Bernie’s Pot Legalization Plan Bars Big Tobacco — But Would It Work?
Bernie Sanders has released his plan for cannabis legalization, which features provisions to keep Big Tobacco from colonizing the new industry. But large tobacco companies are already getting a jump on the cannabis sector, and other industries could just as effectively squeeze out small cannabis businesses.
On Thursday, Oct. 24, Democratic presidential candidate Bernie Sanders, the self-professed democratic socialist and longtime independent senator from Vermont, released his ambitious cannabis legalization plan.
The plan includes the now-standard buffet of progressive cannabis policy ideas: removing the plant from the Controlled Substances Act, creating a robust equity program to address the racist War on Drugs, and expunging criminal records. But Sanders’s plan also includes one unorthodox idea: It calls for banning tobacco and cigarette corporations from “participating in the marijuana industry.”
Outlined on the “Legalizing Marijuana” page on his campaign website, Sanders says that one of his goals is to “ensure legalized marijuana does not turn into Big Tobacco.”
“Big Tobacco is already targeting the marijuana industry for its profits,” the platform states. “As president, Bernie will not allow marijuana to turn into Big Tobacco.” Instead, he calls for programs to “incentivize marijuana businesses to be structured like nonprofits,” with an emphasis on cooperatives that will “create jobs and economic growth in local communities.”
He would also “ban companies that have created cancer-causing products or [are] guilty of deceptive marketing” and “institute market share and franchise caps to prevent consolidation and profiteering.”
Sanders’s plan to keep large tobacco corporations out of the cannabis industry makes sense: those companies have already started making moves in Canada’s cannabis industry, and the senator is notoriously opposed to elite consolidation at the expense of the average citizen. However, it’s not clear if the plan would work — and why it doesn’t also address the threat of the pharmaceutical and alcohol industries.
Why the Threat of Big Tobacco Is Real
There is no doubt that Big Tobacco has designs on the cannabis biz. That threat is, in fact, already upon us.
Last December, tobacco giant Altria — Virginia-based owner of Philip Morris and Marlboro cigarettes — invested $1.8 billion in Canadian cannabis giant Cronos Group, the Toronto-area licensed producer that last year became the first canna-business to be listed on the NASDAQ. The investment gave Altria a 45% stake in the company, with an option to increase its stake to 55% over the next five years.
Of course, both companies waxed optimistic and enthusiastic about the deal. “Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Cronos CEO Mike Gorenstein in a statement.
“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” echoed Howard Willard, Altria’s CEO, in his own statement.
The Altira website now states: “Altria Group holds diversified positions across tobacco, alcohol and cannabis.”
And we can expect more such news. This July, the Financial Times reported that Imperial Brands, UK-based producer of Davidoff and Gauloises cigarettes, made a big investment in the cannabis sector with a £75 million deal to take a stake in Vancouver’s Auxly Cannabis Group.
“Diversifying our next generation products portfolio with this investment provides Imperial with further options for future growth,” said Imperial’s chief development officer Matthew Phillips, in the predictable corporate-speak.
And this was not the company’s first such investment. Last year, Imperial took a small minority stake in British biotech company Oxford Cannabinoid Technologies. The name leaves little doubt what plant its research is focused on.
But What About Big Pharma & Big Booze?
But Big Tobacco isn’t the only corporate interest poised to descend on the cannabis sector and establish dominance — nor the principal one.
Certainly, when it comes to patenting cannabis products, it is Big Pharma that has the big lead. Last year, a study jointly undertaken by Washington, D.C.-based cannabis industry analyst New Frontier Data and London-based cannabis biotechnology firm Grow Biotech named the top applicants for cannabis patents in Canada (where such patents are more available than elsewhere). Seven of Canada’s top 10 cannabis patent holders were found to be major multinational pharmaceutical companies, including Ciba-Geigy (a subsidiary of Swiss giant Novartis), New York-based Pfizer Products and the United Kingdom’s GW Pharma.
In March 2013, it was announced that one of Canada’s leading licensed producers had entered a partnership with the national subsidiary of Sandoz (also a wing of Novartis). The deal, hailed as a milestone for the arrival of cannabis in the corporate economy, called for joint research and co-branding by British Columbia’s Tilray and Sandoz Canada.
Big Booze is also pursuing synergy with Big Bud.
CNBC reported in August 2018 that the Canadian subsidiary of Molson Coors had entered into a joint venture with the Hydropothecary Corporation, a Quebec licensed producer, to produce cannabis-infused drinks for the Canadian market. Lagunitas, a California beer brewer owned by the Dutch giant Heineken, is already marketing a cannabis-infused sparkling water brand called Hi-Fi Hops. Yes, it contains hops like beer, but contains no alcohol — just THC. It’s being marketed in California, where beer now has to compete with legal pot. It seems the booze biz may be adopting an attitude of “If you can’t beat ’em, join ’em.”
Nearly simultaneously, one of North America’s top brewers sank $4 billion into the continent’s top legal cannabis cultivator. Shares of Ontario-based licensed producer Canopy Growth Corp jumped nearly 30% after beer giant Constellation Brands announced its investment in the Canadian company.
After years of lobbying against cannabis legalization, both Big Pharma and the alcohol industry have recently turned around on the question. Last year, the Wine & Spirits Wholesalers of America (WSWA) issued a policy position in support of states’ rights “to establish a legal, well-regulated, adult-use cannabis marketplace,” taking many observers by surprise.
The Case for a Tobacco-Cannabis Firewall
Among the various reasons for a legal firewall keeping Big Tobacco out of the cannabis industry is the danger of the addictive and carcinogenic products of the former being conflated with the decidedly safer and friendlier products of the latter in the public mind.
This was well illustrated in comments this week by the Republican Sen. John Cornyn from Texas. In a speech on the Senate floor ahead of hearings on the health impacts of cannabis, Cornyn questioned the push to end federal cannabis prohibition — and drew a dubious analogy to the tobacco industry.
“There’s no shortage of people who claim that marijuana has endless health benefits and can help patients struggling from everything from epilepsy to anxiety to cancer treatments,” Cornyn said. “This reminds me of some of the advertising we saw from the tobacco industry years ago where they actually claimed public health benefits from smoking tobacco, which we know as a matter of fact were false and that tobacco contains nicotine, an addictive drug, and is implicated with cancers of different kinds.”
This despite the fact that studies have demonstrated that moderate cannabis use holds no risk of lung damage — in vivid contrast to tobacco. And there is mounting evidence of the medical efficacy of cannabis for various ailments.
So, much of the progress that has been made in eroding the cannabis stigma in recent years could be reversed through its association with tobacco.
But more importantly, in the struggle between small producers and home cultivators on one hand and corporate cannabis on the other, the threat doesn’t just come from the tobacco industry. Maybe there’s a case for Sanders’ proposed firewall to be extended to the pharmaceutical and alcohol industries as well.
Of course, many of the giants of today’s cannabis landscape have arrived at their dominant position without infusions of capital from these other industries — pointing to a more intractable long-term dilemma.
TELL US, do you think cannabis should be sold by large corporations?