative process involving constant comparison and theoretical sampling. In constant comparison, the researcher analyzes and codes data as they are collected to look for patterns and generate potential theoretical insights. These patterns and insights then guide theoretical sampling by informing researcher decisions about what data to collect next. This was done repeatedly throughout the research process so that theoretical issues that emerged from analyzing early data could be explored in subsequent data collection and analysis. Coding was done using Atlas.ti, a software tool designed to facilitate coding, categorizing, and finding relationships within qualitative data. The initial intensive open coding (Charmaz 2006) generated codes and labels identifying key actors, actions, events, and sub-processes involved in my informant’s decisions to pursue this type of entrepreneurship. These codes were then sorted into categories relevant to my research questions.
My initial work generated a large number of codes, including such labels as “safe”, “effective medicine”, “harmful pharmaceuticals”, “poison”, “lies”, “deceit”, “ignorance”, “absurd”, “family”, “patient”, and so on. As I continued to conduct interviews and code data, the main themes of the paper emerged as I found codes beginning to fit into larger patterns, and I consolidated subcodes to create second order codes and elucidate the properties of these second order codes. For example, a knot of codes developed around the issue of the safety of cannabis as a drug, a similar knot centered on the belief that cannabis is more effective than other medicines, and a third developed around the belief that traditional pharmaceuticals were dangerous and should be avoided where possible. With these and other broader categories clarified, I began theoretical coding in order to explore and analyze the relationships among the second-order codes (Charmaz 2006) to arrive at the analysis presented here.
Findings
The entrepreneurs in this study identified as members of a medical cannabis community. Although aware of the stigma assigned to them as members of what broader society saw as a deviant group, the entrepreneurs came to reject that stigma and the factual foundation upon which it rested. They saw medical cannabis stigmatization and cannabis prohibition generally as products of ignorance, often willful, and this perception served as a basis for rejecting the legitimacy of the entire institution of prohibition. In particular, they rejected three arguments used to justify cannabis prohibition--that cannabis is a dangerous substance, that cannabis is not an effective medicine, and that traditional pharmaceuticals are safer than cannabis. Consistent with social identity theory, rejection of these arguments and the sense that prohibition was grounded in profound ignorance then served as a basis for redefining the social status of medical cannabis users as a group relative to supporters of prohibition. Seeing themselves as possessing a superior understanding of the facts, they recast supporters of prohibition as ignorant people unable or unwilling to comprehend the truth. With this redefinition in place, the entrepreneurs responded to a number of identity-based needs. These needs included the need to work in a context where they could openly express their social identities as cannabis users without facing stigma, the need for authentic work that matched their sense of self, and the need to fulfill important identity-based roles, particularly the role of caregiver. Their decisions to create cannabis dispensaries were described as efforts to fulfill these identities.
Collective Identification
Medical cannabis entrepreneurs in this study possessed a strong sense of collective identity which developed both through direct interaction (White 1992) and through perception of a common fate (Campbell 1958; Hamilton and Sherman 1996). The medical cannabis entrepreneurs I interviewed participated in some form of medical cannabis activity that put them into contact with patients and other dispensary operators beyond their own work as dispensary operators. Many, for example, showed up and took part in discussions at local chapter meetings of Americans for Safe Access, the country’s largest medical marijuana advocacy organization, and the National Organization for the Reform of Marijuana Laws (NORML), the nation’s oldest and largest marijuana law reform organization. Others were involved in more local organizations or even created their own small associations of operators working within a single town. The entrepreneurs were also found at city council meetings, where medical cannabis regulations were on the agenda, attending educational and political conferences on both medical cannabis and general cannabis issues, and posting to discussions on yahoo groups and other listserves that discussed medical cannabis issues. One particularly strong indicator of community identity was entrepreneur participation in court support activities, in which members of the medical cannabis community showed up at the trials of medical cannabis dispensary operators in order to demonstrate to the accused and the court that the dispensary operator had the support of the community. Although not all entrepreneurs engaged in all forms of collective interaction described above, all of the entrepreneurs I interviewed were engaged in some activity with other members of the community beyond the selling of cannabis. This interaction helped foster a sense of collective identity.
This collective identity was reinforced by the broader discourse used by organizations involved with medical cannabis. Americans for Safe Access, for example, regularly referred to the “medical cannabis community”—describing their mission as representing that community and including references to the medical cannabis community in press releases and announcements, and other communications (c.f. ASA 2011a, 2011b, 2011c). Such references to community were common among medical cannabis organizations, ranging from local activist organizations such as San Diegans for Patient Rights, which referred to its regular meetings as Cannabis Community Meetings, to medical cannabis training schools such as Oaksterdam University and MCCDirectory, which offered classes for dispensary operators such as Survival Tools: Cops and Crooks and Other Dangers for the Medical Cannabis Community.
The entrepreneurs in my study echoed this language, referring to this community and their identification with it. Estelle, for example, expressed a sentiment repeated by several of the entrepreneurs in my study—that the risks she took as a dispensary operator were motivated by her concern for the community, “I don’t want to get arrested, for sure, but this isn’t just about me. I’m trying to be here for the community.”
