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Illegal Markets and the Marketing Mix

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    Monica Gerhardt

    Please provide feedback on Illegal Markets and the Marketing Mix

    Ekin Pehlivan

    Hi Alec
    I found your poster presentation to be directly relevant to the paper I will be presenting on Friday. While our paper focuses on the marketers’ role in normativization of the consumption of Cannabis, the market has been operating in all shades of legality and their Marketing Mix practices change to adapt to the changing legal landscape.

    I understand that you are referring to individual vendors/suppliers of product and services in your poster but I am curious as to the macro scale implications. In other words: not many markets, move in and out of their legal position, I am wondering your opinion on how a progression from operating legally to to illegally or vice versa would impact the companies that are part of that market. Would they go out of business, change ownership or positioning? Would these moves be costly, or even possible?

    Alec Slepchuk

    Hi Ekin,

    Thank you for the comment – I look forward to checking out your presentation tomorrow! As for the macro implications of changing legality of markets, I think the directionality of the change (i.e., from illegal to legal vs legal to illegal) is important. For instance, there were no cannabis companies prior to legalization (i.e., before medicinal marijuana started in California in 1996), so this change to legalization did not impact companies that were part of that market because those didn’t exist yet. Existing companies, such as Marlboro, they could have diversified and started selling pre-rolled joints in addition to cigarettes, but to my knowledge that did not occur. The larger impact was probably felt by underground cannabis organizations (i.e., gangs, drug cartels), considering that they were in essence the only cannabis organizations prior to legalization, but I’m not entirely sure how they/their operations changed (to note: people who were negatively impacted by the war on drugs have priority in cannabusiness, meaning that many people who used to sell illegally are now working legally in dispensaries). On the other hand, markets that become illegal can really hurt businesses. Recently, in Massachusetts, there was a 4 month “vaping ban”. Businesses were hurt (I think ~30% of sales in cannabis dispensaries come from vapes, for instance) and sued the state over it. However, it seems that these businesses were largely inflexible – dispensaries still sold cannabis, but businesses that focused on vaping did not change ownership/positioning. I do think these businesses could have shifted (for instance, dispensaries are now making hand sanitizer to help fight COVID-19), but it would have been costly (especially for a 4 month ban). It certainly is an interesting question.

    CarmaRStev Steve

    How was it?

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