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Vice Wars: Tobacco, Alcohol and the Rise of Big Marijuana

Many supporters of legal marijuana hope for a cottage industry of scrappy growers, collectives and dispensaries. Few expect to get it.
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Drug reformers always dreamed of a world where users were safe and dealers were free. Then that world arrived, at least in the states where marijuana is legal. Now they see a new nightmare on the horizon: Big Pot.

The specter of corporate cannabis loomed large on Tuesday, when the family of Bob Marley appeared on NBC’s Today Show, announcing the creation of Marley Natural. The world’s first global brand of marijuana launched with the support of $50 million dollars in private equity and the same marketing machine that took Starbucks to the masses.

“We see the inevitability of large, well-run companies to sell cannabis,” said Brendan Kennedy, the CEO of Privateer Holding, the Seattle-based company that’s behind the Marley brand. “That train left the station a long time ago.”

Less than a year after Colorado and Washington state opened the first commercial pot markets, and less than a month after two more states voted to follow suit, such frank capitalism has shocked the smiling wise-men of weed and their crusading friends in the legalization movement. Most hoped the market would remain a cottage industry of small-scale growers, collectives and dispensaries. Few expect it will.

“My concern is the Marlboro-ization or Budweiser-ization of marijuana,” said Ethan Nadelmann, executive director of the Drug Policy Alliance. “That’s not what I’m fighting for.”

“It’s a cultural thing,” said Keith Stroup, founder of the National Organization for the Reform of Marijuana Laws, the country’s oldest consumer pot lobby. “All of us have at least a little bit of discomfort with the corporate stuff.”

But they’re not the only ones who are worried. Alcohol and tobacco interests are also keeping an eye on the burgeoning market. The alcohol industry in particular has been communicating with representatives of NORML, DPA, and the Marijuana Policy Project, according to sources on both sides of the table.

They want to know whether pot will be a friend or a foe—a complement to their products, or, as some marijuana reformers have argued, an alternative that could sap America’s love of drinking. The marijuana lobby accepts these overtures out of a combination of curiosity, realism, and smart strategy. If a takeover is inevitable, they figure, it’s better to be prepared.

“Beer, wine and tobacco people—I’ve met with them all,” said Allen St. Pierre, the executive director of NORML, which is above all a consumer rights organization. He doesn’t love the idea of Big Pot, but he believes it will help guarantee that users get a quality product at a fair price.

He recalled two lunches in Washington, D.C., (one at DC Noodles, the other at Pizza Paradiso); several office visits; and a grand tour through Savor, the district’s popular beer and food conference.

“It’s been so surreal,” he said, reflecting on more than two decades as a marijuana lobbyist, all of it spent outside the warm circle of the other vice industries.

“I always dreamed of these meetings,” he added. "I pictured balding guys, with comb-overs, red suspenders, eating in quiet restaurants—and lo-and-behold that’s what they’ve been.”

St. Pierre hopes to create a “Dionysus lobby,” built on the shared interests of alcohol, tobacco and pot. All three industries want low taxes, the right to advertise freely, and the ability to make convenient sales, he said.

But so far the legal marijuana markets in Colorado and Washington are plainly over-regulated, he added, prejudiced against pot consumers, who should be allowed to buy marijuana as easily and safely as they do beer or wine or a pack of smokes.

“I’ve tried to say, ‘look, none of us should be hiding,’” he said. “All of us are involved in a problematic adult consumer product and all of us enjoy using one or more of these products,” he continued. “What do we want? We can get it down to four words, almost a Wal-Mart bumper sticker: ‘Best product, lowest cost.’”

He said that one of his warmest receptions came from the Distilled Spirits Council, or Discus, which represents the leading producers and marketers of liquor in the United States. One day last July a senior member of Discus called St. Pierre, according to an account of the conversation that St. Pierre emailed to a colleague.

That account along with a follow-up interview with St. Pierre illustrates how marijuana has sent a twinned-bolt of fear and excitement through the spines of alcohol executives. The Discus executive congratulated the industry on its wins at the ballot box, St. Pierre recalled.

“What do we want? We can get it down to four words: ‘Best product, lowest cost.’”

The executive also assured the marijuana lobby that the nation’s largest liquor makers would not fight legalization as long as the public supported it.

He estimated that a third of Discus board want to get into the marijuana business, a third oppose legalization, and a third believe that the industry should take a neutral position, according to St. Pierre’s recollections.

But Discus conveyed a threat as well, a complaint against the way marijuana advocates were demonizing alcohol in their campaigns. “Marijuana is safer than alcohol,” is perhaps MPP’s most used slogan in fact, and the group relentlessly argues that America would be a healthier place if we put down our tumblers and decided to toke.

If such talk continued, the Discus rep said, according to St. Pierre’s recollection, the liquor industry would have no choice but to launch a counter-attack. That, St. Pierre agreed, wouldn’t be good for anyone.

Frank Coleman, Discus's vice president of public affairs, acknowledged the industry’s frustration with the claim that “marijuana is safer than alcohol,” and confirmed contact with NORML. However, he strongly denied that a third of America’s distillers want to get into the marijuana business.