Rejection of Dominant Logics
According to social identity theory, possession of a sense of collective identity and awareness of status penalties or stigmatization as a result of that identity do not by themselves prompt action aimed at ending the stigma or overturning the status order. Instead, group members will tend to accept and comply with the existing status order if they believe that order is both legitimate and unlikely to change (Tajfel and Turner 1979; Wright, Taylor, and Moghaddam 1990). However, once change appears possible and the legitimacy of the social order is challenged, members of disadvantaged groups are moved to engage in action aimed at change. The passage of the medical marijuana ballot initiative in 1996 and the Medical Marijuana Program Act in 2003 made change to the status order plausible. At the same time, the legitimacy of the status order came under question as supporters of medical cannabis developed knowledge that undermined the rationale for prohibition.
All entrepreneurs in my sample rejected the basis upon which medical cannabis
Cannabis is Safe
All 27 entrepreneurs expressed a belief that cannabis was a safe therapeutic substance. While they noted that cannabis use could be problematic for some individuals (recreational use by teens, for example, or by those who experience dependency), they saw these as minor risks or rare problems that did not alter an overall assessment of cannabis’ status as a safe drug. According to one dispensary operator, This isn’t dangerous. I’ve been smoking this stuff for 30 years, sometimes pretty recklessly, and I have never had a problem with it. And none of the people I know have either—unless you count not being able to get any when you want it a problem [laughs]. Even then, it’s like, bummer. Oh well, move on. [Hector]
Some of my informants admitted starting off with negative views of cannabis, but then found their experience disconfirming their beliefs. I grew up thinking it was some scary evil thing but at college I met really smart, really together people who smoked, and I was like, huh, maybe it’s not so bad, so I tried it, then I did some research and … not only is it not bad for you, it’s actually a wonderplant. That changed me. It really did. Seeing just … how big a lie it all was. I just couldn’t stomach it. I had to do something. [Ezra]
Echoing Ezra’s discovery, nearly all of my informants insisted that the official position on the dangers of cannabis was, in the words of one informant, “absolute and utter nonsense.” In response to my questions about evidence regarding cannabis’ harms, most informants argued that such claims were either completely baseless or wildly exaggerated. Sean’s response was typical: What evidence? I know a lot of these studies. You tell me a study, and I can tell you what the flaw is…. Marijuana kills brain cells? Uh uh. You know what they did in that study? They put gasmasks on four monkeys and pumped them full of smoke so they couldn’t breathe…. Lo and behold, the monkeys lost brain cells. Gee, no kidding. Did they control for lack of oxygen? No. Carbon monoxide poisoning? Course not. That wouldn’t get them the results they wanted. That’s how these studies get done. It’s all bullshit. [Sean]
Cannabis is Effective Medicine
Similarly, the entrepreneurs in this study all felt cannabis was an effective form of medicine. Twenty of the 27 entrepreneurs had direct experience of that medical efficacy, either personally or through a loved one, prior to deciding to become medical cannabis entrepreneurs. Of the remaining seven, three began to conceptualize their own use as medical after deciding to enter the sector. The remaining four felt their current use was medical in name only, a legal fiction that protected their recreational use from prosecution, but even these four said their work brought them into contact with individuals who clearly benefited from the use of cannabis as medicine.
For many entrepreneurs, direct experience of cannabis’ medical efficacy served to transform their understanding of the plant. Earl, for example, had conceived of cannabis only as drug of abuse prior to his reluctant experimentation with the plant as a medicine. Marijuana was not something I knew anything about. Nor did I want to. But I got injured pretty bad in the Army, and the Norco and Valium wasn’t working for my pain and muscle spasms. So one day a friend of mine told me that I should try medical marijuana. I can’t remember exactly what I said to him, but I remember it wasn’t very nice…. I was already addicted to the Norco and didn’t need another drug problem. But I finally relented … out of desperation, and it was amazing…. I tried it a couple times more just to be sure, and it kept working, and since then I’ve realized what a huge resource this can be for people. [Earl] My dad had cancer and was undergoing chemo and was just a mess, withering away. Nausea. Pain. Just unbearable to watch…. And I thought maybe cannabis will help. I didn’t know anything about it because it was just something I did because I enjoyed it, but obviously I’d heard about the whole medical thing. So I finally convinced him to try it. It was hard because he was so conservative, but eventually he did, and it worked…. [H]e said he felt better. I thought he was just saying that to make me feel good, but he kept taking the tincture. And by the third day he really was better, eating again, smiling, joking with my mom that he was going to take up snowboarding or something crazy like that. I was floored. So thankful, but it also made me mad. This should have been part of his regular treatment protocol, not something he just got because I happened to smoke pot. [Troy]
Another common element in the interviews above, and also raised often when entrepreneurs discussed the efficacy of cannabis, was the relative ineffectiveness of other drugs for many conditions. Both Earl and Troy’s father had failed to find relief with traditional medicines. This experience was common among the entrepreneurs. Many described long quests for relief for their illnesses before finding it in medical cannabis. According to Mike, another recreational user before becoming a medical cannabis user, I’ve had insomnia all my adult life. I’ve tried a lot of different things. Rozerem, Ambien, Lunestra didn’t work. Trazadone gave me heart arrhythmias…. Xanax worked for a little while but then stopped working, so I needed to up the dose, but even that stopped working, and I was worried I’d get addicted and end up like my uncle. I had an uncle who OD’d on sleeping pills when I was ten, so I take this seriously…. That people think I have no right to this medicine because they don’t think insomnia is sick enough just pisses me off. [Mike]
Unacceptable Side Effects of Traditional Pharmaceuticals
Earl’s experience with Norco and Mike’s concerns about Trazadone and Xanax highlight another belief held by the entrepreneurs—that traditional pharmaceuticals are far more dangerous than people recognize. Entrepreneurs provided these accounts as contrasts to what they felt were both the safety and efficacy of cannabis. Here again, entrepreneurs spoke from both personal experience and from knowledge acquired from external sources. Thirteen of my informants indicated that they had personal experience, either themselves or loved ones, with negative side effects from traditional pharmaceuticals. The remaining entrepreneurs cited various sources regarding risks and dangers of traditional medicines, including unanticipated adverse drug reactions such as organ damage and addiction problems as well as common known side effects such as chemotherapy-induced nausea and debilitating psychomotor and cognitive impairment.
