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  • Facebook’s First Director of Monetization Likens Company to Big Tobacco

    Facebook’s First Director of Monetization Likens Company to Big Tobacco

    Tim Kendall, Facebook’s first Director of Monetization, said the company had taken a page from Big Tobacco’s playbook.

    The Subcommittee on Consumer Protection and Commerce of the Committee on Energy and Commerce is looking at the role of social media in “Mainstreaming Extremism: Social Media’s Role in Radicalizing America.” Kendall is testifying based on his role as Director of Monetization from 2006 through 2010, giving him a unique insight into the inner workings of the company.

    The social media services that I and others have built over the past 15 years have served to tear people apart with alarming speed and intensity,” said Kendall. “At the very least, we have eroded our collective understanding—at worst, I fear we are pushing ourselves to the brink of a civil war.

    He then goes on to highlight the methods Facebook used, essentially taking a page out of Big Tobacco’s playbook in an effort to make their product more addictive.

    Tobacco companies initially just sought to make nicotine more potent. But eventually that wasn’t enough to grow the business as fast as they wanted. And so they added sugar and menthol to cigarettes so you could hold the smoke in your lungs for longer periods. At Facebook, we added status updates, photo tagging, and likes, which made status and reputation primary and laid the groundwork for a teenage mental health crisis.

    Allowing for misinformation, conspiracy theories, and fake news to flourish were like Big Tobacco’s bronchodilators, which allowed the cigarette smoke to cover more surface area of the lungs. But that incendiary content alone wasn’t enough. To continue to grow the user base and in particular, the amount of time and attention users would surrender to Facebook, they needed more.

    Tobacco companies added ammonia to cigarettes to increase the speed with which nicotine traveled to the brain. Extreme, incendiary content—think shocking images, graphic videos, and headlines that incite outrage—sowed tribalism and division. And this result has been unprecedented engagement — and profits.

    Needless to say, Kendall’s testimony is likely to give weight to officials concerns about the role the platform has played in societal problems. Explaining Kendal’s testimony may become the biggest challenge for Facebook executives.

  • Marijuana Legalization: Could It Create Big Tobacco 2.0?

    Back in 2013, when former head of Microsoft corporate strategy Jamen Shivley announced that he was intent on developing an upscale medical marijuana retail concern that he dubbed “the Starbucks of marijuana”, heads turned.

    Shivley claimed this business as his birthright. The company he started is called Diego Pellicer (pronounced Pay-ee Sayer). Diego Pellicer was a real person. According to the company’s website:

    “Diego Pellicer … was the Spanish colonial vice governor of Cebu, a major island in the Philippine archipelago, [and] grew to become the largest grower of hemp in the world.”

    But Diego Pellicer is also Jamen Shivley’s great-grandfather.

    When Shivley announced his intention to become the Jeff Bezos of pot, Mexican president Vicente Fox stood behind him, in hopes that such a legitimate concern would ease the illegal business running out of his own country.

    A few months later, Shivley’s plan was catching some flack from the local pot growers and dispensers. They did not want this new thing to turn into another iteration of Big Tobacco.

    Diego Pellicer CEO Ron Throgmartin reportedly thought it was inevitable that medical marijuana would stay small indefinitely. But Diego Pellicer kept a low profile and waited. Still Shivley believed that he could “mint more millionaires than Microsoft in this business.”

    Now, in a piece in the Dallas Morning News, Kevin Sabet looks at the possibility of a Big Tobacco 2.0 with its hands in medical marijuana.

    One area of expansion is in the marijuana vending machine business. “It is like a gold rush,” remarked one vending executive. Sabet reports that there is also a new private equity firm that only invests in marijuana companies.

    Sabet sees the rise of vending machines, equity firms, and Shivley’s “Starbucks of marijuana” as a harbinger of no good to come. He compares these early days of marijuana legalization to the early claims of Big Tobacco that their product was actually good for you, recommended by doctors. But he argues that it is still an industry built on the premise of creating addicts.

    “It is true that marijuana is not as addictive as tobacco (in fact, tobacco is more addictive than even heroin),” Sabet writes. “And marijuana and tobacco differ among other dimensions of harm. Tobacco, though deadly, is not psychoactive. And unlike marijuana, one can drive impairment-free while smoking tobacco.”

    Sabet’s concern is that, although marijuana is less addictive than tobacco, it has intoxicating effects that tobacco does not.

    But it would seem that these effects puts marijuana it in more of a parallel with alcohol. In fact, this is the approach that almost everyone takes with marijuana: keep it away from kids; keep it out of the vehicle; keep it away from the workplace. This is a very different model from tobacco.

    The notion of what a bigger business model might do to the marijuana industry is worth looking at, but Sabet’s parallel seems to be flawed. A look at Big Alcohol might be more revealing and accurate.

  • Could Marijuana Interest “Big Tobacco” Companies?

    With Colorado legalizing marijuana for recreational use, making it legal to grow up to six plants for an individual, other states are looking at getting on the weed wagon. Many already are, decriminalizing possession of smaller amounts of pot, as well as legalization for medical purposes.

    Sales in Colorado have been stellar, and the state is reaping the benefits, big time. In the first month alone, licensed dispensaries hit a whopping $14 million dollars in sales, and the state received a cool $2 million of those proceeds.

    Gov. John Hickenlooper (D) recently announced that he expects that the combined sales from both legal medical and recreational marijuana in the state will reach nearly $1 billion in the next fiscal year — about $600 million of that is projected to come from just recreational sales. The state stands to collect at least $134 million in taxes and fees.

    And then there is big tobacco, with companies seeing a serious decline in sales in the U.S., are forced to turn their markets to other countries, and pushing their deadly fares in China, Russia and India, to name a few. Smokers in the US have dropped to less than half of the people who smoked in the 1950’s. Smokers are becoming a thing of the past. It is a known fact that tobacco kills and as such, many states have banned smoking in any public buildings or structures.

    With the popularity of tobacco declining, and the popularity of marijuana on the rise, following the medical marijuana legalization in 20 states and recreational legalization in Colorado and Washington, and at least 58 percent of Americans agreeing that it should be legalized, it appears pot already has replaced tobacco smoking in America, and the tobacco industry would be crazy not to get on board.

    With all of this cash to be made from an alternative smoking product, why not? However, when the largest tobacco company in the U.S., Philip Morris, was asked the question about the future intentions of its company, spokesman Bill Phelps told CBS: “We have a practice of not commenting or speculating on future business. Adding, tobacco companies are in the business of manufacturing and marketing tobacco products.”

    But one can rest assured, if governments continue to treat smoking as the public health menace it is, the tobacco industry may not have a future at all, at least in the U.S. And as marijuana popularity continues to grow, thereby inadvertently replacing tobacco products, it could save their imminent decline, so it makes perfect sense.

    But there is another entity that could take the marijuana boom to a new level, and that is the liquor industry.

    The Washington State Liquor Control Board is receiving plenty of applications from people who want to be certified to be able to grow pot legally, even though the agency is not yet soliciting such applications. The agency’s spokesman Brian Smith said Tuesday that some applications so far have come from people who have long been growing marijuana when it was against state law.

    “We’re getting a lot of interest from people that want to be producers,” Smith said. “Some say they have been growing it illegally until now.”

    Where pot will go commercially is still unknown, but it is bound to happen soon.

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