"What others in our organization have repeatedly and publicly stated is that the distilled spirits industry takes no position on the issue of legalization," he wrote in an email. "Our major concern is that groups—such as MPP—not demonize the alcohol industry as part of their strategy."

He then fired back at MPP's line of argument, which is often picked up in the press. He attached a copy of "Adverse Health Effects of Marijuana," a study published this summer in the New England Journal of Medicine, authored by the head of the National Institute on Drug Abuse.

"You might focus on the memory loss issues," he wrote. "As with everything we work on, we want to be sure that accurate science is used. That has not always been the case in media."

The Beer Institute, which represents the nation’s 2,800 breweries, and the Wine & Spirit Wholesalers of America also confirmed meetings and calls with the marijuana lobby but denied wanting to get into the business.

All three show signs of the same double vision of marijuana as both opportunity and threat. Earlier this year, Brown-Forman Corp., which owns Jack Daniel's, told investors that the spread of legalization could hurt its sales. The Beer Institute is officially neutral on the question of marijuana legalization. But Chris Thorne, the vice president of communications, seemed to take a shot at the new industry and its claim as a safe alternative to booze.

“We believe that it’s misleading to compare marijuana to beer,” he said in a phone interview. “We are committed to responsible advertising, working with public officials and law enforcement, and supporting communities in the countries where we operate. I don’t think any of that is true for marijuana. There are a lot of unanswered questions about marijuana—questions about its effect on the brain, and on young people—and we think legislators would be wise to look at these questions as they consider the legalization of marijuana.”

But at the same time, the Wine & Spirit Wholesalers of America may be ready to make marijuana work for it. Earlier this year, in a letter sent to all fifty U.S. attorneys general and governors, the president of the WSWA argued that if a state decides to legalize marijuana, it should regulate it with the same three-tiered distribution system set up for alcohol after prohibition—a move some analysts interpreted as a sign that alcohol companies would be open to moving pot as well.

“The question of marijuana legalization and decriminalization is a question best left to state legislatures,” said WSWA president Craig Wolf, in a statement to NBC News. “But the three-tier regulatory system enacted after repeal of Prohibition does offer a model that we believe has proven remarkably successful.”

Tobacco executives, meanwhile, have been studying the marijuana industry for years, according to Stanton Glantz, a professor of medicine at the University of California, San Francisco. His research has drawn an 80-million page archive of tobacco industry documents, spanning the 1960s to the late 1990s. Many of the documents reference softening pot laws, rising use, and the dual threat/opportunity of a third major vice industry.

In early 1970, for example, an unsigned memorandum distributed to Philip Morris’ top management read, “We are in the business of relaxing people who are tense and providing a pick up for people who are bored or depressed. The human needs that our product fills will not go away. Thus, the only real threat to our business is that society will find other means of satisfying these needs.”

“These documents reveal that since at least 1970, despite fervent denials, three multinational tobacco companies, Phillip Morris, British American Tobacco, and RJ Reynolds, all have considered manufacturing cannabis cigarettes,” according to an investigation by Glantz and two colleagues, published this summer in Milbank Quarterly, a peer-reviewed journal of public health.

As they have for years, Phillip Morris, RJ Reynolds and British American Tobacco said that these documents no longer reflect their focus, which is entirely on tobacco products. Glantz and many others, however, remain convinced that tobacco companies are watchful and waiting, especially since about 2005 when marijuana use overtook tobacco use among American teenagers.

“They all have a plan for marijuana,” said Gerry Sullivan, who manages the popular Barrier Fund, formerly known as the Vice Fund, a collection stocks tied to guns, booze, and tobacco companies. “If they don’t have a plan they should all be fired.”

Just a few years ago the threat of corporate pot was a distant concern. At the first marijuana business conferences, for example, organizers saw poor turn-out at panels that conflicted with 4:20pm, the daily happy hour of weed. They watched agog as attendees picked up their name tags wearing flannel pajama pants or a Cheech-n-Chong t-shirt.

“It was a cavalcade of crazy,” remembers Kennedy of Privateer. “Four years ago those conferences had everything you would imagine in a bad Hollywood movie about cannabis.”

By contrast Las Vegas hosted two massive pot gathering this month, the Marijuana Business Conference & Expo and a “pitch forum” run by The ArcView Group, one of the field’s new investment firms. At both events men and women wore suits and sipped San Pellegrino.

But despite their new corporate clothes, many remained afraid of a corporate takeover, according to Chris Walsh, who founded the expo three years ago.

One fear is that the capitalists will go too far as the laws soften. They’ll flip a switch to produce Marlboro Greens (or, for that matter, Marley Natural), and turn a cherished plant into a cheap commodity. There’s an old joke about marijuana: if it’s legal, it won’t get you high.

Knowing all this, Walsh added a new panel to this year’s conference, a special session on tobacco and alcohol companies, and their potential interest in pot.

The name says it all: “I called it, The Pending Invasion,” said Walsh. “That reflects how a lot people feel.”