Running head: PSYCHOLOGY IN THE CANNABIS BUSINESS 1

Psychology in the Cannabis Business

Nathan C. Kronschnable

Eastern Gateway Community College

Nkronschnable9671@student.egcc.edu
PSYCHOLOGY IN THE CANNABIS BUSINESS 2

Abstract

As a prospective manager in the emerging legal cannabis industry, one must keep

in mind several psychological factors in running such a business. Advertising and in-

store marketing are affected by psychology in any business. However, the cannabis

industry is unique because it is still controversial societal attitudes in combination

with organizational perception management are crucial to the relative success or

failure of an up-and-coming cannabis business. Finally, cannabis contains

psychoactive chemicals that can provide both positive and negative effects to those

who smoke, vaporize, or otherwise consume this product.

This paper uses psychological and business texts and reports, surveys, reports of

public agencies and organizations, as well as established medical studies released

in peer-reviewed journals to examine the factors a prospective cannabis business

owner must recognize in running such a controversial business.

Psychology in the Cannabis Business

One who is planning to enter the up-and-coming cannabis business must

have a solid understanding of consumer and societal psychology to find success in

this controversial industry. The sure (albeit slow) deregulation of cannabis in the

United States will allow many business opportunities, as well as humanistic

opportunities, to enter the market. In running a cannabis business, an owner must

be aware of the psychological influences on advertising and in-store processes, as

well as the societal perception of ones business, and the effects of cannabis use

itself on human psychology.

Advertising and psychology have been linked since the early 20 th century,

when Walter D. Scott (a student of Wilhelm Wundt) published The Psychology of

Advertising in Theory and Practice (Ciccarelli & White, 2015). In this text, Scott

places a special emphasis on the effect of preconceived notions on the perception

of advertisements. Scott states that an object is perceived as nothing more than its

physical form unless it typifies to the person something which they have met in

their former experience (Scott, 1921). This idea, related to the concept of schema

(mental generalizations of objects, places, events, and people) is especially relevant

when it comes to celebrity endorsements of modern marijuana products (Ciccarelli

& White, 2015).

For example, Snoop Dogg and Bob Marley are both famous, prominent

musicians who have expressed a positive attitude towards marijuana use who have

their names on marijuana products (Rough). This usage of celebrity endorsement

could be related to ones personal experience as many marijuana users have

listened to music that depicts marijuana in a positive light. Due to this prior

experience, Scott may argue that a customer searching for a marijuana product

may be inclined towards purchasing a product endorsed by a musician whom they

associate with positive memories (cannabis consumption with friends while listening

to Bob Marley, for example).

Scotts perspective was not the only early view of psychology in advertising.

John B. Watson, the psychologist who established the school of behaviorism, worked

in advertising for quite some time. He was initially hired by Stanley B. Resor of the J.

Walter Thompson agency to provide legitimacy to the agencys psychological

studies on the nature of consumer behavior (Bartholomew, 2013). The goal of this

partnership was to identify the laws regarding consumer behavior in relation to

advertising the first attempt to scientifically quantify advertising practices. One

aspect of Watsons advertising research that is very relevant to the modern

cannabis business was his research on brand preference among cigarette smokers.

Cigarettes, as a relatively uniform product, have few noticeable differences

among high-quality brands (budget brands are often made with substandard

tobacco). Watson found that cigarette smokers tended to choose their brand based

on the atmosphere around the brand rather than the taste or smoking experience

(Bartholomew, 2013). This is quite relevant as modern, high-quality cannabis is

more-or-less the same among cannabis producers, who must rely on brand name

differentiation rather than pure product differentiation. Therefore, (and Scott and

Watson would likely concur) the aforementioned celebrity endorsements could

provide a positive atmosphere, based on prior experience, that could cause a

consumer to choose the endorsed product over a generic or lesser-known brand.

Scott and Watsons respective works signified the beginning of the

combination of science and advertising. Even today, most major companies

personify their brands targeting consumers based on specific ideals or traits

(Bartholomew, 2013). Thus, a cannabis company would need to market their house

brand in a way that attracts customers away from the celebrity-endorsed products

by associating the product with a positive atmosphere. One form of marketing could

be the use of odd-even pricing the idea that customers prefer prices not stated in

even dollar amounts (Ebert & Griffin, 2016). For example, $999.95 is generally

perceived to be significantly less than $1000, even though the difference is only

about five cents.

Store layout also plays a role in customer loyalty and retention. In a cannabis

business, the owner may elect to use a process layout; the process layout involves a

customer being catered to in a personal manner (Ebert & Griffin, 2016). This layout,

which provides the customer with individual attention based on their specific needs,

can foster a sense of security and of being cared for in a customer. This form of

layout, using an experienced budtender to help a customer choose a product that

is best suited for their recreational or medical needs, could greatly increase

customer retention and loyalty due to the feeling of personalized service.

