The long-term outlook for retailing cigarettes in the US looks pretty grim. For the past 30 years, the average consumption has been decreasing dramatically, while the average price has been increasing. There is little to no public, celebrity, or medical support for the habit. Advertising is illegal, and older smokers are drying faster than teens are beginning to smoke.
In the past 2 decades, cigarettes have been expelled from public buildings, then bars and restaurants, and they are now being outlawed in some public, outdoor spaces. If these trends continue, smoking rates are expected to be between 12% and 3% by the year 2030[1]
- Therefore, if big tobacco wants to survive as an industry, it needs to diversify. Here are a few things that tobacco companies have going for them:
- They have the machinery to turn crops into cigarettes on a large scale basis
- They have preexisting relationships with distributors to deliver their product to consumers
- They are expert marketers
- They have a multimillion dollar lobbying group in Washington.
- Tobacco companies, (even with existing bans on radio and tv advertising) have deep-seeded brands and images that could potentially be tied in to different products.
Given all of these strategic capabilities, I believe that cigarette companies should move their lobbying efforts towards marijuana legalization, then produce and sell marijuana cigarettes. CNBC expects the current American marijuana market to be a $40 billion per year,[2] and that market is comprised of just a handful of states that have legalized medical marijuana.
Tobacco companies could combine products and sell cigarettes containing both THC and nicotine, also they could use their global supply chain to import cannabis from around the world and excel in both in quality and quantity. Above all, big tobacco is one of the few industries whose public perception could actually improve from diversifying into the marijuana industry. [3]
Bravo Retailing and Encores 
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