Often realization of the dangers of traditional medicine was expressed as a revelation, as in the following examples, one based on personal experience, the other on external sources: My son was admitted to the hospital with stomach ulcerations from ibuprofen. That was a real eye opener. We take it for granted that this stuff is safe. But it isn’t. [Leslie]
I saw something on CNN about a study in the Journal of the American Medical Association that said pharmaceuticals kill over 100,000 people every year in the U.S., and I was like, what? Did I just hear that? I had to look that one up because it just seemed so ridiculous.
Was it true?
Hell yeah! Look it up if you don’t believe me. This was ten years ago. I’m amazed that story made it onto CNN. I’m sure the government and the drug companies don’t want you to know about that one. [Ted]
Others, particularly those with backgrounds in healthcare or with longstanding interests in natural medicines, were more matter of fact about the dangers of traditional pharmaceuticals. As Kara, a retired nurse, expressed it, “Oh, please. What are you kidding me? That stuff is poison.” However, regardless of whether informants expressed surprise at the dangers of traditional pharmaceuticals or took it for granted, all discussed the risks involved in the use of traditional pharmaceuticals as an important contextual factor for understanding cannabis’ legitimacy as a medicine.
Discussion of Rejection of the Dominant Logics
In line with Webb et al.’s (2009) argument that illegal informal economy entrepreneurship arises out of a gap between legality and perceived legitimacy, medical cannabis entrepreneurs rejected key tenets justifying cannabis prohibition and laws against its use as medicine. Cannabis prohibition relies upon the belief that it is a harmful substance, while laws forbidding its use as medicine rest upon arguments that it is either not an effective remedy or that it is inferior and unsafe relative to legal alternatives. These entrepreneurs rejected all three components of this dominant institutional frame as a product of ignorance at best and deceit at worst.
In rejecting these dominant frames, the entrepreneurs drew upon both personal experience and discourse circulating within the cannabis-user community. All described personal experiences at odds with the portrayal of cannabis and traditional medicines presented by supporters of prohibition. In several instances these personal experiences overrode previously accepted frames regarding the dangers of cannabis and the safety of pharmaceutical drugs.
My informants also drew upon cannabis community discourses. Discussions about the safety of cannabis relative to other drugs circulate widely within the medical cannabis community. Cards and stickers like those in Figure 1 were present in nearly every cannabis dispensary I visited. The curriculum of medical marijuana industry training schools such as Oaksterdam University included presentation of data on pharmaceutical drug risks, peer-reviewed scientific studies supporting the safety and potential efficacy of medical cannabis for various maladies, and flaws with existing studies showing cannabis is dangerous. This information also showed up repeatedly in conversations with users, glossy medical cannabis-oriented magazines (often distributed free at medical cannabis dispensaries) such as LAJEMM and Culture Magazine, and radio shows and podcasts such as Marijuana Compassion and Common Sense and the daily NORML Show Live. The information also showed up in opinions posted in the comments section of newspaper articles about cannabis in the mainstream media, posts on cannabis-themed discussion boards and Yahoo groups as well as on the websites of pro-cannabis organizations such as NORML and ASA and on the Facebook pages of medical cannabis activists, users, and dispensary operators. These discourses were pervasive in the medical cannabis community, helping erode the legitimacy of legal structures prohibiting medical use of cannabis and, in the words of one of my informants, “educat[e] us about the utterly and insanely ridiculous bogosity of the lies, deception, and all around bullshit behind cannabis prohibition.”
Community discourse on the relative safety of cannabis.
Beliefs about cannabis and traditional medicines circulating within the medical cannabis community undermined the legitimacy of cannabis prohibition in the minds of medical cannabis entrepreneurs. Thus, the testimony of these entrepreneurs is consistent with Webb et al.’s (2009) depiction of illegal informal economy entrepreneurship emerging from the gap between formal definitions of legal behavior and beliefs grounded in collective identity regarding what constitutes legitimate activity. However, my data go beyond their model. The entrepreneurs were not simply indifferent to a legal regime they found irrelevant and therefore justified in ignoring; they were overtly hostile towards it, and this hostility had important implications for how the entrepreneurs understood the position of cannabis users as a social group.
