Fighting To Survive: How Supply Chain Managers Navigate The Emerging Legal Cannabis Industry

The cannabis industry is a new quasi-legal industry. Growing, selling, and using cannabis are still illegal in most countries. However, 24 countries and 33 U.S. states have approved cannabis for medical use, and five countries and 11 U.S. states allow recreational use. This research focuses on value-added producers (VAPs), companies that process cannabis to manufacture ingestible, inhalable, or topical products. Due to public health concerns, the VAP tier of the cannabis supply chain faces stringent regulatory focus and turbulence. Using multiple case studies of VAPs in an emerging cannabis industry, this research investigates how these companies' primary supply chain decision-makers make and implement strategic decisions in an environment characterized by fast-changing regulations. While the public often perceives this new market as a way for new business owners to get rich quick, the results of this research paint a different picture. Neither significant corporate expertise and funding nor black-market cannabis experience are necessarily predictors of success. Incorporating the underpinnings of dynamic managerial capabilities, namely managerial cognitive capital, human capital, and social capital, this research investigates how VAP companies have managed their production and supply chains to ultimately thrive, survive, or fail. Human and cognitive capital is important, but social capital that reaches beyond the supply chain is a distinguishing feature of firms that thrive in this nonpredictive environment.