Customers may need to be convinced to purchase a specific brand, but the

owner of a cannabis business must keep in mind the social controversy surrounding

the commercial retail of cannabis products and convince the community of the

business benefits. Although most US adults support legalization, there are many

conservatives who do not (Geiger, 2016). Therefore, the social attitude toward

cannabis must be evaluated in terms of the ABC model affective, behavioral, or

cognitive attitude expressions (Ciccarelli & White, 2015).

The affective aspect of attitude is the emotional component of attitude

expression. One group that seeks to foster a negative affective aspect is Citizens

Against Legalizing Marijuana. This group uses appeals to authority, sweeping

generalizations, and other logical fallacies in its press releases to appeal to the

affective component of individual attitudes (CALM). For example, CALM states that

the FDA has not approved cannabis as medicine, and therefore it has no medicinal

value. However, according to the FDA website, some cannabis derivatives (i.e.

Marinol, Syndros) have medical value. The FDA also encourages researchers

interested in medical marijuana to submit research proposals in order to discover

clinical benefits of the drug (FDA).

Therefore, a prospective cannabis business owner must be prepared to battle

anti-marijuana activists and propaganda to retain or even convert a consumer to

having a positive affective attitude toward cannabis consumption. The behavioral

component of attitude is also important if a consumer has a positive affective

attitude, they will be more likely to purchase cannabis products. This behavior can

also be reinforced through the principles of operant conditioning by providing a

high-quality product. Operant conditioning is a reward-based system of learning

behavior (Ciccarelli & White, 2015). If the owner provides a high-quality product,

and therefore a high-quality experience, the consumer will be positively reinforced

to continue to purchase the product. The cognitive aspect of consumer attitude

plays the biggest role in brand loyalty. The thoughts a consumer has about a

product, including prior experiences and memories, can foster customer retention

and therefore increase a cannabis business profits. However, the large variety in

social attitudes towards cannabusiness calls for a way to manage these crucial

perceptions.
PSYCHOLOGY IN THE CANNABIS BUSINESS 7

One way to manage the overall perception of ones business is to use

organizational perception management. This process is defined by researcher

Kimberly Elsbach (2014) as the actions that are designed and carried out by

organizational spokespersons to influence audiences perception of an

organization. It consists of three categories of perceptions (organizational images,

reputations, and identities) and four categories of organizational actions (verbal

accounts, categorizations/labels, symbolic behaviors, and physical markers). A

manager can perform a task out of any of the four action categories to improve any

of the three categories of perceptions (Elsbach, 2014).

In a cannabis business, an owner could use organizational perception

management to sway the opinion of a community leader, zoning committee, or

even an anti-marijuana group. For example, the owner could improve the

organizational image of the company by hiring educated and well-informed

professionals (a symbolic behavior) to lend legitimacy to the companys business

operations. Another action an owner could take is to provide evidence (a verbal

account) of marijuanas relative harmlessness (when used in moderation) or

medical benefits to improve the organizational reputation of the business. Finally, as

prior mentioned, professional customer service representatives that assist

customers with making cannabis product decisions (budtenders) can offer

increased legitimacy and customer comfort to a cannabis retailer.

Of course, cannabis itself (as a psychoactive drug) has immediate

psychological effects. Studies have found negative effects such as decreased

information-processing abilities and reaction times, as well as an increased risk for

chronic bronchitis and cardiovascular disease. However, these studies did not

control for confounding variables such as tobacco usage. In addition, studies on

adolescent cannabis users have found that adolescents can experience impaired

psychosocial development, educational attainment, and mental health (Ciccarelli &

White, 2015). This is important for a prospective cannabis business owner because

it adds a moral requirement to the already-existing legal requirement to confirm a

customers age before selling them cannabis products.

Some studies, on the other hand, have found positive psychological effects

related to cannabis use. One study, performed at the University of Haifa in Israel,

involved exposing rats to an electrical shock and subsequent situational reminders.

In the control group, rats who experienced the shock exhibited alterations in the

brain areas responsible for the emotional-processing element of PTSD. These

alterations caused increased activity levels when exposed to the situational

reminders. However, in rats treated with cannabinoids after receiving the shock,

these increased levels of activity were not observed upon introduction of the

situational reminder (Korem & Akirav, 2014). This suggests that cannabis can be

used to treat PTSD.

Another piece of evidence regarding the treatment of PTSD with cannabis is a

study regarding the New Mexico medical marijuana program (which recently began

allowing cannabis prescription for PTSD). Via a self-report method, the study found

that patients experienced up to a seventy-five percent reduction in PTSD symptoms

(including re-experiencing, avoidance, and hyperarousal) based on reminders of the

traumatic experience. Additionally, when not using cannabis, these symptoms

tended to resurface (Greer, Grob, & Halberstadt, 2014).