Redefining Group Status Ordering
Beliefs about cannabis and traditional medicines circulating within the medical cannabis community not only undermined the legitimacy of cannabis prohibition, they also undermined the legitimacy of the status ordering generated by cannabis prohibition. For the entrepreneurs, their understanding of the safety and efficacy of cannabis generated a new in-group/out-group status order. Informant accounts regularly distinguished between those who understood the world as they did and those who did not, and they consistently spoke of those who accepted the view that cannabis is a dangerous drug that should not be available as a medicine as members of an ignorant out-group. According to one respondent, “The thing is, we know the truth, and they don’t” [Estelle]. To some this difference in understanding constituted an almost unbridgeable gap: “They think cannabis is the devil weed, and we think it’s the one plant that can save the planet. There’s not a lot of ground for discussion when it’s like that” [Brad].
Informants also denigrated the character of those who held views consistent with cannabis prohibition, often portraying them as immoral or fundamentally flawed due to their unwillingness to consider new information. “These people are so close-minded, they’d rather see someone die than admit they’re wrong…. That’s immoral” [Max]. According to another, “They’re ignorant. That’s the thing, they just don’t want to be educated…. I can’t relate to that. I’m not this stagnant pool of water” [Mike].
This gap in the knowledge upon which supporters of prohibition relied and their perceived unwillingness to acquire new knowledge both strengthened social identity boundaries among supporters of medical cannabis and justified reinterpretation of the appropriate status position of the cannabis user in-group relative to the prohibition supporting out-group. The entrepreneurs used prohibitionist ignorance of the safety and efficacy of cannabis and the dangers of traditional medicine as a basis to derogate those wedded to the logic of cannabis prohibition and reject the right of that logic to determine the rules and norms under which medical cannabis users must live.
Historically prohibition had created an in-group/out-group dynamic that differentiated between those who did not use cannabis and those who did, characterizing the former as normal and the latter as abnormal, immoral, and deviant. The medical cannabis entrepreneurs flipped this ordering. They counterpoised negative descriptions of “ignorant,” “immoral,” and “closed-minded” others described as “they,” “them,” and “people like that” with positive descriptions of an informed and rational in-group identified as “I,” “we,” and “us,” thus reflecting a transformation of the meaning and content of existing in-group/out group categorizations.
Collective Identity, Social Change, and Entrepreneurial Action in Illegal Markets
For the entrepreneurs in this study, the decision to found organizations in this illegal market was part of an effort to create a world which reflected their view of an appropriate social ordering. By openly operating a dispensary, entrepreneurs rejected the stigma attached to their status as cannabis users. Sam, a middle aged veteran, explained: I’m tired of being looked down upon, dealing with stereotypes about stoners…. I’m 41 years old, I’ve done nothing but good in my life. I served my country. I give back to my community. My neighbors respect me…. We shouldn’t have to feel like criminals when we walk past a police officer. [Sam]
Some dispensary operators also used their businesses as vehicles for community service in order to reinforce a positive view of cannabis users. Corey, for example, organized food and clothing drives for a local homeless organization at his dispensary. I reckoned that by being here, we could … be a real resource for the community. People would finally see that what we do is actually helping people…. Maybe then they’d think about cannabis a little different. [Corey]
Openly operating a dispensary also challenged the stigma attached to cannabis users through the effect it had on the user’s own sense of self, which many entrepreneurs felt was degraded by the very act of having to hide one’s cannabis use. According to Carol, When you’re sneaking around all the time, sneaking around like you’re doing something wrong, it gets to you…. You can’t breathe right, you can’t think right…. You start to question yourself. So I decided to open a collective. You open a collective, you can’t hide anymore. You’re out. You get to be fearless…. It feels good. [Carol]
Thus the entrepreneurs’ statements suggest that identity dynamics in this illegal economy are much more complex than that posited by Webb et al. (2009). Illegal entrepreneurship is not always simply a means to capitalize on identity-based economic opportunities. Rather, it is also a means to use economic activity as a way to serve community identity needs. Thus, the entrepreneurs in this study have much in common with the transformative subsistence entrepreneurs described by Sridharan et al. (2014). For both groups, fulfilling collective needs in ways that could transform the social and economic context played a key role in motivating their entrepreneurial pursuits. This is a view much more consistent with social identity theory, which posits that members of a disadvantaged group will seek to change the social order when that order comes to be perceived as illegitimate and vulnerable to change (Reicher 2004; Tajfel and Turner 1979; Wright, Taylor, and Moghaddam 1990). Personal experience as well as discourses circulating within the cannabis user community undermined the legitimacy of the prohibition status order, while the economic and political opportunities afforded by medical cannabis entrepreneurship made that order vulnerable to change. Cannabis-using entrepreneurs responded to this situation by taking advantage of the economic opportunities available to them in order to found firms whose purpose in part was to disrupt prohibition, create a new marketing system, and overturn the existing group status order.
