By Tony C. Dreibus
The tobacco, pharmaceutical and alcohol industries are looking to get into the marijuana industry and plan to capitalize on the leverage those already in the cannabis space have built, several experts speaking at the Marijuana Business Conference and Expo said on Friday.
“The inconvenient truth is that Big Tobacco is coming for you and, surprise, surprise, she plans on giving it to you good and hard,” Patrick Basham, director of the non-partisan public policy research organization based in Washington DC and London, said during a speech at the conference – run by the parent company of Marijuana Business Daily – in Las Vegas.
While executives in the tobacco industry deny any interest in marijuana, the makers of cigarettes and other products see enormous potential in cannabis with many betting on the burgeoning industry as a way to offset their own shrinking businesses, he said. Basham added that tobacco faces a “perfect storm” of regulatory threats, negative public image, shrinking consumer base and, on a general basis, is a habit of less affluent and uneducated people.
Marijuana, conversely has public opinion on its side, is seeing increased deregulation on a state level and by the end of the decade may no longer be a Schedule I drug, making it federally legal and potentially worth billions of dollars, he said.
Publicly, big tobacco has said it isn’t interested in cannabis, but research says otherwise. A report published earlier this year in a health policy journal said tobacco businesses, along with food and beverage companies, are prepared to enter the space.
Tobacco executives aren’t known for always being forthcoming, Basham said. In fact, big tobacco tried to get into the marijuana business in the 1960s and 1970s and is likely planning on how to capitalize on today’s growing cannabis space.
“You shouldn’t wage your industry’s future on the word of the tobacco industry,” he said. “Tobacco plans to” use the leverage those in the cannabis industry have already built to capitalize down the road.
Big pharmaceutical companies are also eyeing the marijuana industry, Basham said.
Harry Schuhmacher, the publisher of Beer Business Daily and Wine & Spirits Daily, said that alcohol companies also may be looking at entering the marijuana business as they’re reportedly under threat of losing sales to cannabis.
“We in the alcohol business, we’re scared… because we don’t know the effect weed is going to have on booze,” Schuhmacher said. In Colorado, alcohol consumption has risen thanks to the throngs of tourists who have made their way to the state to consume legal marijuana, but that won’t happen if deregulation moves into more states.
Marijuana may have the same effect on alcohol consumption that legalization of lottery tickets, including scratch-offs, had on beer sales when they were first allowed into stores, said Schuhmacher, who followed his father and grandfather’s footsteps into the beer industry.
“A guy used to go into the convenience store to buy a 24-pack,” he said. “Now he buys two lottery tickets and a 12-pack. Gaming, marijuana and alcohol are all fighting of the same dollar – they’re fighting for the same dollar so they’re competing against each other. The liquor industry is not excited about legalized cannabis.”
Tripp Keber, the owner and managing director of edible-maker Dixie Elixirs, said during the conference also said that the tobacco, pharma and alcohol are all coming for the marijuana industry, and those who own cannabis companies need to be ready.
“You can’t have an industry that is tripling in size and taking revenue and profits away from manufacturers of alcohol and tobacco and not expect them to do something about it,” Keber told an audience on the last day of the conference. “You better be prepared.”
Tony Dreibus can be reached at Tonyd@mjbizmedia.com