Accounting as a Normalizing Tool for Transitional Dirtiness: The Case of the U.S. Adult-Use Cannabis Industry

66 Pages Posted: 22 Dec 2017 Last revised: 1 Feb 2022

See all articles by Andrea M. Romi

Andrea M. Romi

Texas Tech University - Area of Accounting

Heather Carrasco

Texas Tech University

Casey Camors

Mississippi State University

John Masselli

Texas Tech University - Rawls College of Business

Date Written: August 20, 2021

Abstract

In this study, we conduct in-depth interviews to examine the role accounting plays in the development of the U.S. cannabis industry as it transitions from the illicit market where formal accounting was systematically avoided, to a state-legal market where participants are subject to conventional business processes. Facing impediments to traditional operational practices and pressures to increase normative conformity for industry survival, cannabis operators relied on three normalizing strategies (creative concession, collaborative facilitation, and experimentation), seemingly influenced by the incongruencies between prior illicit-market culture and experiences, and the state-legal operating environment. In response to what operators perceived to be coercive regulation, they incorporated creative concession strategies, including influencing, bargaining, challenging, escaping, and cessation tactics. However, in response to pressures to adopt more commonly accepted forms of accounting, cannabis operators instead deployed two different strategies, one focused on acquiescence to normalizing pressures when doing so facilitated essential relationship building (i.e., collaborative facilitation strategies), and one deployed as strategic experimentation, working to normalize industry activities in areas of perceived threats to industry acceptance and continuity. Given cannabis operator accounting naiveté, its usefulness was often introduced by peripheral industry parties attempting to normalize their own participation with the cannabis industry. Notably, we also find that normalizing pressures occasionally resulted in unintended consequences, including reversion to the illicit market and forgoing normalizing strategies in favor of retaining some level of dirtiness to fend off pending competition, both of which threaten to reemphasize the industry’s dirtiness. Our study, therefore, points to accounting itself as a central mechanism in the complex, multidirectional strategy to normalize transitional dirtiness.

Keywords: normalization of dirtiness; accounting; cannabis; marijuana; normalizing strategies; transitional normalization.

Suggested Citation

Romi, Andrea and Carrasco, Heather and Camors, Casey and Masselli, John, Accounting as a Normalizing Tool for Transitional Dirtiness: The Case of the U.S. Adult-Use Cannabis Industry (August 20, 2021). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3090386 or http://dx.doi.org/10.2139/ssrn.3090386

Andrea Romi (Contact Author)

Texas Tech University - Area of Accounting ( email )

P.O. Box 42101
Lubbock, TX 79409
United States

Heather Carrasco

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Casey Camors

Mississippi State University ( email )

Mississippi State, MS 39762
United States

HOME PAGE: http://https://www.business.msstate.edu/directory/cc3916

John Masselli

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

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