It all went down in 2016.
Insys Therapeutics, a pharmaceutical company that makes Fentanyl, ponied up a half million dollars to help fight legalization in the Grand Canyon state.
While it’s not surprising to see a pharmaceutical company write a fat check in an effort to keep cannabis out of the hands of people who need it, what made this particularly despicable was the fact that Insys had oftentimes paraded itself as a cannabis company because it manufactures synthetic marijuana.
The company is even held by the Horizons Marijuana Life Sciences ETF, which is considered to be a cannabis ETF. With giants like this in the pharmaceutical industry, is legalizing marijuana really a threat to Big Pharma?
But such a thing should come as no surprise. After all, Big Pharma has a long history of being hostile toward the cannabis industry; spending millions to support politicians that oppose the legalization of cannabis, which of course, could eat into the pharmaceutical industry’s bottom line.
According to data analysis from New Frontier Data, if medical cannabis were legalized on a national level, pharmaceutical expenditures on the top nine conditions commonly treated by medical cannabis could fall an estimated $18.5 billion between 2016 and 2019.
The key word there, however, is “could.”
The truth is, while cannabis can effectively be used as a treatment for all kinds of ailments and diseases, that doesn’t mean it will be. In fact, it could successfully be argued that Big Pharma stands to lose very little if all 50 states were to legalize medical cannabis.
Big Pharma Has Little To Fear
In 2017, the top 10 pharmaceutical companies by revenue, generated $331.9 billion.
That’s a lot of scratch, and the cannabis industry is eager to get a piece of this action. That being said, the notion that somehow the cannabis industry will render the pharmaceutical industry helpless and alone is about as sound as the notion that Jeff Sessions is a friend of the cannabis industry.
Even with full-scale legalization in every state, it’s important to understand that the pharmaceutical industry is a beast, and it pays handsomely to ensure it has a direct connection to the lawmakers who ensure their survival.
According to the Center for Responsive Politics, pharmaceutical companies spend $900 million on lobbying efforts between 1998 and 2005. That’s more than any other industry. And make no mistake: That kind of cash brings huge favors.
Interestingly, last year, $280 million was spent on Big Pharma lobbying efforts. To put that in perspective, that’s more than 30% of the total spent over the course of seven years, from 1998 to 2005. The point is, this steady flow of lobbying lucre is unlikely to peter out anytime soon, and in fact, will likely continue.
Now compare this to the cannabis industry, which, in 2017 spent a total of $1.62 million on lobbying efforts. That barely registers as an accounting error.
Of course, this doesn’t mean Big Pharma can stop the inroads the cannabis industry has made over the past few years. But it does mean that even when the federal prohibition on cannabis is lifted, the cannabis industry still won’t have anywhere near the influence that Big Pharma has on policy and registration.
And here are a few more considerations that should not be trivialized:
- Without insurance companies paying for marijuana-related medications. Big Pharma will still maintain a monopoly on the drugs that could effectively be replaced by cannabis.
- The propaganda surrounding cannabis has been incredibly powerful. It quite literally, scared millions of people into believing that if they consume cannabis, horrible things will happen. As a result, even with the legalization of medical marijuana, it is likely that many people will not choose safe and effective cannabis over traditional pharmaceuticals.
- Big Pharma has some skin in the weed game, too. A number of former Big Pharma execs now sit on the boards of a number of cannabis companies and some Big Pharma companies are actually reaming up with the marijuana industry. In fact, a few months ago it was reported that Tilray Inc.—which actually just went public—signed an exclusive deal with Sandoz Canada of Quebec, which is part of the Novartis healthcare conglomerate. The truth is, while Big Pharma continues to throw up obstacles to legalization, it is also hedging its bets by getting some exposure to the space.
So while it’s understandable that legalization advocates would love nothing more than to help the cannabis industry swipe market shares from Big Pharma, such a thing is unlikely to happen anytime soon. At least not to any degree that’s relevant.
Is Legalizing Marijuana Really A Threat To Big Pharma?
The cannabis industry is stronger than ever. Growth will continue to be robust and more and more folks who desire an alternative to pharmaceuticals are getting just that with marijuana. Make no mistake: the path to legalization is one that is already bringing wealth, prosperity, and social justice that is long overdue. And while it is unlikely that the cannabis industry will ever present any kind of realistic threat to Big Pharma, it will continue to provide relief for a lot of sick people, in defiance of Big Pharma. And that in itself is a victory.