Cannabis stands today at a similar place to where the high-tech industry was in the early ‘90s: the pre-boom era. The gates of a wonderfully unexploited new market are opening up before everyone’s eyes. But not every omen calls for endless wealth, since for many sectors, marijuana stands as a share stealing new devil. Whether it’s rec or medical, multiple industries are becoming worried about either losing part of their market to weed, or getting left out of possible unearned fortunes.
So, at a time when tomorrow’s giants could be taking their baby footsteps, some of the main representative companies from other sectors are turning their eyes towards investment opportunities within the cannabis industry, and, though previews experiences with booming industries should stand as a lesson (take the early 2000s dot-com bubble burst, for instance), there’s a lot of commotion around the growth expectations of this blossoming new market, and a lot of the big names out there are making sure they’re not getting left out.
The alcohol industry is likely to be the most threatened of all sectors when it comes to recreational weed being legalized, mainly because weed and booze share the same consumer base.
However, facing previsions of marijuana sales surpassing beer sales in some states by 2019 and studies showing that people are more likely to choose weed over alcohol in recreational situations. Representatives from some alcohol companies decided it’s best not to fight a lost cause, like the Wine & Spirits Wholesalers of America, who publicly announced their support for federal legalization last month.
They’re not the only ones who see the potential in befriending the new market. Heineken’s own Lagunitas launched a marijuana beer. Additionally, Molson Coors partnered with a cannabis company to make their own weed-infused beverage.
The first alcohol company to leap into the industry was Constellation Brands with their $4 billion investment in Canopy Growth. The move caused Canopy’s stock to rise by 30 percent overnight.
Although regulation regarding the join consumption of marijuana and alcohol in states where recreational has been legalized is still quite stiff in allowing the two to mix within the same venue, that doesn’t prevent big alcohol companies from venturing into the industry.
No one really needs to wrap their heads around why would a tobacco company go into cannabis: It just makes sense. They already have the experience and expertise to handle an industry that shares more similarities than differences. For them, it’s as simple as plant it, dry it, sell it, smoke it. So, when entering the cannabis race, Big Tobacco firms have a head start. And they sure are taking advantage of it.
Imperial Brands is one of the main players in the sector, showing off by including to their board of directors, the former chairman of PharmaCielo, a Canadian CBD oil producer. This obvious move towards the cannabis business became more clear this past June, when the company straight-out invested in a British medical marijuana lab, Oxford Cannabinoid Technologies.
The giant Philip Morris clearly doesn’t want to get left behind, and they proved it with the $20 million acquisition of Syqe Medical, an Israeli Cannabis biotech company. In fact, they even went one step further and bought a patent for implementing GMO technologies for cannabis growth.
Alliance One International entered the race as well, after purchasing 75 percent of a Canadian weed growing facility. Considering that tobacco sales have plummeted over 50 percent in the past decades, these type of moves can only seem like the most logical step to gain control over a new market.
Yet another sector that is by no surprise, an up and coming player in the new game of cannabis finance. Though, as members of a somewhat more conservative sector, some representatives of the Pharmaceutical Industry think it’s still worth fighting to protect their own terrain. Last year, Arizona’s legalization was politically blocked with the help of a $500.000 investment from a big pharma company, which was used to back an anti-marijuana campaign.
It is invariable that legalization would be harmful for today’s pharmaceutical industry. As a natural and cheaper form of medicine, cannabis stands to take over a big part of the US drug market, which is today, the highest profiting pharmaceutical market in the world, due to extremely high retail prices.
However, some members of this sector have decided to play it smart, and dip their toes in the green ocean. And, although federal prohibition on cannabis still makes it really hard to conduct proper research, the involvement of some of these companies in the marijuana community could help speed things up, since their lobbying power is known to be tremendous.
Johnson & Johnson recently took a major step in this direction, taking advantage of their international presence to welcome two cannabis companies into their Canadian research network.
Things get easier regarding medical research after crossing the Canadian border. This past June, the Canadian branch of the pharma giant Sandoz, became the first pharma company to enter the Canadian cannabis business, after striking a deal with Tilray, a medical cannabis producer.
The FDA’s lock on medical marijuana research has started to loosen up, with the recent approval of a cannabis-derived epilepsy drug called Epidiolex.
This type of progress could be paving the way for the approval of drugs derived from current research being conducted by pharmaceutical companies, to develop cannabis-based pain-killers that could eventually overthrow opioids out of the market.
This February, a long-time coca-cola high executive was named CEO of Sundial Growers, a Canadian medical marijuana company.
Although hard evidence of non-alcoholic beverage companies entering the cannabis business is still to come, certain rumors of companies like Coca-Cola and Pepsi looking towards possible investments, have spread. In fact, according to some sources, Coca-Cola executives have been touring Canadian production facilities and meeting with their high management, with their eyes set towards possible investments in the sector.
Though the cannabis industry is on its way to becoming one of the giants, who will be the main powers in the business, is still to be defined.