Beyond Social Identity: Person and Role Identity in Illegal Market Entrepreneurship
While the interview data are consistent with social identity theory’s view of social change, it also goes beyond it by showing that entrepreneurs were motivated by other aspects of identity than their membership in a group with which they strongly identified. Medical cannabis entrepreneurs also expressed their work as a way of fulfilling the needs of what Burke and Stets (2009) refer to as the person identity, those particular characteristics internalized by an individual that allow that individual to understand him or herself as a unique person. Sam, for example, explained his decision to quit his job as a pharmaceutical sales representative as follows: I was a f***ing drug dealer! I used to sell pharmaceuticals, poisonous shit, for fifteen years. It was good money. I was good at it. But I hated it…. [I]t wasn’t me. One day I was in Arizona and my buddy and I were commiserating about our jobs, about … corporate American and how phony and plastic and ridiculous it really was. And he said, I can’t wait until they legalize medical marijuana in Arizona. I’m going to open up a dispensary and do something real. And I was like, oh my God, I live in California. I can do that now…. As soon as I got back home, I just threw myself into it. [Sam] I worked as a director of marketing for a large company in the real estate industry…. I helped secure clients who needed municipal bonds to fund their projects. And at that job I was at a desk, I felt like this isn’t me. And … I was like, okay, what else can I do? And I just started growing [marijuana]. [Daniel] I’m telling you, this plant loves us. And we love it. I love these guys. There’s definitely a relationship because that’s how it works. That’s how the good energy occurs, when that relationship exists where everything is benefiting everything else. That’s why I do this. [Daniel]
One former registered nurse who decided to come out of retirement despite health problems in order to open a dispensary described her reasons as follows: I’ve always been a caretaker and I’ve always been very much into alternative medical research. So I’m here because I want to help people who are like me and can’t tolerate pharmaceuticals…. I want to help my patients. It helps me, it helps me mentally, it helps me physically. Otherwise I’m laying around my own house like a disabled person. I can’t walk, I can’t ride a bike, I’m not allowed to exercise, I can barely breathe from three chronic lung diseases. So what am I going to do with the rest of my life? This lets me to take care of people without killing myself. Where else am I going to find that? [Kara] I’ve always wanted to help people. So after taking care of Ben [a friend who died from cancer], I realized just how valuable this medicine could be, how much it could help people. You know my thought was that it’s probably a lot of people pushing the law to get what they want, but I thought some percentage of these patients are going to be serious, legitimate patients, and even if only 20 to 30 percent of them are, it’s still worth it. I’m still helping people who really need it. [Ted]
One implication of this feature of identity is that work contexts that do not allow an individual to behave in ways consistent with the identity standards that match their sense of self are likely to be stressful and prompt career change or the pursuit of entrepreneurial opportunities more consistent with the individual’s sense of self. For many of the entrepreneurs in this study, this is precisely what occurred. Key elements of their personal and role identity demanded that they find work congruent with their sense of self. Medical cannabis entrepreneurship provided an opportunity for them to do so.
Informal Economy Entrepreneurship and the Destruction of an Illegitimate Institution
At the same time that the entrepreneurs in this study explained their entry into the medical cannabis sector in terms of identities defined by personal characteristics and interpersonal relationships and roles, they also expressed motivations based on a sense of the self as an actor operating within a social justice paradigm. Here, the entrepreneurs cast their work as a response to a sense that the world as it existed was fundamentally out of alignment with the world as they believed it should be. The perception of a gap between the world as it existed and the world as it should be was pervasive within this sample, and all of the entrepreneurs placed their entrepreneurship within a broader struggle to undo an institution they saw as illegitimate and oppressive. Entrepreneurs described themselves not only as individuals seeking to align their actions with perceived personal characteristics and interpersonal obligations, nor only as members of a group seeking to advance its status, but also as actors attempting to rectify an unjust world. Because they saw the institution of prohibition denying a perceived right to effective medical treatment and oppressing the sick and the weak, they felt compelled to act towards its destruction.
The case described above of the entrepreneur Troy, whose Catholic father had endured weeks of misery during and after chemotherapy before Troy decided to offer him cannabis, provides one example. Relieved to find it worked to ease his father’s pain, he noted, “[I]t also made me mad. This should have been part of his regular treatment protocol, not something he just got because I happened to smoke pot.” His anger became a motivating force behind his decision to open a dispensary. Similar factors motivated the former serviceman who had become addicted to prescription pain medications before finding relief from both pain and addiction through medical cannabis.
