EXCLUSIVE: How Much Competition Will Cannabis Companies Face From Big Tobacco And Alcohol?

The competition ahead in the cannabis market from tobacco, alcohol and pharmaceutical companies was a topic of discussion this week at the Benzinga Cannabis Capital Conference in Miami Beach. 

Competition: One area of concern for the cannabis market could be the continued entry of big companies entering the market as more states legalize.

“If you’re big tobacco, you want to blow up the dispensary model,” Greenlane GNLN CEO Nick Kovacevich told the crowd at the Benzinga conference.

Kovacevich said that the cannabis licensing model and regulatory issues could make it hard for big tobacco and alcohol companies to disrupt the cannabis market. Instead, tobacco and alcohol companies would need to make acquisitions and buy into the market instead of launching new operations.

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Challenges: Among the biggest challenges for consumers is the placement of dispensaries due to regulations.

Canada, which federally legalized cannabis in 2018, had a rollout that was far from smooth. 

High Tide Capital Markets Advisor Vahan Ajamian said that when cannabis launched in Ontario, there weren’t enough dispensaries. Some territories have faced issues of having too many dispensaries in one area and not enough in another, leading to consumers having to drive hours to get product. 

WM Technology MAPS VP of corporate development Greg Stolowitz agreed and said one of the greatest challenges for the cannabis market is not having enough stores to meet demand.

Stolowitz would like to see more licenses so consumers don’t have to drive as far for pot.

Growth Of Vaping: One area that has seen growth and could continue to is vaping, according to Kovacevich.

“We suffered through that vape crisis,” Kovacevich said.

Now, consumers are switching to vaping, with around 30% of users preferring this method.

Kovacevich said consumers were scared of this method due to bad apples that weren’t following legal requirements.

“That’s the reason why customers should buy legal. We need people to convert and buy legally.”

During the pandemic, people also switched to consuming more edibles due to the effect of the COVID-19 pandemic on people’s lungs, he said. 

“In terms of vaping, I think it’s here to stay.”

Photo by Dez Smith.