The last few years have been epic for cannabis as the once frowned upon herb has drawn the attention of presidents. This hasn’t gone down well with some quarters, and BIG tobacco is in the mix. You see before it emerged that tobacco smoking was one of the riskiest habits that one pick up, tobacco was the darling of party-goers. This has however changed in recent years, of course against the backdrop of tobacco smoking being a leading cause of preventable deaths in the US. Now cannabis doors are opening up and it appears that cannabis is stealing the hearts of the tobacco loving population. It will be interesting to see how all this pans out and whether tobacco will put up a fight.
Teens Are Dropping Tobacco For Cannabis
A study conducted by the University of Michigan showed that 22% of high schoolers had used cannabis in the last month compared to just 9.7 percent who smoked cigarettes. This study also revealed that alcohol and opioid abuse among this population had also gone down or remained at a similar level to the previous year. The National Institute on Drug Abuse deputy director Dr. Wilson Compton expressed that he was impressed by the improvement in substance use by all teenagers.
Teenagers are turning to vaping cannabis and moving away from tobacco cigarettes. Cannabis companies have worked hard to market their brands in ways that are appealing to youngsters. Cannabis vapes could either be pure CBD or THC infused vapes. CBD vapes offer therapeutic value without causing psychoactive effects. Teenagers turn to CBD vapes to help them deal with anxiety, depression, and pain. Vaping is also considered safer than smoking traditional joints or cigarettes. Consequently, vaping CBD seems to be a healthy alternative to smoking tobacco cigarettes. Some tobacco addicts have turned to vaping cannabis as a remedy to help them kick-off the harmful habit.
Cannabis Sales are at an all-time high
US-based cannabis sales are projected to reach $75 billion by 2030. On the other hand, the global tobacco market (2017) was valued at about US$700 billion. A report from British American Tobacco (BAT) stated:
“While combustible cigarettes remain the largest category, their volumes have seen a gradual fall over many years driven by increased regulation and changing societal attitudes. Although this is a trend which is predicted to continue, the growth of new categories of potentially reduced-risk tobacco and nicotine products is expected to, at least partially, offset this decline in combustible tobacco products.”
It may seem that BIG tobacco has the money, but cannabis holds the promise for the future.
Cannabis Sector Is Appealing
With their foundations shaken, tobacco brands are eyeing the cannabis market, and the opportunity to venture in has been presented by the loosening of cannabis restrictions.
The strong market activity in the last few years has driven the cannabis sector to new levels, drawing in the presence of major conglomerates from different niches. Canada’s decision to implement a legal cannabis system has also contributed to the soaring interest in cannabis. With these major businesses salivating at the opportunity, it is just a matter of time before the scramble takes over, it has already begun.
These Are The Major players
Britain’s Imperial Brands (a major tobacco brand) (made an investment into Oxford Cannabinoid Technologies in 2018. The partnership was to aid in research into cannabis from a medicinal perspective.
Altria Group’s entry into the cannabis market was also a major shake-up. Towards the close of 2018, Altria bought 45% shares worth $1.8 billion into Canadian cannabis firm, Cronos Group.
Friends not Foes
Tobacco and cannabis are closely related industries. They both appeal to a similar clientele and they are both consumed in similar ways. For tobacco companies, transitioning into the cannabis market can be as easy as ABCs. Tobacco companies already know how to manufacture the products and they have existing distribution networks. The technology is already in place and the market aptitude has been tried and tested. This means that cannabis companies have a lot to gain by forming partnerships with tobacco magnates.
For example, vaping has become a popular method for taking both tobacco and cannabis. Tobacco companies have put in a lot of effort to create the best vaping solution in the market. JUUL (a tobacco vape device) is the most popular vaping device in the market currently. It has a sleek appearance resembling a flash drive and largely appeals to the youth. Cannabis companies can ride on such technology to help push cannabis into the market.
By teaming up with cannabis, Big Tobacco can create a healthier public image and gain favor in the eyes of a public that’s constantly at crosshairs with the industry. Studies on cannabinoids found in cannabis such as CBD have helped shed light on its diverse health benefits, and by providing access to medicinal cannabis, tobacco companies can get involved in a commodity that has a positive reputation in the eyes of the public, who is still the consumer and sales driver.
- BAT: The global market, Trends affecting our industry. Retrieved from https://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DO9DCKFM
- Investor’s Business Daily (2018): Here’s How Enormous Pot Sales Could Get With Legalization. Retrieved from https://www.investors.com/news/marijuana-sales-after-legalization-compares-with-beer-wine-cigarette-sales/
- NYT (2017): Marijuana and Vaping Are More Popular Than Cigarettes Among Teenagers. Retrieved from https://www.nytimes.com/2017/12/14/health/teen-drug-smoking.html
- Business Insider (2018): One of the world’s largest tobacco giants is teaming up with Snoop Dogg’s VC firm to invest in medical cannabis research. Retrieved from https://www.businessinsider.com/imperial-brands-snoop-dogg-vc-invests-in-medical-cannabis-biotech-2018-6?IR=T