Marlboro’s parent company Altria is getting into the cannabis market. Altria Group is just one of the big companies like Corona to show extreme interest in weed. What’s in it for them? Marlboro’s makers are based in Richmond, Virginia and are the largest cigarette maker in the United States. Due to the continued and expected exponential growth of the medical marijuana market, everyone’s vying for a piece of the pie before its too late. Just like with bitcoin. The ones who got in early, are the ones who made the largest profit off of the decentralized currency. Big Tobacco not only wants the money that marijuana will bring in but their young consumers too.
MARIJUANA BIGGER THAN CIGARETTES?
Studies have shown that marijuana use may have just surpassed cigarette smoking. A 2017 government survey showed that daily marijuana use was exceeding daily cigarette use among high school students. I’m not sure if this a good or bad thing. With research out like this, it’s no wonder that Marlboro and even Corona are beginning to target the marijuana market.
“We think that this is another very aligned category that’s going to develop very fast and very large and it simply presents another opportunity for growth,” Constellation Brands CEO Rob Sands said in a recent conference call with investors. In August 2018, Constellation, which owns Corona beer and Manischewitz wine, invested $4 billion in exchange for a 38 percent stake in Canadian marijuana grower Canopy Growth.
HIGH STAKES
Marlboro makers recently invested a whopping $1.8 billion for almost half of Cronos Group, a cannabis company based in Toronto. Big business is slowly creeping in on the medical marijuana industry. The swift descent of these multinational corporations is a good indication of the turn towards support and mainstream acceptance for medical marijuana. However, these large-scale investments may suggest that marijuana may soon no longer be the “mom-and-pop” shop’s game. Many question what’ll happen to the young entrepreneurs that even made this change possible.
While other companies are taking precaution, like Coca-Cola and Pepsi, Marlboro has already spoken of the potential growth they imagine will come from their investment deal with Cronos Group. Report of their stocks falling about 25% last year hit various news outlets. “Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” said Howard Willard, Altria’s CEO, in a statement. “Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Cronos CEO Mike Gorenstein in a statement.
THE FUTURE OF CANNABIS
The arrival of these giants could mean a very different future for the cannabis industry as we know it. Long term, it’ll be less common to have companies produce their own marijuana, much like how few tobacco companies produce their own tobacco. It’s not unlikely that cannabis may be produced and processed overseas due to lower labor costs. In the United States, several states have legalized recreational consumption, though it remains illegal at a federal level. That patchwork of regulation is keeping several big companies that are interested in the industry on the sidelines for now.
Trump signed the 2018 Farm Bill a few months ago, legalizing the commercial cultivation of hemp. The Marijuana Revenue and Regulation Act, appropriately named S. 420, which would legalize, regulate, and tax cannabis in the United States in a manner similar to how the plant is cultivated and sold in California, Oregon, Colorado, and elsewhere, was one of three marijuana-reform related bills Senator Ron Wyden introduced last week. “The federal prohibition of marijuana is wrong, plain and simple. Too many lives have been wasted, and too many economic opportunities have been missed,” Wyden said in a statement. “It’s time Congress make the changes Oregonians and Americans across the country are demanding.”
Maybe soon cannabis will be so accessible we’ll be able to buy a pack of cannabis cigarettes from the local gas station. Who knows?
