This case tests the candidate's ability to structure a market entry decision using both quantitative analysis (market sizing and NPV valuation) and qualitative risk assessment. The case progresses logically from market evaluation to entry strategy selection to financial analysis, requiring candidates to synthesize multiple analytical frameworks and maintain professional judgment on a potentially controversial topic.
Over the last few years some states have legalized medical marijuana sales on a prescription basis, and some have even legalized recreational use. The cultivation and sales of marijuana most often take place in small storefronts called dispensaries. In most states, limits have been created on how many dispensaries are allowed to exist at any one time.
Your client, North Carolina Tobacco Company, made $8 Billion in revenue and $2 Billion in profits last year, but has seen declining use of cigarettes in the United States, which currently makes up 25% of its total revenue and profit. NC Tobacco is considering moving into the recreational marijuana market. What should they do? Assume that federal regulations are not a concern in this case.