Tobacco cigarette sales have been on the decline in the U.S. for several decades now, and it seems the tobacco industry now sees its future in marijuana.
The major tobacco firms have been watching the cannabis industry as it evolves and they now think that having a part of this nascent industry holds the key to the tobacco industry’s future. The Big tobacco companies have several factors that favor their entry into the cannabis industry.
First, the tobacco industry has a well-known record of manufacturing products in a way that maximizes their addictive potential. You can therefore bet your last dollar that big tobacco will tap into this “heritage” to make marijuana products that will get their users hooked for life. Addiction is good for business because it assures you of repeat customers for decades to come.
Secondly, the tobacco industry has an extensive marketing network across the globe. This capability means that it will not be hard for the companies to get marijuana anywhere buyers or potential buyers may be. As you may know, several states, such as California, are already struggling with surplus supplies of cannabis. The marketing muscle of tobacco companies can fix that problem on a large scale.
Thirdly, tobacco firms have a long tradition of lobbying and navigating their way around tough legislative and regulatory scrutiny. This experience can be an invaluable resource to the cannabis industry that is struggling to shake off the association of marijuana with junkies and criminal gangs. Who knows, the lobbying resources of the tobacco industry can even make the federal government to move faster towards ending marijuana prohibition!
However, the tobacco industry does have some baggage that may make the cannabis industry jittery about jumping into bed with “big tobacco”.
For example, the tobacco industry didn’t win a lot of friends when it was discovered that the industry deliberately misled the public about the health and safety issues of cigarette smoking. Actually, the big players even used taxpayer money to find ways to make smokers addicted sooner!
Additionally, there’s agreement among experts that cigarettes are a product that will kill half of the people who use it as it was intended to be used. Cannabis industry players are a little uneasy about associating with an industry that has such a reputation.
That notwithstanding, a number of deals have already been struck between tobacco companies and players in the cannabis industry. One of the largest is one between Altria and Cronos Group worth $1.8 billion.
The cannabis industry, including TransCanna Holdings Inc. (CSE: TCAN) (FSE: TH8) and Therma Bright, Inc. (TSX.V: THRM) (OTC: THRBF), hopes that the tobacco industry doesn’t soil the reputation of cannabis as big tobacco jumps on the cannabis bandwagon.
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