Will National Legalized Marijuana Help or Hurt Big Pharma, Tobacco and Alcohol?

pillsOn December 7, marijuana became legal in the state of Washington, adding to the list of states that have moved toward legalizing or decriminalizing the drug. Will this be a national trend or a state by state adoption? No one knows for sure, and the verdict will be out for some time. In a country desperate for tax revenue, and an aging population that grew up with marijuana as part of the landscape, the concept of national marijuana legalization is certainly not out of the question. If that is the case, does any sector have something to lose?

The beer and spirit industry has always cast a wary eye at legalized marijuana. The last thing Diageo PLC (NYSE: DEO), maker of popular liquor brands like Smirnoff, Johnny Walker and Captain Morgan, wants to see is marijuana cannibalizing their sales. Based on current industry sales numbers, the wide availability of marijuana already, and the probability of extremely restricted and regulated access for anyone under 21, the liquor industry probably has little to fear.

To many, it seems that Altria Group Inc. (NYSE: MO) or Reynolds American Inc. (NYSE: RAI) would have a big interest in legal marijuana. After all, the principal products of both companies are cigarettes. They have distribution, manufacturing and retailing down to a science. Sales of cigarettes by case volume have declined for years. A new product line could be just what they need to resume margin growth. When national prohibition of pot ends, expect both companies to quickly ramp up for business. Altria seems well prepared, by having already secured the domain Altriamarijuana.com.

One other big and powerful industry might have something to lose: Big Pharma. It is estimated that the global pharmaceutical market will be worth more than $1 trillion by 2014. Industry giants Merck & Co. (NYSE: MRK), Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE) and Abbott Laboratories (NYSE: ABT) have warded off patent cliffs for years using their large cash reserves to acquire smaller companies with robust product pipelines. The last thing these companies want see is current product lines that are producing dependable revenue flow to be dented by legal marijuana. The big pharmaceutical firms have a lot of money to spread around, so when it comes to lobbying efforts, very few have this group's clout. One thing it wants is for marijuana to remain illegal.

There are countless maladies where the ingestion of marijuana has been believed to help alleviate or control the symptoms. These include glaucoma, multiple sclerosis, AIDS-related complications, Crohn's disease, fibromyalgia, chemotherapy complications and others. Big pharma has tried to come up with their own pot pill. There are more than 400 chemicals in marijuana, 80 of which are called "cannabinoids." Drug companies have tried reducing it to one chemical and results have been poor. Researchers find that when you reduce cannabis to just tetrahydrocannabinol (THC), you lose efficacy and gain side effects.

In a book critical of the pharmaceutical industry called "Our Daily Meds," author Melody Petersen offers a statistic showing more than 100,000 people die each year from prescription drugs. This includes death from abuse and overdose, side effects, misdiagnosis and interaction error. Many physicians may currently be reluctant to prescribe legalized marijuana. A national mandate would provide many physicians with the moral and ethical cover they need to be more aggressive if they feel medical marijuana may help their patients. Then it is very possible that medical marijuana prescriptions will put a dent in many currently prescribed drugs. This is not an outcome that big pharma is likely to tolerate well, unless they get in on the action themselves.

Lee Jackson


Filed under: 24/7 Wall St. Wire, Consumer Product, Drug companies, Economy, Food, Personal Finance, Politics, Regulation, Tax, Tobacco Tagged: ABT, DEO, JNJ, MO, MRK, PFE, RAI

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bob

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December 11 2012 at 6:57 PM Report abuse rate up rate down Reply
420 College

Oh snap....Steve DeAngelo has no business in this business conference, if he knew anything about medical marijuana business, he wouldn't have claimed millions in business experiences, that's why the IRS is after his ass in a major way. A judge in Cali threw out the case his landlord had against his claiming it was unconstitutional to evict him, but there is no news from the IRS yet, that's another monster that will eat him up. Also, if he knew anything about this business he wouldn't have a "purchasing" manager who deals with "vendors" about their "donations" that are being "reimbursed" with dollar bills. Marijuana collectives in California are supposed to provide themselves with their own product and marijuana sales are illegal. So, what is the purchasing manager purchasing if selling marijuana is illegal?? How does a collective deal with a vendor when they are supposed to provide themselves with their product?? How does a vendor make a donation?? How do you reimburse a vendor for a donation?? get educated people... http://420college.org

December 11 2012 at 3:07 PM Report abuse rate up rate down Reply
420 College

of course it will hurt the pharma industry. why do you think the gov is so uptight about removing it from Schedule 1?? http://420college.org

December 11 2012 at 3:07 PM Report abuse rate up rate down Reply
Jose Gonzales

Legalizing marijuana hurts drug dealers, law enforcement, prisons, counseling services, big pharma, and many others.

You will see them screaming over the next few years but they will be squashed like bugs.

December 11 2012 at 12:41 PM Report abuse rate up rate down Reply
BillG4

We'll see what happens. So far, there really hasn't been a lot of lobbying against marijuana legalization by pharmaceutical companies or the beer and spirit industry. That could be because there was no chance of it happening until now and they don't like wasting money. Could also be that they aren't too worried about marijuana. I don't think legal marijuana is going to hurt their business much if at all. Most who want to smoke pot are already smoking it. Precious few want to smoke pot but won't just because it's illegal. There are plenty of other good reasons not to smoke pot that have nothing to do with its' legal status. Pot has basically been legal in the Netherlands since the mid 1970s and everybody there isn't smoking it. In fact, people in Holland are less likely to even try pot than people here, and they're allowed to have it, grow a little, buy it from shops. Marijuana just has limited appeal and most who want to smoke it are already smoking it. Legal pot isn't going to hurt "Big Pharma" or "Big Beer" or big anything, except Big Crime, Big Cartels, maybe Big Corporate Prison Industrial Complex, Big Prosecutors who love Big Asset Forfeitures, etc.

December 11 2012 at 11:19 AM Report abuse rate up rate down Reply
jway

Something keeps Congress from considering marijuana legalization. It'd be a sad thing if it was money from these big corporations!

It is fundamentally WRONG to cause massive harm to one group of Americans just to protect the interests of another group. 800,000 marijuana arrests/year is NOT worth the paychecks and bonuses paid to pharmaceutical and alcohol executives!!

Marijuana is significantly milder, safer and less addictive than alcohol. There is NO good reason why we shouldn't be allowed to choose marijuana instead of alcohol!

December 11 2012 at 10:11 AM Report abuse rate up rate down Reply
Richoux

"There are countless maladies where the ingestion of marijuana has been believed to help alleviate or control the symptoms." Believed is the key word. Now that it is legal, the research can be done. And the industry will come up will pills with the uniform concentrations that doctors demand. Its what they have always done.

December 11 2012 at 10:03 AM Report abuse rate up rate down Reply
Alan Mason

Cannabis use is already very wide-spread, and is de-facto legal in so many places with a little caution, so its hard to see how this will negatively affect the alcohol industry. The cannabis and alcohol high are quite different and not mutually exclusive. As for the tobacco industry, this might not be the opportunity it might seem to be. Cannabis does not smoke well in the dried out condition found in packaged cigarettes, so some research would need to be done there.

As for the writer's remarks about Big Pharma, they point out why an increasing number of people no longer trust the drug companies. An industry whose products kill more than 100,000 people a year in the US is fighting the legalization of a drug that has never killed anyone because they can't patent it. They may never be able to - the effects of cannabis are the result of the interaction of the dozens of cannabinoids in it., and they are in different proportions in different strains, which is why dispensaries in medical marijuana states carry so many different strains.

December 11 2012 at 9:46 AM Report abuse rate up rate down Reply