Canadian cannabis company Cronos Group shares soared on Friday after disclosing tobacco giant Altria, which makes Marlboros and owns Philip Morris USA, the largest cigarette maker in the United States, will invest $1.8 billion in the company for a 45 percent stake.
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“Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Cronos Group’s Mike Gorenstein, Chairman, President and Chief Executive Officer in a statement. “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers..."
“The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers..."
The interest from Altria, which was first disclosed earlier this week, is a sign of the growth potential this budding business holds as legalization of pot expands. Canada legalized recreational marijuana use this year and in the U.S., the trend is moving in that direction on the state level. Cronos bills itself as "a geographically diversified and vertically integrated cannabis group that operates within Health Canada’s Access to Cannabis for Medical Purposes Regulations and distributes globally" according to the company.
It is not the first major U.S. company to target the new field, and may be among the best positioned as far as infrastructure goes to become directly involved in sales if the shift toward legalization continues. In August Constellation Brands, the beverage company that owns everything from Corona beer and Manischewitz wine, strengthened its partnership with Canadian pot producer Canopy Growth Corp. and within the last year has increased its stake in the company to 38 percent.
Investors are also paying more attention to the space. Tilray, a medical marijuana company in British Columbia, became the first cannabis business to begin trading publicly this year on a major U.S. stock exchange. Its market value is quickly approaching $10 billion, about the same as The Gap or Macy's.
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Questions about marijuana are even starting to pop up in corporate conference calls at companies as large as Coca-Cola Co., one of billionaire Warren Buffett's biggest holdings.
In October, as reported by FOX Business, Coca-Cola CEO James Quincey dismissed rumors that the beverage giant is mulling an entrance into the legal cannabis industry, even as other beverage brands have explored cannabidiol (CBD)-infused drinks.
“We don’t have any plans at this stage to get into the space,” Quincey told analysts during an earnings call. "So that’s kind of where we are.”
The Associated Press contributed to this report which was originally published on 12/4/18.