Tobacco giant Philip Morris is reportedly set to acquire Israeli cannabis company Syqe Medical for $650 million. The deal is primarily driven by Philip Morris' interest in Syqe's metered-dose inhaler, which dispenses precise doses of medical cannabis to patients. This is not the first time that a tobacco company has invested in the cannabis industry, with significant investments made in 2018 and 2019. However, this deal suggests that there may be differences this time.
One significant area of interest is in vaped cannabis delivery products. Vape products accounted for 28.1% of sales in the US cannabis market in 2020 and 2021, making them the second most popular product after pre-rolls. Vape cartridge sales exceeded $2.8 billion in 2022, representing 23% of the entire cannabis market. The increasing sales of these products indicate their potential to dominate the industry in the future, with projections valuing the vaped medical cannabis market at $22 billion in the next 10 to 15 years.
Furthermore, the Philip Morris/Syqe deal could suggest potential changes in federal regulations for marijuana. Following President Biden's announcement about pardoning federal convictions for simple marijuana possession, there is speculation about whether the federal government will re-schedule or de-schedule marijuana. The deal with Syqe, which hinges on securing FDA approval for its inhaler, indicates that re-scheduling may be more likely. This suggests that re-scheduling marijuana could involve significant FDA red tape and compliance, which Philip Morris may be preparing for.
Overall, this deal highlights the optimism of big tobacco companies about the future of the cannabis industry. Many investors are hoping for significant returns once marijuana is legalized federally and industry giants like big tobacco, pharma, and alcohol companies enter the market. While it may still be too early to celebrate, this deal further strengthens the belief that these industries are betting big on the future of cannabis in the United States.
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