Cannabis could soon become the powerhouse that “Big Tobacco” used to be, with an enormous potential investment that is currently being considered. Cigarette sales are on a steady decline over the past decade, leaving cigarette makers with no choice but to improvise and adapt.
According to a Dec. 3 press release, Cronos Group Inc., a Canadian cannabis producer, confirmed that its leadership is in talks with Altria Group Inc., the makers of Marlboro cigarettes and several other cigarette brands. Altria is behind Philip Morris USA, Nat Sherman and other cigarette companies.
“Cronos Group today confirmed that it is engaged in discussions concerning a potential investment by Altria Group Inc. in Cronos Group,” the company stated. “No agreement has been reached with respect to any such transaction and there can be no assurance such discussions will lead to an investment or other transaction involving the companies.”
Cronos Group’s shares soared 23 percent immediately following the news of a possible acquisition or deal in the works.
According to Reuters, Altria is considering diversifying its market beyond conventional tobacco products. Beyond Cronos Group, Altria is also in talks with purchasing the vape product startup Juul. Altria also toyed with the idea of acquiring a minority stake with Aphria, another Canadian cannabis company.
Once Canada legalized cannabis for recreational use on Oct. 17, it opened the floodgates as to how cannabis can be sold commercially. Last October, cigarette maker Imperial Brands invested in Oxford Cannabinoid Technologies via its venture company branch. Large companies of all types such as Coca-Cola have shown interest in the cannabis industry.
Should Cronos Group and Altria’s deal go through, it would likely become the largest deal yet between tobacco and cannabis companies.
— Cronos Group (@CronosGroupMJN) December 4, 2018