Other entrepreneurs described comparable experiences and motivations to act. One entrepreneur described how mainstream practices around traditional pharmaceuticals combined with the stigma associated with cannabis to impose a great hardship on a family member. My sister in law needs an organ transplant because her liver started to fail from Vicodin…. She started using cannabis for the pain because it worked and it’s not toxic for her liver, but then she had to stop because she found out that they’d take her off the [transplant waiting] list if she tested positive…. So she has to choose between sitting there and suffering or taking her pain meds and praying the pills don’t kill her before they find her a liver…. So for me this is about fighting ignorance and clawing our way out of the Dark Ages. [Neil] My wife completely changed me, that’s why this is so personal to me. We found out she had cancer. I watched her throw up one day in the bathroom. We came home from dinner and she locked herself in the bathroom, and my wife doesn’t cry because our youngest was injured by a faulty product and can’t sleep through the night because he needs breathing treatments every night, so she doesn’t cry because she’s had to deal with stuff like that, you know. But this made her throw up so bad and she … just sat there and cried hysterically. Like broke down. And I’m sitting on the other side, and we both know this medicine can help her. It can help her, bro, but she doesn’t take it because she’s afraid she’ll test positive, and they’ll take our kids away. That’s how messed up this country has become, bro. Our son can’t breathe at night because some greedy corporation bought off the regulators, but they’re going to put our kids in a foster home because my wife needs relief from chemo? That’s gotta stop. We’re going to stop it. [Daniel]
Another dispensary operator was prompted to action when he found such contradictions operating within a community that he felt should know better. I went to an AIDS conference and started asking about medical marijuana and people just freaked out because they were afraid they might lose government funding if they talked about it or advocated it. It was very disappointing. You’re out and proud and you’re wearing a “Silence Kills” T-shirt, but you won’t talk about cannabis? What is that? Cannabis saves lives. I’ve seen it…. Our government is willing to intimidate AIDS activists in order to keep that message from getting out there. That was my aha moment. [Max]
Scholars of social movements have long examined why actors engage in action aimed at social change (Gamson 1992; Jasper 1997; McAdam 1982, 1986; Oberschall 1973; Snow et al. 1986; Teske 1997). Although this work has focused on protest rather than entrepreneurship, it can inform our understanding of entrepreneurship aimed at institutional transformation. The inconsistencies and contradictions described by my informants violated expectations of how the world should operate, and the absurdity of those inconsistencies and contradiction delivered what Jasper (1997) referred to as “moral shocks.” Jasper’s work shows such “moral shocks” recruit people into social movement activity by provoking powerful and deeply felt responses. Events and information that deliver moral shock help “a person think about her basic values and how the world diverges from them in some important way” (Jasper 1997, p. 106), thereby motivating them to take action to realign the world with their values. My interview data suggests that medical cannabis entrepreneurship follows this pattern. The violations that my entrepreneurs identified tended to display characteristics of incongruity or disproportionality that made the contradictions stand out in obvious and explicit ways, provoking a sense of moral indignation that Jasper shows is often a motivating force for collective action. It was this extreme quality that created a sense that the situation was intolerable and required change. The entrepreneurs in this study responded to that sense that the situation must change by founding dispensaries that openly challenged cannabis prohibition.
Discussion
This paper sought to understand the relationship between identity and entrepreneurship in illegal markets. I was particularly interested in how entrepreneurs in illegal markets come to see existing legal structures and dominant institutions governing a marketing system as illegitimate, how this perception of illegitimacy affects the entrepreneurs’ identities, and what role those identities play in shaping their actions as entrepreneurs. I argued this would address two weaknesses in Webb et al.’s (2009) theorizing about illegal market entrepreneurship. First, it would clarify both the basis and the implications for collective belief in the legitimacy of illegal activity among marketing entrepreneurs. Second, it would correct a view of identity that is both superficial and inconsistent with the rich literature on identity’s role in shaping the behavior of actors in organizations and other contexts.
I found that, consistent with Webb et al. (2009), entrepreneurs who engaged in the illegal provisioning of cannabis did so because they believed the activity legitimate despite laws against it. Beyond the framework of Webb et al., however, I found that medical cannabis entrepreneurs saw laws prohibiting cannabis sales as overtly illegitimate. The entrepreneurs did not simply ignore such laws; they actively sought to disrupt them. This intention to disrupt cannabis prohibition through illegal market activity emerged from a variety of identity processes. Some of these identity processes operated at the individual and interpersonal level; entrepreneurs challenged existing institutional arrangements because doing so satisfied local identity needs. These included the need to overcome the stigma attached to membership in a denigrated group and the need to find work that fulfilled the sense of self as a unique individual with particular characteristics and values. In this way, identity led entrepreneurs to engage in action to fulfill an authentic sense of self as well as to protect the self from the penalties imposed on it by an illegitimate institution.
Other identity processes operated at a more macro level. Here action was aimed not at protecting the self, but rather at creating a rational and just social order. While structural identity theory has focused on the way actors act on the self to bring it into alignment with the meanings they have assigned to themselves, my data suggest that actors also seek to act on the world to bring that world into alignment with the meanings they have assigned to it. Social movement scholars have argued that this too is a function of identity, particularly collective identity, which Polletta and Jasper define as “an individual’s cognitive, moral, and emotional connection with a broader community, category, practice, or institution” (Polletta and Jasper 2001, p. 285). Webb et al. (2009) draw upon Polletta and Jasper for their understanding of collective identity, but they neglect the primary point that the authors as well as other social movement scholars make about it—that collective identity can play a powerful role in mobilizing actors to participate in movements for social change (Darnovsky, Epstein, and Flacks 1995; Fireman and Gamson 1979; Jasper 1997; Polletta 1998; Polletta and Jasper 2001). For the entrepreneurs in this study, that appears to be the case. Entrepreneurship became a means for social transformation.
Together, these findings suggests that entrepreneurs in illegal markets may conceive of their projects in larger terms than that portrayed in Webb et al. (2009). The identity processes that make entrepreneurship in the underground economy possible according to Webb et al. serve not only as the basis for seeking economic opportunity but also for destroying formal institutions that conflict with those identities. Thus, when formal market institutions are incongruent with community ones, actors may not be satisfied peddling their wares to community members in secret in the underground economy. Rather they may seek to transform those formal institutions.
