Going Green

#Cannabis/Marijuana #Consumer Goods
ProHub Comment

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.

Estimated Time 26 minutes
Difficulty Medium
Source Duke
10 / 100

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.

Clarifying Information

  1. Global use of tobacco has not declined and is even increasing in some areas
  2. NC Tobacco is interested in diversifying their portfolio of products
  3. NC Tobacco is normally focused on long-term profitability, but because this is a very new market they aren’t completely sure what else they should be thinking about.
  4. NC Tobacco only interested in entering the recreational market, as medical marijuana is highly regulated and requires the dispensary to be a not for profit organization. (Assume recreational dispensaries are for-profit)
Mock Interview
Interviewer

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.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
Score coming soon
Practice this case with AI Mock Interview

NC Tobacco Company, facing declining cigarette sales in the US, is evaluating entry into the recreational marijuana market in Washington and Colorado. Candidates must determine market size, evaluate buy/build/partner strategies, calculate NPV of dispensary acquisitions, and assess broader risks including PR, regulatory, and financing concerns.

Key Insights:

  1. Market Entry Framework: Systematically evaluate market size, entry strategy (buy/build/partner), economics, and risks
  2. Quantitative vs. Qualitative Balance: Strong math execution is necessary but insufficient—risk factors and strategic fit matter equally
  3. First-Mover Advantage vs. Reputational Risk: Positive NPV must be weighed against PR, regulatory, and consumer perception risks for a tobacco company
  4. Constraint Recognition: Limited dispensary licenses significantly favor acquisition (buy) over organic growth (build)
  5. Recommendation Under Ambiguity: Excellent candidates present the data-driven recommendation while acknowledging valid counterarguments and supporting either decision with sufficient rationale