It is possible that depression can also be treated with cannabis products.

According to Dr. Samir Haj-Dahmane, increased stress levels lead to lower levels of
PSYCHOLOGY IN THE CANNABIS BUSINESS 9

endocannabinoids in the body, which in turn leads to depression. THC and CBD (the

most prevalent chemicals in cannabis) break down into similar chemicals that fit

into the bodys natural endocannabinoid receptors. Therefore, Haj-Dahmane

suggests that cannabis products could help to replace the endocannabinoids lost

due to stress, and therefore enable more stable moods and behavior. Although

human trials have not yet been conducted, Haj-Dahmanes animal trials have met

with some success (Wilde, 2015).

Therefore, a cannabis business owner who sells both recreational and medical

marijuana should be aware of the psychological effects (both benefits and

detriments) in order to provide accurate information to their customers. It would

also be helpful to hire a cannabis expert to create informational documents

regarding the use of cannabis to be distributed freely to customers (both

recreational and medical). Cannabis can be something of a miracle drug when used

properly but when used improperly, or by adolescents, can be detrimental to ones

psychological health.

In conclusion, one who wishes to get into the cannabis business needs to

keep in mind several psychological factors related to cannabis retailing.

Psychological influences on advertising and in-store processes are experienced by

all businesses, but cannabis is unique due to its controversial nature. Therefore,

social attitudes in ones community regarding cannabis must be evaluated and

controlled through organizational perception management. A cannabis business

owner must also remain informed on the latest developments and studies regarding

the medical use of cannabis to provide the best and most accurate relief for their

customers. Knowing about the neurophysiological impacts of cannabis use is also

crucial in running a successful and well-received cannabis business. If an owner

manages to balance these psychological factors (and has a solid business plan!),

there is no reason that any cannabis business should not find success in the

burgeoning legal marijuana market.

References
PSYCHOLOGY IN THE CANNABIS BUSINESS 11

Ciccarelli, S. K. & White, J. N. (2015). Psychology (4th ed.) [E-book]. Available from

Pearson Education, Inc.

Scott, W. (1921). The Psychology of Advertising in Theory and Practice [archived

version]. Retrieved from

https://archive.org/stream/advertpshycho00scotrich/advertpshycho00scotrich_djvu.t

xt

Rough, L. (n.d.) 7 Celebrities With Their Own Line of Cannabis Products. Retrieved

from https://www.leafly.com/news/strains-products/celebrities-jumping-into-the-

cannabis-sphere

Bartholomew, A. (2013). Behaviorisms Impact on Advertising: Then and Now

[Masters thesis]. Retrieved from http://digitalcommons.unl.edu/cgi/viewcontent.cgi?

article=1042&context=journalismdiss

Ebert, R. & Griffin, R. (2016). Business Essentials (11th ed.) [Electronic version].

Available from Pearson Education, Inc.

Geiger, A. (2016). Support for marijuana legalization continues to rise. Retrieved

from http://www.pewresearch.org/fact-tank/2016/10/12/support-for-marijuana-

legalization-continues-to-rise/

Citizens Against Legalizing Marijuana (CALM) (n.d.). Do You Know Marijuana?

Retrieved from

https://static1.squarespace.com/static/5541a76ae4b0175cee8827d0/t/55d11401e4

b0c6285c51b4da/1439765505986/Do-You-Know-Marijuana.pdf
PSYCHOLOGY IN THE CANNABIS BUSINESS 12

U.S. Food and Drug Administration (FDA) (2017). FDA and Marijuana: Questions and

Answers. Retrieved from

https://www.fda.gov/newsevents/publichealthfocus/ucm421168.htm

Elsbach, K. (2014). Organizational Perception Management. Retrieved from

https://www.researchgate.net/publication/248563854_Organizational_Perception_Ma

nagement

Korem, N. & Akirav, I. (2014). Cannabinoids Prevent the Effects of a Footshock

Followed by Situational Reminders on Emotional Processing [published in

Neuropsychopharmacology]. Retrieved from

http://www.nature.com/npp/journal/v39/n12/full/npp2014132a.html

George R. Greer, Charles S. Grob, Adam L. Halberstadt (2014). PTSD Symptom

Reports of Patients Evaluated for the New Mexico Medical Cannabis Program.

Journal of Psychoactive Drugs, 2014; 46 (1): 73 DOI:

10.1080/02791072.2013.873843

Wilde, C. (2015). RIA neuroscience study points to possible use of medical

marijuana for depression. Retrieved from

http://www.buffalo.edu/news/releases/2015/02/004.html
PSYCHOLOGY IN THE CANNABIS BUSINESS 13