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New York - Marlboro Maker Leaps Into The Cannabis Trade With $2.4B

Published on: December 7, 2018 11:30 AM
By: AP
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FILE - In this July 17, 2015, file photo, store manager Stephanie Hunt poses for photos with a pack of Marlboro cigarettes, an Altria brand, at a Smoker Friendly shop in Pittsburgh. Altria is diving into the Canadian cannabis market with a $2.4 billion investment in Toronto-based medical and recreational marijuana provider Cronos Group.  (AP Photo/Gene J. Puskar, File)FILE - In this July 17, 2015, file photo, store manager Stephanie Hunt poses for photos with a pack of Marlboro cigarettes, an Altria brand, at a Smoker Friendly shop in Pittsburgh. Altria is diving into the Canadian cannabis market with a $2.4 billion investment in Toronto-based medical and recreational marijuana provider Cronos Group.  (AP Photo/Gene J. Puskar, File)

New York -  One of the world’s biggest tobacco companies is diving into the cannabis market with a $2.4 billion buy-in.

Marlboro maker Altria Group Inc. is taking a 45 percent stake in Cronos Group, the Canadian medical and recreational marijuana provider said Friday.

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Altria will pay another $1.4 billion for warrants that if exercised, would give the Altria a 55 percent ownership stake in the Toronto company.

That would mean Altria’s investment would be in the same league as the $4 billion spent earlier this year by Constellation Brands to acquire shares of Canopy Growth Corp., another Canadian pot producer.

The August investment by Constellation, which makes Corona and other beverages, was the largest to date by a major U.S. corporation in the cannabis market.

Whatever hesitation larger corporations in the U.S. had about entering the cannabis market appears to be fading if there is a financial justification.

Altria’s huge investment lit up shares of cannabis companies that have begun to set up shop in Canada, where recreational use was legalized this year.

Shares of Cronos Group Inc. jumped 31 percent and neared an all-time high at the opening bell Friday.

Rapid growth in the cannabis market is expected to continue as legalization expands in the U.S. and social norms change. On Tuesday, ultra-conservative Utah became the latest state to legalize marijuana use for medical purposes.

Consumers are expected to spend $57 billion per year worldwide on legal cannabis by 2027, according to Arcview Market Research, a cannabis-focused investment firm. In North America, that spending is expected to grow from $9.2 billion in 2017 to $47.3 billion in 2027.



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Read Comments (2)  —  Post Yours »

1

 Dec 07, 2018 at 02:40 PM Geulah Says:

No shock here. The tobacco companies funded anti-marijuana campaigns because they couldn't make a buck off of it to begin with, being that it was "illegal" and a "dangerous drug" Now we know that the dangerous part was a fabrication. Now that there is a financial justification, tobacco companies which have been getting financially killed by cancer-causing tobacco (nicotine being a dangerous drug, addictive and harmful) are jumping on the bandwagon. Woo hoo, now marijuana will cost twice the amount of a pack of cigarettes and no warning labels.

2

 Dec 08, 2018 at 06:34 PM Anonymous Says:

The marjuana craze is a dangerous phenomenon whose effect will be just as bad as tobacco not with cancer but addiction. All tobacco companies should be banned

3

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