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   From: a425couple@hotmail.com   
      
   Could Big Tobacco Become Big Cannabis As Marijuana Business Soars?   
      
   BILL PETERS9:03 AM ET   
   A day before April 20, when a dome of pot fumes will account for   
   approximately 90% of the smog over Los Angeles and its hot marijuana   
   business, Big Tobacco stocks giants Altria Group (MO), sister firm   
   Philip Morris International (PM) and British American Tobacco (BTI)   
   tanked on fresh signs of declining demand.   
      
   X   
   The reason was that Philip Morris, which sells outside the U.S., fell   
   short of Q1 sales expectations, amid an ongoing consumer flight from   
   cigarettes in most of the world. Weaker-than-anticipated demand for   
   reduced-risk devices that aren't cigarettes, particularly in Japan, also   
   hurt.   
      
   One place where none of this is a problem, at least right now, is the   
   rapidly growing, quasi-legal marijuana business. More users, perhaps   
   accepting that they don't enjoy coughing or pot smoke's armpit-spice   
   smell, are turning to vaping devices. Some analysts say that trend could   
   be an opportunity for firms like Altria and Turning Point Brands (TPB),   
   which owns rolling-paper-maker Zig Zag and two vaping companies.   
      
   "Vaping is one of the fastest-growing segments in both nicotine and   
   cannabis," Cowen analyst Vivien Azer said in 2016. "Upon federal   
   legalization, Big Tobacco could leverage its expertise to explore the   
   legal cannabis market through vapor."   
      
   IBD Newsletters   
      
   She estimated then that Big Tobacco companies could nearly double their   
   underlying growth via cannabis. Overall, assuming full legalization, Big   
   Tobacco could scoop up around a fifth of the overall share of the   
   marijuana business by 2036, she said in a report then.   
      
   The marijuana delivery platform Eaze said last year that ready-to-use   
   products, which include vaping devices, for the first time made up a   
   greater portion of its sales than "flower," the industry's term for   
   buds. Vaporizers in November and December made up a greater percentage   
   of sales than dry, loose buds, according to data from the company, which   
   operates in California.   
      
   "Not a lot of people know how to roll a joint, or they don't have the   
   paraphernalia to consume the flower," Sheena Shiravi, Eaze's director of   
   communications. "So (with) prerolls, they can just consume flower, or   
   even better, a vaporizer."   
      
   Marijuana Business An 'Exciting Opportunity'   
   Marijuana store products   
   Vaping products on display at Med Men. (Elaine Low/IBD)   
   Even so, people do, in fact, still roll joints. Turning Point Brands   
   said in March that "there will be a whole new audience of consumers" of   
   people rolling their own in Canada, where recreational pot legalization   
   kicks in this year. Turning Point Brands at that time said it widened   
   its offering of its Zig Zag Orange and King-Size Slim rolling papers in   
   Canada, and that its partners were "exploring additional opportunity   
   products" beyond this year.   
      
   At a conference in January, Turning Point Brands CEO Larry Wexler said   
   that it saw the marijuana business as an "exciting opportunity" that it   
   was still trying to understand.   
      
   He added: "I suspect that there probably are some people who buy our   
   products that were intended for tobacco — my lawyer's sitting here —   
   intended for tobacco and they go off and they credibly use it for other   
   products."   
      
   Even as it remains enthusiastic about the marijuana business, Turning   
   Point Brands said in January that it had no plans for any prerolled   
   products. Azer suggested that tobacco companies pushing   
   lower-health-risk products might not want the extra glare from   
   regulators that could come with trying to sell their own joints.   
      
   "The tobacco industry is highly scrutinized and highly regulated," she   
   said. "And that's true in the U.S. and it's true globally as well. Right   
   now, one of the key priorities for global tobacco companies are their   
   reduced-risk product platforms."   
      
   Pesticide Worries For Marijuana Business   
   The marijuana business, however, has its own big health problems. In   
   California, new cannabis industry regulations on pesticides take hold in   
   July. Those rules have raised fears that the vast majority of the pot   
   sold via dispensaries would come up short, choking off supply and   
   pushing prices higher. The changes would likely favor the state's small   
   portion of licensed, deeper-pocketed pot growers.   
      
   Despite the marijuana industry's rebranding efforts — the rustic-chic   
   packaging and the chipper, minimalist startup logos — a lot of pot is   
   still loaded with chemicals that are bad for you, a Rolling Stone   
   article from March notes. That story also notes that because marijuana   
   is illegal on a federal level, the EPA hasn't approved or rejected what   
   pesticides to use for pot the way it does for other plants.   
      
   Quiet Moves By Big Tobacco   
   Meanwhile, other tobacco companies have made quieter moves that may, or   
   may not, signal interest in the marijuana business.   
      
   Philip Morris International planned to invest roughly $20 million in   
   Syqe Medical, an Israeli company that makes a cannabis inhaler,   
   according to reports in 2016. Syqe "will develop technologies for   
   Phillip Morris that will help reduce health risks associated with   
   smoking," Reuters said, citing the Israeli news outlet Calcalist.   
      
   Philip Morris declined to provide any extra information beyond existing   
   press accounts. The overseas Big Tobacco firm said it "has no plans to   
   develop or commercialize cannabis products." Similarly, Altria, which   
   owns Philip Morris USA and spun off Philip Morris International a decade   
   ago, said "Marijuana remains illegal under federal law and Altria's   
   companies have no plans to sell marijuana-based products."   
      
   Marijuana store products   
   (Elaine Low/IBD)   
   Imperial Brands (IMBBY), the U.K. company whose brands include   
   cigarettes like Winston and Kool, last year appointed Simon Langelier to   
   its board. Langelier is a 30-year Philip Morris International veteran   
   who is also chairman of a medical cannabis company. Imperial, in a   
   release, cited his experience in "wider consumer adjacencies."   
      
   When asked about how Imperial was viewing the cannabis market, Simon   
   Evans, a spokesman for the company, said it is "tracking developments in   
   what is a fast-growing segment."   
      
   Evans stressed that Langelier's experience at Philip Morris was the main   
   reason for his appointment. But Evans indicated his cannabis industry   
   experience wasn't just an afterthought. "So, is it irrelevant? No. It's   
   not," he said.   
      
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