Will Legal Weed Become A Subsidiary Of Big Tobacco?

Magazines such as High Times like to rant that it is a stupid scare, putting it in the realm of modern day urban legends, but the truth is that it is a very real possibility…

Feb 27, 2016

It is a brave new world out there, as hard working people put their life savings, time, and reputations on the line to open marijuana dispensaries, grow operations, and other periphery businesses to try and get a foothold in the first new industry since the Silicon Boom.

The myriad of worries that keep these dreamers up at night is predominated by two major opposing forces. The future of legalization, which if reversed could end the dream before it has the chance to grow, has always been there, but a second fear is rising in the minds of entrepreneurs, and for good reason. What if Big Tobacco decides to throw its hat in the “smoke ring”?

Historical interest

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In the 2014 paper published in Milbank Quarterly entitled Waiting for the Opportune Moment: The Tobacco Industry and Marijuana Legalization, researchers poured through 80 million pages of tobacco industry documents previously kept secret and found that marijuana has surfaced again and again as a subject of either potential new revenue or as a competing product.

“In many ways, the marijuana market of 2014 resembles the tobacco market before 1880, before cigarettes were mass produced using mechanization and marketed using national brands and modern mass media,” they wrote. “Legalizing marijuana opens the market to major corporations, including tobacco companies, which have the financial resources, product design technology to optimize puff-by-puff delivery of a psychoactive drug (nicotine), marketing muscle, and political clout to transform the marijuana market.”

Big guys vs little guys

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While marijuana companies are starting to see the benefit of pre-rolled cannabis joints sold in packs, it is still a fledgling market for a product that can be ingested in a million different ways. From creams, patches, and gums to edibles, vaporizers, and pipes, there is more market than muscle for any one company to grasp it all. President and CEO Derek Peterson of Terra Tech, a company that makes

President and CEO Derek Peterson of Terra Tech, a company that makes hydroponic equipment says that the economics ultimately favor large companies. This has been true for all products, from cars to shoes, but it goes against the modern culture of strain cultivation and attention to product quality that makes legal marijuana stand out from the black market schwag that is mass produced in Central and South America. At a large enough scale, product quality could be diminished in favor of quantity.

Isn’t it just a baseless scare?

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Magazines such as High Times like to rant that it is a stupid scare, putting it in the realm of modern day urban legends, but the truth is that it is a very real possibility that hinges on 3 factors:

  1. Big Tobacco companies face intense scrutiny, and won’t put a dime directly into marijuana production until Congress makes it as legal as tobacco. The legal ramifications for the company if it backfires on their scale would lose them billions.
  2. Social stigma of Big Tobacco is already in a tailspin. Becoming any more controversial only opens them up to worse customer losses and bad press. Marijuana would have to be well established in the mainstream before they wade in.
  3.  Because the market is being paved by risk takers both small and large, it is possible that by the time Big Tobacco deems it safe to move into the market, it will already be saturated, making the investment and competition unprofitable. Only a sudden change in the laws in the near future could give them the time to get a foothold before there isn’t room left.
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Those factors don’t mean that Altria (the new name of Philip Morris) and R.J. Reynolds haven’t been trying to get a head start all along. In 1970, Philip Morris confidentially approached the DOJ‘s Bureau of Narcotics and Drug Abuse to conduct secret research on marijuana, and received formal bureau approval, even requesting samples of marijuana for the research and being allowed to sidestep the FDA‘s review of its plans.

We can hardly refuse this request under any circumstances,” stated an unsigned 1970 Philip Morris memo to executives obtained by UCSF’s Center for Tobacco Research & Education.

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In 1993, Philip Morris sought the French trademark and intellectual property rights for the name “Marley“. Recently, Big Tobacco has been buying up e-cigarette companies, which allow the delivery of either nicotine or cannabinoids through vapor. Altria purchased Green Smoke for $110 million, Lorillard bought Blu Ecigs for $135 million, and Reynolds America launched its own e-cigarette brand, called Vuse.

Keith Humphreys, a professor of psychiatry and behavioral sciences at Stanford School of Medicine, spoke in an interview with DCNF last month, saying big tobacco has a distinct advantage in marijuana production.

“On marijuana, who knows better how to grow a plant that you dry up, wrap up in paper and smoke, They’re the masters of that worldwide and have wide brand recognition.”

Why tobacco could spell doom for pot

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Tobacco companies are poised to quickly dominate the field in marijuana production, for good reason. Tobacco holds the best historical performance of any U.S. industry in history. A dollar invested in tobacco in 1900 would have been worth $6.3 million at the end of 2014, according to the 2015 edition of  Credit Suisse’s Global Investment Returns Yearbook. This surpasses even the growth of new tech companies in the past 20 years.

Despite the vehement denial of their interest, Big Tobacco is putting all its pieces in place to swoop in and dominate the market with the political influence, money, and legal clout to move faster and make bigger strides than anyone currently in marijuana today. While they seem content for the moment to push against legalization, perhaps it is only because they are waiting for the perfect moment to pounce.

The biggest hit to cannabis would be that much of current lobbying focuses on it being a less harmful substance than tobacco. If tobacco starts pushing marijuana, brand recognition will be the equivalent of (forgive the Star Wars reference) the Empire opening franchise Jedi training centers. The images of the two very different products could be blurred in the eyes of the public like so much smoke

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Do you think having companies like Big Tobacco sell cannabis would be good for legalization, or would corporatization of a “grass”roots culture staple make cannabis lose its positive message and appeal? Share your thoughts with us on social media  or in the comments section below.

Feb 27, 2016