Many people are concerned that the stigma surrounding cannabis as an illegal drug that is harmful to the body and could be a gateway to harder drugs is harmful to business. I would argue that such a stigma is a blessing in disguise. The stigma, I believe, is not going to discourage someone who is already interested in cannabis from using cannabis. The people that already believe the fallacy that cannabis is a gateway to harder drugs were never the kind of people that were going to use cannabis anyway.
However, for California cannabis entrepreneurs this stigma is a blessing in disguise. Many companies that could make a large splash into the cannabis market are prevented from doing so because of the stigma. Tobacco companies and alcohol companies would seem to be a perfect fit for entering into the California cannabis industry. Both of these products are stigmatized as being harmful, addictive and a gateway to harder drugs. The industries that produce these two products, alcohol and tobacco, are already familiar with a business that is controlled by significant regulation and is taxed heavily. These organizations are also used to making products that are consumed by the customers and therefore are familiar with issues that surround selling a product that is ingested. Therefore, the alcohol and tobacco conglomerates would be the perfect companies to move into the California cannabis recreational market.
However, these companies have enough heat on them that they don’t need to incur any more heat by getting into cannabis. As you will notice, in general tobacco companies and alcohol companies don’t enter into each other’s markets. I believe this is the case because they are so stigmatized by being in one of these industries that they don’t need any further stigmatization.
This stigmatization also prevents many other small companies and individuals from venturing into cannabis. There are many people that don’t want to get involved in the “drug business” no matter how lucrative it is. It is my conclusion that this stigmatization cuts seriously down on the amount of companies and individuals that but for the stigma would otherwise enter the market. Therefore, I would argue that the stigma of cannabis seriously cuts down on the supply of recreational cannabis products by reducing the number of players that are willing to enter the game. On the other hand, I don’t believe the stigma significantly reduces the number of people who are going to purchase cannabis products.
Before cannabis goes fully legal in California, there are still plenty of people that have already tried cannabis and certainly want to purchase more. Especially now that it is completely legal and it will be very easy, come January 1, 2018 to simply walk into a store to purchase it. Therefore, for California cannabis entrepreneurs the stigma means less competition but the same demand.