These findings resonate with existing marketing literature, particularly work on personal and community identity as generative forces in the rejection of dominant ideologies and the transformation of social institutions. These cannabis entrepreneurs, for example, have much in common with Thompson’s natural health and natural childbirth communities (Thompson 2003, 2005). In each case, personal experience and the need to validate and defend identities drove rejection of dominant health ideologies. The findings also resonate with recent research on identity processes in market transformation. Affirming a Muslim identity and resisting stigmatization, for example, were at the heart of the work by Muslim women in Turkey to create a new and fashionable market segment for veils and modest clothing (Sandikci and Ger 2010). Similarly, the formation of a collective identity among dissatisfied plus-size consumers of fashionable clothing in the West led them to demand market transformation in terms of the range of offerings available to them in the marketplace (Scaraboto and Fischer 2013). Thus, we know that identity processes related to consumption drive institutional entrepreneurship and market transformations (Martin and Schouten 2014). The current study shows that very similar identity processes, but related to production and provisioning rather than consumption, also drive market transformations.
Although consumption can be an important source of market transformation, in the context of illegal markets moving aboveground, consumption activity alone cannot explain market change. Underground markets already existed for cannabis, and although consumer access to cannabis was constrained, most consumers could attain cannabis products under existing market structures, even if doing so required some effort. The emergence of open cannabis retail markets, a fundamental form of both market and social transformation, however, depended critically on the willingness of entrepreneurs to take on the profound legal risks of operating aboveground in an illegal market. Thus, the entrepreneur side of the story is essential for understanding this type of market and social transformation. Without their actions, the transformation could not occur, and these actions appear to be grounded in identity projects parallel to those undertaken by consumers.
This similarity should not be too surprising. We live in a world of symbols, and meaning creation and symbol generation and interpretation are key aspects of market exchange (Kadirov and Richard 2011; Venkatesh 1999). This symbolic aspect of exchange is universal; it is not limited to the consumption side, and we should expect entrepreneurs, provisioners, and producers to be subject to the same symbolic forces that affect consumers. Yet research in this area has focused primarily on consumer culture and the way consumer identity links to meaning and the symbolic aspects of exchange. By focusing on identity among entrepreneurs in illegal markets, this study redresses some of that imbalance.
Understanding entrepreneur identity processes may also be important for understanding marketing system transformation unrelated to illegal markets. It is worth noting, for example, that the efforts of Scaraboto and Fischer’s (2013) fatshionistas failed to transform the market. With neither large incumbent firms nor small-scale entrepreneurs taking up their cause, the activists’ demands remained unfulfilled. In contrast, consumers of natural health products and services received the attention of a wide range of small scale entrepreneurs even as traditional healthcare incumbents neglected them (Thompson 2003), and miniature motocross transitioned from a mere hobbyist activity to a commercial market only after commercial entrepreneurs became attracted to the activity (Martin and Schouten 2014). It would be useful to understand why entrepreneurs entered the latter two market spaces, but not the former, and particularly what role identity played in both sets of decisions.
Neglect of identity issues among entrepreneurs is not limited to the marketing literature. Surprisingly, the entrepreneurship literature itself has largely neglected identity as a motivating force for entrepreneurship. That research has focused primarily on opportunity recognition and exploitation as a source of new market development and market transformation. Where identity has been examined, researchers have focused narrowly on the entrepreneur’s identification with the role of entrepreneur or firm founder (Hoang and Gimeno 2010) or as an inventor (Cardon et al. 2009). Issues of community, authenticity, and social values are rarely considered. The current study shows that these forms of identity can be implicated in the decision to become an entrepreneur and in the type of entrepreneurship an individual pursues. Generalized identification with the role of entrepreneur was much less important among my informants than desire to fulfill an authentic sense of self and their identification with both a particular social group and the broader society.
Future research on entrepreneurship and on marketing systems would do well to link research on entrepreneurship to the marketing literature on identity and the symbolic aspects of exchange. The current study demonstrates that entrepreneurs are no less subject to the power of symbol and the need to find and create meaning than are consumers. Given that much of the changes in marketing systems is generated by entrepreneurial action, further research in this vein would likely provide a more thorough understanding of the forces motivating market system transformation.
Implications for Policy and Practice
Cannabis policy is evolving rapidly in the United States. As of January 2016 twenty three of the fifty United States allowed patient access to cannabis for medicinal purposes, with eighteen of those including some form of retail sales. Moreover, four states (Colorado, Washington, Oregon, and Alaska) allow retail sales of cannabis for recreational purposes, and several states, including California, may soon pass similar legislation. According to a report published by ArcView Market Research, sales of legal cannabis reached $5.4 billion dollars in 2015 (Hauser 2016).
Whether these changes will erode the collective identity of cannabis providers and change the relationship between identity and cannabis provision remains an open question. As legal regimes and broad social norms come into alignment with the world view of the cannabis user and supplier community, we might expect collective identity and its power to shape action would decrease. However, as I have argued above, identities are not easily shed. Moreover, cannabis still remains illegal at the federal level, a large portion of society still views its use as deviant, and even in states that have legalized sale of cannabis, businesses face tremendous obstacles, including strict and sometimes prohibitive government regulation as well as inability to access basic banking and insurance services. In such a context, collective identification and mistrust of governing authorities will likely persist among those most strongly identified with cannabis users and suppliers as a community despite market evolution and changes in state laws.
