Marijuana sector needn’t fear Big Alcohol, Tobacco – yet

(This is an abridged version of a story that appears in the November-December issue of Marijuana Business Magazine.)

There has been a flurry of business activity this year by several multibillion-dollar companies in the alcohol and tobacco space looking to capitalize on opportunities in legal marijuana.

The cannabis industry has seen an influx of liquor companies such as Constellation Brands, Molson Coors Brewing, Heineken’s Lagunitas Brewing as well as tobacco firms Pyxus International (formerly Alliance One International), Altria Group (which owns Marlboro maker Philip Morris USA and is an investor in alcohol giant Anheuser-Busch InBev) and Imperial Brands.

Such influx might frighten small business owners in the U.S. marijuana industry, since the entire market has been built by tiny companies with relatively little access to serious capital with which to scale operations.

These pioneers could be worried – and rightly so – about their market share shrinking with the arrival of heavyweights such as Constellation and the rest.

But just because they’re here doesn’t mean they’re going to dominate anytime soon. At least not in the U.S. market. Click here to read why.

5 comments on “Marijuana sector needn’t fear Big Alcohol, Tobacco – yet
  1. mitchell g bolnick on

    What do people think about the idea that once things are legal the producing will migrate to the best places to grow, rather than having grow operations in every state? Which states do you think are the best for growing?

    Reply
    • Mike on

      Raw material is transported fairly long distances all the time. Processing will likely evolve into a whole different group of people distinct from growers.

      Reply
    • Forest Vancil on

      State and local laws will be hard pressed to get rid of there tax revenue, I don’t see the laws changing any time in the future.

      Reply
  2. Matthew Morgan on

    Recently I thought it was going to big alcohol that ended up owning the cannabis space but now it looks like we will be able to watch two giants slug it out for market dominance. I’m actually surprised big tobacco didn’t jump in sooner. Very curious to know what metrics alcohol and tobacco are using to make their large investments into specific cannabis companies.

    Reply
  3. Sarcastic Fringehead on

    Warren Buffet invests in companies with a “moat”, barriers to entry for the little guy. In this case, there isn’t any, except for stupid laws. If we can preserve the right to grow your own, the various businesses will have to compete, meaning lower prices. This should be just another grocery item, like corn on the cob. We don’t tax groceries. Tax rates + falling prices means at some point the tax won’t be worth collecting.

    Reply

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