I really don't think they are.
Is fast food in competition with grocery stores?
People spend LOTS of money on LOTS of shit. I know tons of people that smoke the good herb. The large majority of those people also smoke cigs and drink alcohol.
As far as the pharmaceutical companies go, do you really think people are going to give up taking all their meds and go straight to smoking weed instead? Of course they won't. First of all, doctors aren't going to support that. Second of all, marijuana isn't going to fix the ills most people take all those meds for. I think marijuana is a wonderful and magical plant, too, but it isn't going to solve your irritable bowel syndrome, your high blood pressure, or your raging cholesterol level. I suppose maybe Bengay might be go out of business if all the old people are toking up to get rid of their arthritis, but I don't see the pharma companies or big beer going out of business because people can get high.
One thing you have to realize, is that 100% of Americans aren't going to be toking up the day after marijuana gets legalized. Most Americans don't smoke weed right now, only around 20-30 million do it once a month or more. I'm sure that number will increase when/if it becomes legalized, but it'll be just like anything else. Some people will get converted and become regular users, some people will use it occasionally, and some people will try it and decide it isn't for them.
The only thing that would be in direct competition with marijuana is. . .well. . .nothing. People will still smoke cigs to get their nicotine rush and they'll still drink alcohol to get a buzz.
Like a said originally, E-cigs are in direct competition with tobacco because they give you the same rush without all the bad side effects. This could possibly prompt tobacco companies to decide they want to expand into marijuana sales, which would get them to push for legalization.
I see your point, I had the following senario in mind:
A)
I walk into GasMart's store with 10 bucks in my pocket... With those ten bucks I could get a (maybe) gram of weed, which I could probably spin into 2 skinny blunts... Or I could get 1 pack of cigs. Or I could some booze. I know what I would choose, personally.
B)
I've never smoked a cig before (hypothetical, I have), however I've also never smoked weed before. I'm interested in trying weed because I have heard of the high, and in comparison what could cigs do? Most people don't even know that cigs initally give a buzz that is much like being drunk. Why would I even be remotely interested in picking up an expensive habit like smoking cigs when I could just buy a pack of weed instead, and catch a buzz 10 times longer? I mean, the prices that cigs are at now, it can't be attracting many new smokers, and with weed available OTC, I could see some direct competition.
C)
I have problems concentrating on my homework, but it is negligable throughout the day. I could see a doctor and get a script for a pill that I would rather not take which separates me from my friends, and has high addiction potential, or I could grow my own herb for free and smoke that strain to slow the constant barrage of thoughts.
D)
I am depressed. My doctor gives me an SSRI... I know that weed helps me get out of the worst slumps, and that an SSRI isn't 100% necesary. I now have another option.
E)
You guessed it with arthritis, but it would also work for my HEADACHES and severe TMJ or other pains, something that I've personally have had benzos, pain killers, and other off-label prescriptions for. I choose not to use them or buy them anymore because I can just grow weed legally instead.
Just like an E-cig giving the rush without the negatives, weed can provide relief without the addiction or cost. Obviously some of these senarios are far-fetched, but I wrote them off the top of my head and who knows what crazy world we would be living in when we could all grow our own plants

Obviously not everyone would toke up, but I do believe a vast majority of people would time to time, the same thinking applies to alcohol.
I think we would likely see a lot more self-medicating citizens at the cost of pharms, and a lot more smokers at the cost of tabacco.