The shift towards legalization, however, has attracted new players drawn to the industry more by profit potential than by identity needs, and this will likely make identity less salient in the industry overall. With greater access to capital and depth of business experience, these new players may drive out identity-based entrepreneurs. Fear of just this possibility drove many California medical cannabis entrepreneurs to oppose efforts to legalize recreational cannabis when it appeared on California’s election ballot in 2010, and the same fears have reappeared as high profile businessmen have put their efforts behind a new California ballot initiative for 2016 (Wilson 2016). Competitive dynamics will likely drive attrition of identity-based entrepreneurs, and this will almost certainly change the extent to which identity matters in this industry.
Opponents of this shift towards more professional cannabis businesses have argued that these new firms are likely to behave irresponsibly because their motivation to enter the industry is based solely on the desire to maximize profits. They may have a point. My data suggest that group identification led many entrepreneurs to engage in pro-social behavior to generate a positive image and overcome status insecurity and stigmatization associated with their group membership. Lacking this group identification, new entrants would likely not be similarly constrained. It is telling that the policy report generated by California’s Lieutenant Governor’s office included recommendations to support smaller players and limit corporate involvement in the industry. These recommendations are unlikely to be followed however because opponents of cannabis legalization will make it difficult for state or federal legislatures to pass any legislation that legalizes cannabis sales. Ironically this inaction may lead to more liberal cannabis markets as the only remaining avenue for creating such markets is through ballot initiatives, which larger business interests have great power to shape due to the cost of qualifying initiatives for the ballot. This dynamic is already unfolding in California, where business interests have provided financial backing for a ballot initiative that includes reducing barriers to entry as one of its key goals (State of California Department of Justice 2015; Wilson 2016).
Limitations
This study has a number of limitations. My sample does not represent the entire population of medical cannabis entrepreneurs. I did not interview the entrepreneurs who operated the largest, high-traffic retail operations in the state. News reports on these dispensaries suggests that such operations can be quite lucrative (Mozingo 2012). It is possible that for the entrepreneurs at these very large storefronts, financial rewards may play a larger role in driving industry involvement than the identity issues I identify. The limitations of my sample prevent me from commenting on this possibility.
Another limitation derives from the study’s focus on why medical cannabis entrepreneurs founded their firms. Addressing this narrow question risks creating an impression that the medical cannabis entrepreneur community is monolithic. This is not the case. My interview data indicate that medical cannabis entrepreneurs are unified in their desire to overturn medical cannabis prohibition, but they also reveal rifts and tensions within that community. Because these tensions were peripheral to my main research questions, I did not present or analyze those tensions here. A complete understanding of identity and entrepreneurship in the illegal markets would benefit from such an analysis, and future research along these lines is clearly needed.
Finally, by focusing on the role that identity played in entrepreneur perception of the legitimacy of prohibition, I risk providing an explanation of the phenomena that appears too individual, micro, and psychological to address issues relevant to macromarketing. Layton (2015) points out, however, that system outcomes are grounded in part in processes unfolding at the individual level. The micro and the macro are linked in the systems approach, and neither can be excluded if we are to develop a true understand of marketing systems. Indeed, Monieson (1981) called for an eclectic tradition in macromarketing precisely to ensure that researchers could effectively capture system dynamics rather than allow predetermined disciplinary boundaries to artificially constrain our knowledge of the system and frustrate the goal behind the systems approach. The point of this paper has been to detail the link between individual identity and social transformation in order to gain a more thorough understanding of marketing system dynamics at the heart of macromarketing.
Conclusion
These limitations notwithstanding, the analysis I present here is useful for understanding important aspects of underground economy entrepreneurship not addressed in existing literature. By clarifying the basis and the implications of collective belief in the legitimacy of illegal activity among entrepreneurs, the study demonstrated that entrepreneurs may undertake entrepreneurship in illegal markets not merely because they recognize unique opportunities for economic gain in those markets but also because their belief in the legitimacy of illegal activity may move them to dismantle what they see as an illegitimate legal regime. Moreover, by placing issues of identity at the center of analysis, this study provides a richer understanding of the role identity processes play in illegal economy entrepreneurship than theorized in earlier work. Identity clearly matters to entrepreneurship in illegal markets—as it does in nearly all organizational contexts. However, as identity scholars have long demonstrated, identity is a multi-faceted construct, and it affects actors in a variety of deep and meaningful ways. Thus, while it is true that collective identity may help entrepreneurs recognize opportunities in illegal markets, it clearly does much more. This study attempted to explore some of the ways identity processes affect entrepreneurs in one particular sector of the underground economy. Yet, given the rich nature of the construct and the depth of its effect on all manner of actors, a great deal of work still needs to be done to understand its role in illegal market entrepreneurship.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by grants from the Center for Organizational Research at the University of California, Irvine and the Beall Center for Innovation and Entrepreneurship at the Paul Merage School of Business, University of California, Irvine.