What The Cannabis Industry Can Learn From How The Consumer Electronics Sector Dealt With Pornography

Authored By: Doug Poretz

The Legal Community Needs To Help

Lawyers staking out their position in the cannabis business have an obvious vested interest in the growth of the industry. That also means they have a vested interest in learning from the experiences of how other industries have grown.

One great role model is consumer electronics, a $1.3 trillion global industry.

Particularly, there is a lesson for the cannabis sector in how that industry successfully cleansed itself of its stigmatized history: an early and integral association with (even reliance on) pornography.


When viewed against the perspective that it wasn’t too long ago that the legal cannabis industry didn’t even exist, it was thrilling to see some 25,000 and 1,000 booths at MJBizCon in mid-November. But that pales when contrasted to the 2018 Consumer Electronics Show (CES), which attracted more than 180,000 visitors and 4,400 exhibiting companies to the same Las Vegas Convention Center.


Although it is now the world’s largest trade show, the CES was first held in 1967 as a spinoff of the Chicago Music Show in which only 14 companies participated. But the demand for consumer electronics grew substantially and rapidly, starting in the mid-1970s largely because of Sony’s introduction of the Betamax and JVC’s launch of VHS video tape decks. By 1987, annual sales of the video tape decks reached $5.25 billion in the U.S. alone. Know what fuelled that growth? Well, the ability to tape your favorite TV show for watching at a more convenient time was a great benefit. But the growth of the hardware was attributable in large part to the sale of the software that went with the tape deck: porn, which accounted for more than half of all the videotape sales in the U.S.


The CES ended up with this dilemma: although the public clearly had a strong appetite for porn (as they now do for cannabis), there was still a very clear stigma associated with it (as there now is with cannabis), and it was sullying the hard-won legitimacy of the consumer electronics industry (as the outdated “stoners” image still damages the legitimacy of the cannabis industry). So the CES decided as a first step to relegate the porn exhibitors to far-away booths, and eventually they were “unwelcomed” at the show completely. The porn industry established its own show held at the same time in another Las Vegas venue, and the consumer electronics industry went on to polish its image, leaving its past behind.


Can the consumer electronics experience be a role model for the cannabis industry?

Below are some of my ideas. I think the cannabis industry is amazing, and that is has overcome unbelievable counter-productive fundamental problems to achieve remarkable growth, but relative to the prospects in front of us, what has been accomplished thus far is still part of its infancy, and although what I assert here may seem harsh, it is a harsh reality that we should accept and act on sooner rather than later.


  • Reality Matters. Every industry can be naïve and unrealistic. The consumer electronics industry, jubilant at the success of video tape decks, eventually came to terms with the downside of that success and took what they thought to be appropriate action. Today, it is easy to get super-excited by the billions of dollars being generated by the sale of legal cannabis and the high valuations being given some of the larger cannabis enterprises. But that excitement shouldn’t lull the industry into believing that all the demonizing and stigmatizing of cannabis over the past several decades is now a matter of history. Bull! Just as the virtually ubiquitous use of porn hasn’t de-stigmatized that industry, it’s going to take a long time to erase decades of anti-cannabis propaganda. Hanging in the balance is the industry’s clout with policy makers, support from its customers, and ability to expand and control its own destiny. I know there are already efforts trying to do that. But let’s get real. If we are satisfied that industry efforts are keeping up with the need to control our image, we are going to lose. To get past that situation, the first thing we need to do (without losing pride for what has happened thus far) is to get real about our image, where we are as an industry and how far we have yet to go. Having a realistic appraisal of things is a basic premise every lawyer faces when dealing with any legal matter – that ethos should be extended into industry matters more forcefully with more urgency.


  • Words Matter. So, what business are we in after all? Cannabis? Sure. Marijuana? Well maybe sometimes. Weed? Dope? Grass? Pot? If we classify what we sell as either “medical marijuana” or “recreational marijuana” then we shouldn’t expect this to be known simply as the “cannabis” industry despite the wide-spread desire to rebrand from “marijuana.” If many of our leading publications and events use the word “marijuana,” it’s going to be a futile passion to try to brand this industry as “cannabis.” Let’s get real about our branding.


  • A Predictable Consumer Experience Matters. The flower named XYZ that I buy from dispensary ABC produced by grower DEF does not predictably provide the same experience as the same flower I buy from dispensary GHI produced by grower JKL. In fact, often the consumer experience is not the same for the same product bought at the same dispensary from the same grower. Isn’t it time to acknowledge that our industry has a real problem with providing a predictable consumer experience? Other industries have established quality standards for their products and services and have precisely defined terms that are critical to a consumer making a decision about whether to buy or not. Knowing a strain of cannabis has this much THC or this much CBD is important, but there has to be a better way of describing the experience for the consumer. Being precise is integral to being an attorney – thus, as a group, you have to be a part, maybe even the instigators, of creating a new priority of how to express the consumer experience in reliable terms.


  • Most Of All – Please Help Kill The Hype Machine. Many of the cannabis entrepreneurs who have never been associated with a public company before do not know that long-term positive results are never realized by glowing reviews bought by the company with large chunks of equity. They do not realize that credibility is the true currency of the investment community – but you do! Attorneys working with public or pre-public companies need to help their clients understand that legitimate analytical coverage and investor support – the type that high quality and longer-term investors seek — depends in the final analysis on how their company performs. So, tell your clients that if they can’t merit coverage because of not-so-great results, they should use their money to improve their results rather than use that money to pay a stock tout to hype their company.


In the final analysis, it is hard to believe that this cannabis industry will not succeed. But, we can make it grow bigger faster, and the industry’s lawyers can play an extremely productive role in that effort.

Doug Poretz
High Growth Communications (Launch  Early 2019)

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