The world of cannabis has had the benefit of the interest of large tobacco companies over the past six months. This may seem like a promising prospect, but there are several issues that come into play when considering the entrance of tobacco into the marijuana market.
One of the biggest pieces of news to hit the market is interest from tobacco giant Altria, who stated that they were in talks with Cronos, one of the large producers of cannabis. Some have stated however that tobacco may end up being a bad light for the world of marijuana.
Using Cronos as an example, the company has been able to produce as much as 258,000 pounds per year. Although they have an extremely high rate of production, the company is showing that they may not be able to end up selling all of this excess cannabis. With only 1,133 pounds of cannabis sold in the last quarter, it is extremely difficult for companies to get the distribution they need.
Altria of course is worth as much as $100 billion which means the $1.8 billion market cap of Cronos is quite small in comparison to the larger picture. Altria has been working to diversify their investments as they move into the vaping space with the potential investment in the company Juul Labs.
The issue with this is that the tobacco industry has quite a bad rap. With cannabis, it has taken a substantial amount of time for the industry to become reputable in the eyes of the majority of the public. Cannabis should not begin to get involved with the controversies of tobacco especially since the former promotes itself as a health conscious.
The cannabis industry has been working to make itself seen as medicinal in the eyes of some. New research is showing that cannabis can be used as a treatment for everything from pain reduction to insomnia. Studies are also showing that cannabis may be able to be used as a treatment for various types of cancers or at least help to negate some of the side effects that come with treatment.
The fact that tobacco has been directly linked to cancer and a variety of other ailments means that the investment from them is quite contradicting to the message cannabis is working to protect. The other issue that remains is that cannabis is still very much in the early stages of legislation as far as the U.S. and international markets are concerned. Legislation has been somewhat halted to the difficulties with coming to a consensus from the majority of the nation.
There has also been a large amount of legislative issues with cannabis advertising. This is highly reflected in the history of tobacco as well. The long story short here is that cannabis needs to continue to protect its image. If the industry doesn’t work to do this and instead sacrifices its views for quick investments, it may end up being a downturn in the long run. The next few years will be extremely telling for the world of marijuana and the potential interest of tobacco investing within it.