Big Tobacco’s Next Frontier: The Legal Cannabis Industry

As far back as 2016, Philip Morris International had invested $20 million in Israel-based Syqe Medical, which developed a medical cannabis inhaler. In 2018, tobacco giant Altria had announced that it would be discontinuing its vape devices and Verve nicotine gum, in order to instead invest 1.8 billion in Canadian cannabis company Cronos Group Inc., which is the fourth most valuable publicly listed marijuana company, with a total valuation of about $1.9 billion.

Similarly, in 2018, Britain’s Imperial Brands had invested through its venture arm in Oxford Cannabinoid Technologies, a cannabis-focus biotechnology firm, and in 2019 it announced an investment of C$123 million for a 19.9% stake of Canada-based Auxly Cannabis.

However, an article on BMJ highlighted that Big Tobacco has been eyeing opportunities to invest in the cannabis market as far back as the 1970s. “While I am opposed to its [marijuana] use, I recognize that it may be legalized in the near future…we should be in a position to examine: 1. A potential competition, 2. A possible product, 3. At this time, cooperate with the government,” then-Philip Morris President George Weissman in an internal memo.

The “Vape Mail Bill” and the cannabis industry

Meanwhile, the pending vape mail bill “Preventing Online Sales of E-Cigarettes to Children Act” is predicted to also pose a problem for the legal cannabis industry. Signed into law by President Trump on the 27th of December 2020 and currently on hold, this measure would ban all shipments of vaping products by the US Postal Service, and would force all other postal delivery services (such as UPS, FedEx, or DHL) to check IDs and obtain signatures of adults at points of delivery.

The bill is considered problematic as the signatures’ requirement naturally presents its own set of challenges, since most deliveries would happen during business hours when the majority of adults are at their place of employment. To this effect, the procurement of signatures would add additional costs, when receiving deliveries via the already more expensive private carriers.

In addition to the vaping industry, the cannabis industry is also growing concerned, as it will ban the shipping of vape products through mainstream mail. “To the extent that they are participants in the industry who are selling vape products, it absolutely affects them,” explained cannabis attorney Rod Kight of Asheville, North Carolina.

Industry insiders have pointed out that the measures enforced by this measure would be no different than those that the legal cannabis industry already has in place, however, they may mean some extra work. “A lot of them are doing age verification already,” Kight said. “For some, this is going to be a larger project to take on.”

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