Marlboro owner Altria invests $1.8 billion in cannabis company Cronos

Altria hopes pot is the key to help it grow beyond its stagnant cigarette business.Tobacco giant Alti...

Posted: Dec 7, 2018 1:00 PM
Updated: Dec 7, 2018 1:00 PM

Altria hopes pot is the key to help it grow beyond its stagnant cigarette business.

Tobacco giant Altira is investing $1.8 billion in Canadian cannabis company Cronos Group. That will give Altria a 45% stake in the company, with an option for Altria to increase its stake to 55% over the next five years.

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Reports of an Altria-Cronos deal first surfaced earlier this week. The decision by Altria to go ahead with an investment in Cronos shows that Altria is serious about investing in marijuana as a new growth area as sales of traditional cigarettes slow.

Altria's stock has fallen nearly 25% this year and the company is expected to report revenue growth of only about 1% this year and in 2019.

"Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria," said Howard Willard, Altria's CEO, in a statement.

Shares of Altria (MO) rose 2% in early trading Friday while Cronos (CRON) soared more than 30%.

"Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth," said Cronos CEO Mike Gorenstein in a statement.

Gorenstein added that Cronos will use the investment from Altria to expand its distribution and infrastructure around the world and also boost its investments in research and development for new brands and products.

Cronos and other cannabis stocks have been thrust into the spotlight in the past few months following the legalization of recreational marijuana in Canada in October, as well as legalized recreational and medical pot in several US states last month.

With Democrats winning control of the US House, Congress may finally pass the Farm Bill, which would make it legal to produce hemp and potentially open the door for more products containing cannabidiol, or CBD.

Many alcoholic beverage, tobacco and other consumer products companies may want to bet on cannabis.

Canadian marijuana company Canopy Growth (CGC) already has received a multibillion dollar investment from Corona owner Constellation Brands (STZ).

Coca-Cola (KO) was rumored to be considering an investment in Canadian cannabis company Aurora (ACB).

But Coke shot down the talk in October. CEO James Quincey said the company "doesn't have any plans at this stage" to enter the CBD market.

Coke's archrival Pepsi (PEP) hasn't completely ruled out a move into cannabis. Chief Financial Officer Hugh Johnston told analysts during its earnings call in October that "it's fair to say we look at everything" in response to a question about cannabis.

The Canadian subsidiary of Molson Coors (TAP) has a joint venture with The Hydropothecary Corporation to produce cannabis-infused drinks for the Canadian market. Lagunitas, a beer brand owned by Heineken (HEINY), is selling a cannabis-infused sparkling water brand in California.

Investors seem to be betting that more deals could be coming. Shares of Canopy, Aurora, Tilray (TLRY) and Aphria (APHA) all surged Friday morning.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 512632

Reported Deaths: 10262
CountyCasesDeaths
Harrison34853555
DeSoto33162432
Hinds32556641
Jackson24830389
Rankin22442402
Lee16238242
Madison14874283
Jones14086247
Forrest13741259
Lauderdale12249324
Lowndes11286193
Lamar10644140
Pearl River9707244
Lafayette8827143
Hancock7835132
Washington7550169
Oktibbeha7204138
Monroe6989179
Pontotoc6970109
Warren6849178
Panola6746134
Neshoba6726210
Marshall6653141
Bolivar6440151
Union633897
Pike5924156
Alcorn5862107
Lincoln5525136
George510180
Prentiss500884
Tippah490282
Itawamba4829107
Scott477499
Adams4766125
Tate4748116
Leflore4723144
Copiah455895
Yazoo455591
Simpson4543117
Wayne442772
Covington432895
Sunflower4299106
Marion4265112
Coahoma4227109
Leake413790
Newton395581
Tishomingo381793
Grenada3775109
Stone365666
Jasper340166
Attala337790
Winston317792
Chickasaw313367
Clay311878
Clarke301195
Calhoun284449
Holmes271289
Smith268952
Yalobusha243747
Tallahatchie231453
Greene224749
Walthall221366
Lawrence217840
Perry213356
Amite209557
Webster205148
Noxubee188642
Montgomery181557
Carroll174441
Jefferson Davis173643
Tunica163239
Benton152639
Kemper144941
Choctaw136527
Claiborne134238
Humphreys131139
Franklin124929
Quitman107528
Wilkinson105939
Jefferson96834
Sharkey65121
Issaquena1957
Unassigned00

Alabama Coronavirus Cases

Cases: 844594

Reported Deaths: 16115
CountyCasesDeaths
Jefferson1160612006
Mobile741651379
Madison53255732
Shelby38313368
Baldwin38061589
Tuscaloosa35996641
Montgomery34473781
Lee25541263
Calhoun22582518
Morgan22441406
Etowah20009517
Marshall18771316
Houston17723425
St. Clair16863358
Limestone16123218
Cullman16032303
Elmore15902294
Lauderdale14945306
Talladega14186299
DeKalb12957269
Walker12011380
Blount10700192
Autauga10512157
Jackson10151194
Coffee9412192
Colbert9325208
Dale9013191
Tallapoosa7248201
Russell707465
Chilton7015170
Escambia6951143
Covington6926195
Franklin6337108
Chambers5778142
Marion5400130
Dallas5283209
Pike5114109
Clarke484986
Lawrence4826129
Winston4777110
Geneva4640136
Bibb434094
Barbour369180
Butler3433100
Marengo342393
Monroe336666
Randolph334067
Pickens333188
Fayette329885
Henry320566
Hale317989
Cherokee316963
Crenshaw260477
Washington256952
Cleburne254360
Lamar251253
Clay250869
Macon244764
Conecuh192762
Coosa184647
Lowndes178168
Wilcox177438
Bullock152545
Perry141840
Sumter139041
Greene130245
Choctaw93228
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