Altria Invests $1.8 billion in Cannabis Company

The decision by the maker of Marlboro to go ahead with an investment in Cronos shows that Altria is interested about investing in marijuana as a new growth area.

Tobacco giant Altira Group 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, according to a CNN Business report.

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.

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“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 prepared 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 prepared 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.