Will Big Tobacco Become Big Marijuana?

Bud Genius, Inc., a leading laboratory for cannabis testing and profiling, developer of data-driven rating systems for marijuana strains, brand and retail development specialist, and licensee of celebrity-endorsed marijuana-related merchandise, commented today on an article in USA Today, which examined the potential role of major tobacco companies in the cannabis industry.

“At marijuana business conventions and in private conversations, it sometimes seems like everyone has heard a rumor about Big Tobacco getting in.”

“Many fear that tobacco companies, with their deep pockets, longstanding experience dealing with heavy government regulation, and relationships with generations of farmers will jump into the burgeoning marijuana market,” the article stated. “At marijuana business conventions and in private conversations, it sometimes seems like everyone has heard a rumor about Big Tobacco getting in.”

Angel Stanz, CEO of Bud Genius says the corporate giants are inevitable and very few companies will survive the incursion regardless of whether they are publicly traded or privately held. “The one thing that the big tobacco companies will need is data, which they do not have and currently cannot collect. Multinational corporations base their marketing, brand positioning, and product management on data. This includes detailed demographics of their consumers and how attributes of each product appeal to them,” he said. “As the company with the largest combination of quantitative and qualitative data regarding cannabis strain composition and specific consumer interests, I believe that the day the tobacco companies enter the cannabis market is the day that our company value soars.”

In a June 2014 paper titled, “Waiting for the Opportune Moment: The Tobacco Industry and Marijuana Legalization,” researchers Rachel Ann Barry, Heikki Hiilamo and Stanton Glantz wrote: “Since at least the 1970s, tobacco companies have been interested in marijuana and marijuana legalization as both a potential and a rival product… As public opinion shifted and governments began relaxing laws pertaining to marijuana criminalization, the tobacco companies modified their corporate planning strategies to prepare for future consumer demand.”

Stanz thinks this level of competition will be good for the cannabis industry and will keep businesses innovating. “Big tobacco will cause a catastrophic thinning of the herd. Smart companies are acting now to position themselves with unique intellectual property. For example, the tobacco industry is built on brands — Are you the cowboy or the jazz guy? However, these outdated brands will not work in the cannabis industry,” Stanz commented. “The three biggest brand names in the marijuana industry, one of which we recently announced, are beginning down the path of carving out market share and creating market dominance,” he added. “We view the eventual competition from the tobacco industry as building immense value in our data and stimulating the value of name brands – an area where we hold the industry’s brightest star.”