Wall Street Analyst Argues Big Tobacco Will Soon Have To Answer Questions About Pot
REUTERS/Ben Nelms
The big tobacco companies have also been tight-lipped about the issue.
But RBC Capital Markets' US tobacco-research team thinks that the current progress toward legalized weed means that Big Tobacco could soon have to start answering questions about this.
Here's an excerpt from a research note that was just circulated:
Dialogue on marijuana mounting
During the elections this past November, Oregon, Washington DC and Alaska joined Colorado and Washington in essentially legalizing the recreational use of marijuana. Today there are 27 states, as well as Washington DC, which have legalized marijuana in some form or have decriminalized the drug. A few additional states are slated to do the same next year. Today, for the first time ever (according to the PEW Research Center), the majority of Americans believe marijuana should be legal-a likely critical topic for the 2016 presidential election. With this quickly changing view of marijuana across the US, we believe it is only a matter of time until investors start asking questions about how it will fit into the bigger picture. And while every tobacco company management we have spoken to on this topic has been unwilling to discuss it, we believe full federal legalization of marijuana in the US would likely lead tobacco companies to reconsider this space.
And by "reconsider this space," the analysts mean that big tobacco companies like Reynolds American, Lorillard, and Altria will need to start running the cost/benefit numbers soon.
Here are some marijuana facts from RBC:
- "Marijuana is now legal in some form or decriminalized in 27 states and Washington DC"
- "More than half of the US adult population believes that marijuana should be legal, the highest level ever"
- "Millennials have especially been a key driver of the push to legalize marijuana, with 69% of the millennial population believing the drug should be legalized. Importantly though, all generations have become more in favor of legalization in recent years"
Those second and third points are crucial because they mean more and more marijuana-friendly politicians will be voted into office to push through this legislation.
Pew via RBC Capital Markets
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