Alcohol and Tobacco Ask if the Cannabis Industry Is Friend or Foe? Maybe Neither.

The question has been circulating for some time by the Alcohol and Tobacco industries whether the nascent legal cannabis industry is to be viewed as friend or foe?  My simple response is neither.  However, that doesn’t mean there won’t be times when mutual interests converge or diverge amongst the various players in these industries leading to different and necessary strategic alliances. 

                As way of background, I was recently in Denver, Colorado, the land of Zion for the marijuana legalization effort. It was back in October 2014.  Planes still landed at the airport.  Taxis still roamed the street.  People still attended sporting events, went to the mall and restaurants remained opened serving all the foods I really shouldn’t eat.  Panic, fear and crime had not overtaken the “reefer-mad” city. During my visit, I had the chance to visit a few dispensaries.  People stood in line nicely – I saw college age kids, grandmothers, motor cycle riders, urban professionals, no different than the make-up of society at large. No different than the society who engages in alcohol and tobacco use.  Truth be told, the cannabis industry has existed underground for a very long time. Even wise King Solomon is said to have indulged.  The recent legal recognition of medical and recreational cannabis use just acknowledges society’s growing acceptance of the truth about cannabis rather than the historical “Reefer Madness” mentality.

Even I made a purchase of product in Denver with no fear of criminal persecution, nor any social stigma attached. I was not “experimenting”.  I had left my lab coat in my closet at home.  I did not use a Bunsen burner, test tube or triple balance scale.  I simply tendered my money to a nice budtender who handed me my selections in a sealed non-see through pouch.  I took such with a grin on my face that must have looked like the Cheshire Cat scoring big.  And I did, and will do so again, with no apologies. I would have never imagined that I would have been witness to the day that purchasing marijuana legally would be easier than purchasing eggs and milk at the Costco.

Now, in full and fair disclosure, I don’t smoke tobacco products.  My mother smoked Kool 100s, who can forget those green packs, throughout my entire childhood- in the house, in the car and in her office.  I couldn’t stand the smell of her choice, and as this was the beginning of the “cigarette smoking could be hazardous to your health” movement I would try and get her to quit to no avail.  Well, I’m sure many of you can see where this going. As of today my mother has been through two lung cancer surgeries and I just shake my head. 

In further full and fair disclosure, I don’t drink alcohol.  I wasn’t an alcoholic. Don’t get me wrong, I used to drink alcohol.  I went to college and was even the president of my fraternity.  I have prayed to the porcelain God with its soothing cool sides.  I had obtained “courage” from the amber brew.  But candidly, I didn’t care for the taste and I found that drinking simply created confusion in my mind, as well as the convenient ability to make and justify poor decisions. Especially, when I would examine those choices in the sobriety of daylight. In law school I realized if I had an evening to relax I could either spend it drinking or using marijuana.  Only one of those choices allowed me to easily get up the next morning and attend class.  I will let you guess which choice won out.

Now, I only reveal these facts to state, although I don’t personally use alcohol or tobacco products, that doesn’t mean anyone else of responsible years, shouldn’t be able to make their own choice.  This is where I find common ground with those libertarians who understand restrained government intrusion upon personal freedoms and the right of individual choice.

So, with no personal stake in the future of the alcohol and tobacco industries, I say that the cannabis industry is neither friend, nor foe, but rather a calculating potential strategic partner.  No one from the cannabis Industry is calling for the prohibition of alcohol or tobacco.  Individual rights and freedom of choice is a due process argument, not an equal protection one.  It is one that strikes at the fundamental and basic tenant to allow people the ability of self-determination without unobtrusive government intervention.  I would argue it is a person’s right to engage in the use of alcohol or tobacco, even if I, or you, don’t personally agree.  We have already witnessed that prohibition in this regard is an expensive troublesome failure. People should have the right to make their own choices.  Alcohol use is responsible for countless deaths, cigarette smoking as well.  Cannabis use attributable to causing death is a round figure – zero.   

With that said, the alcohol and tobacco industry, have not been the friend of the cannabis industry in the past.  They along with “Big Pharma”, were quite content with the status quo and if you examine the balance sheets of these players over the past decades, I don’t believe any one could argue against their strategy.  However, this is a new day and there are new economic realities to account for.  So to believe that alcohol and tobacco is the cannabis industry’s friend would be naive.  

On the flip side, the alcohol and tobacco industry as of today is not necessarily a foe.  In fact, several large alcohol and tobacco companies have been planning for the legalization of marijuana for decades.  In college, I was constantly told that the name “Acapulco Gold” had been reserved and was ready to roll out upon legalization.  So opposition was not about morality, corporate or spiritual, or about image, but simply about economics.  What is the rational economic maximizing Board of Directors to do?  Simple – maximize profit.  I have personally been privy to conversations amongst kings of alcohol who were quite interested in entering the cannabis industry, yet felt political and economic fear, from making the jump.  Again, not that they didn’t and don’t want to – just that it wasn’t the right time.

So neither friend nor foe, but rather potential strategic partners.  As cannabis has not been legalized or decriminalized on a federal level, this leaves plenty of opportunities for smaller companies to grow their empires while big tobacco and alcohol sit on the sidelines plotting their next moves.  There will be dominant industry players that will emerge in the Marijuana industry during this interim which I believe will last until 2016 – the year recreational marijuana is placed on the California ballot. 

Everything will change once the Federal government reclassifies cannabis from a Schedule I drug.  The current criminal classification, which is scientifically untenable, severely impacts the alcohol, tobacco, Big Pharma and banking industries from moving forward in the space. But once that barrier is removed, it will be a brand new game.  The current legal dichotomy has allowed small regional grass root business to sprout up to prosper or fail.  Once cannabis is legalized on a national level, the big players will establish their own flag, purchase other industry participants, force the consolidation of those who wish to remain “independent”, or simply put many current cannabis related companies out of business. The alcohol and tobacco industries, among others, will become involved with marijuana growers, infused products, dispensaries, and ancillary lines such as distribution, tracking, and branding.  These ancillary cannabis businesses will be agnostic to the particular winners, since it is a net zero game from that perspective.  As long as cups, lids, straws and napkins are sold, ancillary businesses will let the future Starbucks and Dunkin Donuts battle it out amongst themselves.  Anything other would not be “best for business”. 

In concluding, the cannabis industry will not necessarily be friend or foe of alcohol and/or tobacco.  There will be certain natural alliances, as well as certain natural competitors, amongst the industries and players themselves.  Sometimes there will be interests that mutually unite, as well as those which divide.  But the driver of these relationships will not be set in absolutes or moral imperatives, but rather the real politics of economic growth and shared interests. 

Barry Gainsburg, Esq. can be contacted at gainsburg@bellsouth.net