Marlboro-Maker Investing $2.4 Billion in Canadian Cannabis Producer Cronos

Can weed make you some green? What you need to know about investing in pot

Marlboro cigarette maker Altria on Friday became the latest major company to explore an entry into the legal cannabis market as more states approve the once-taboo substance for medical or recreational use.

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. Aurora Cannabis Inc.'s stock rose 7.8 per cent to close at $7.60 after it announced a new supply deal to Mexico. The new relationship represents an "exciting new growth opportunity" and Cronos is backed by an "excellent management team".

Atria, formerly Philip Morris, makes the move after watching its stock tumble 25 percent this year and outlook on the company's growth projected at about one percent this year and 2019.

"Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth", said Mike Gorenstein, Cronos Group Chairman, President, and Chief Executive Officer.

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.

— Last summer, Tilray Inc., a medical marijuana company in British Columbia, became the first marijuana business to complete an initial public offering on a major USA stock exchange, raising $153 million to expand its operations as Canada prepared to legalize the drug nationwide.

Subsequently, earlier this week, MarketScreener has reported that the tobacco giant is also in separate talks with Canadian cannabis company Cronos Group Inc.

— There are a handful of companies listed on the Toronto Stock Exchange devoted exclusively to cannabis, either for medicinal or recreational use, or both: Canopy Growth Corp., Aurora Cannabis Inc. and Cronos Group Inc.

In June, London-based tobacco company Imperial Brands Plc took an undisclosed stake in closely held Oxford Cannabinoid.

Coca-Cola CEO James Quincey said last October that the company did not have any plans to develop a CBD-infused drink in the near future.

Canadian Press People celebrate cannabis legalization in Canada. Molson Coors Canada owns a 57.5 percent interest in the joint venture. And a beer brand owned by Heineken, Lagunitas, is selling a cannabis-infused sparkling water brand in California.

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