What Marlboro's investment in Cannabis Signals

And how we can prepare for corporate giants.

Corporate Cannabis: What Marlboro’s Investment in the Cannabis Industry Means.
December 12, 2018 The Evergreen Market

With giants like Marlboro and Corona positioning to enter the cannabis arena what does the future hold for the little guy?

The news of big corporate companies like Marlboro and Coca-cola positioning themselves to enter the cannabis industry has created some question marks for what that exactly means pertaining to the future of legal cannabis in Washington as well as other legal states. As it currently stands there are certain strongholds in place keeping corporate giants from taking over recreational weed. Many companies are waiting for it to become federally legal, for example. Until that happens, cannabis transport across state lines is still illegal trafficking (thanks to it’s schedule 1 drug status) and the potential for growth is limited compared to what these national companies are interested in.

Eric Gaston, Evergreen Market co-founder and president of C.O.R.E. (Cannabis Organization of Retail Establishments) answered a few of my questions regarding the future of recreational cannabis in Washington State.

 

Now that Marlboro has invested in the cannabis industry, in your opinion, what is the greatest worry and also the greatest good that could come from this? Do you feel similarly or differently about Corona, Blue Moon, or Coca Cola?

Eric Gaston is no stranger to business or legislation so corporate giants like Marlboro don't scare him.

Eric Gaston presents at the Eyes on Renton breakfast presented by the Renton Chamber of Commerce.

“While I believe that the crazy amount of interest in our industry is going to ultimately change the narrative of cannabis from one of illicitness to one of normalcy, the road to this eventuality is likely going to have a few potholes. In this case, I worry that big tobacco will bring some baggage born of nearly a century profiting from addiction, pesticides, and a lack of candor to the consumer. I do think that their prowess in commercial agriculture will create efficiencies that can come only from years of practice and deep pockets. This is also likely to result small farmers getting squeezed out by much larger operations – we are seeing that already in Washington with growers who lack the resources of a Marlboro (or other corporate giant).

My concerns with Corona, Blue Moon, or Coca-Cola are less alarmist, but still raise the specter of commoditizing cannabis. Corporations are driven by profits and are answerable to shareholders first, consumers are almost always a distant second. What makes our industry unique is that it is occupied by small operators who by and large have a genuine passion for cannabis and for the community of cannabis users. My fear is that this focus on the people, product, and culture of cannabis will ultimately be overshadowed by a larger focus on profits. Big business will care more about profit than quality, and the consumer (and our culture) will suffer for it. There will be exceptions to this, but right now there is no “Budweiser” in our industry, which means our entire industry is comprised of “craft brewers” – I love that, and wish that it could remain that way.”

 

What are the top two or three major corporations (other than Marlboro, etc) that you personally are in some way expecting to jump in to legal weed and why?

“I think the big players are already in the industry, but on the down low. As soon as the Federal laws change to allow for institutional money to engage our industry, big business will already have a landing pad. I expect to see some major retailers, big pharma, tobacco, and liquor companies.

Washington has done what it could to keep these outside interests at bay, to the benefit of small businesses (owned by residents), but the walls are cracking and out of state money is likely to be in play after the next legislative cycle – paving the way for consolidation and corporate dollars. While this will ultimately make Washington more competitive with the rest of the country in the conventional sense (profits, big brands, etc.), I fear that the small farms (and the myriad of products they represent) will be a casualty. This is a shame, as it is this variety and the uniqueness of our products that makes Washington state the best place in the world for a consumer to buy cannabis.”

 

If not federal legalization, what is the best path forward for legal cannabis in the U.S.?

“I like a State’s rights approach, where each State is free to create its own market while at the same time it remains federally prohibited. This would help to keep large corporations out of a market that is still finding its way. There is currently legislation in the works that would allow for this, as well as easing banking restrictions and allowing cannabis businesses to be treated like any other business for tax purposes.

Oversupply is still going to be a challenge, as there is far more cannabis being produced than can be consumed. This oversupply has led to lower prices and higher quality (as vendors fight for shelf space). While this is great for a consumer, it is not so good for farmers trying to make a living. I would like to see a higher wholesale price mandated at the retail level, which would allow those growers who are spending the money to grow quality flower to make a living (it’s hard to compete when there are people selling schwaggy poison for $0.15 a gram).”

 

As president of CORE, what is the highest priority on the retailer

Senator Warren and The Evergreen Market supporting cannabis legalization

Eric Gaston and Elizabeth Warren present and accounted for in Washington D.C. to support cannabis legislation.

group’s agenda?

 

“I think our highest priority is to become better aligned as an industry and endeavor to take care of each other, which in turn will allow us to take care of our customers. Again, I firmly believe that our State has the best legal cannabis market in the world – and I have visited almost all of them. Washington state is the birthplace of authentic, original, cultural, game changing, brands. Starbucks. Microsoft. Amazon. Nordstrom. Nirvana. Hendrix. All are children of Washington, born of our unique, quirky, independent Pacific Northwest weirdness. I believe that Washington state can make this same indelible mark in the emerging landscape of cannabis, and I believe that this is something worth fighting for.”

 

As part of his position in C.O.R.E. as well as his passionate investment in our still evolving industry, Eric is active in cannabis legislation and advocacy. Even with Washington State having the greatest legal cannabis market, there is room to improve and prepare for when the national floodgates open.

 

What can we do to fight a corporate cannabis takeover?

Washington State placed a limit on how many licenses one entity can own. This double edged sword serves good by preventing a monopoly in the industry, but unfortunately also limits the amount of success for the local small business owner that picks up a license. Currently the state limits the growth of smaller, local retailers. Retailers are still small enough to be picked off by corporate giants even at the maximum number of five licenses.

Producer/processors’ current price gouging for shelf space makes it even more difficult for them to remain contenders against the Marlboro types. In short, if we want to keep our local companies in the fight, we need to consider removing the leash on retailers and letting them grow. Additionally, we must find a way to end the ‘race to the bottom’ for producer’s wholesale pricing. At the end of the day, it will be the customers who hold all the power by being smart about where they choose to spend their money.

 

Written by: Nikki Marangon


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