Big Tobacco Company Altria Takes Major Stake in Canadian Cannabis Firm Cronos Group

Altria Group, which owns multiple big tobacco brands like Marlboro and Skoal, announced a $1.8 billion investment into Canadian cannabis company Cronos Group at approximately $12.19 a share. That is a 16.2% premium over the stock’s Thursday close, according to Reuters.

The transaction gives Altria a 45% interest in Cronos, which operates in both the medical and recreational marijuana markets. The deal is expected to close in the first half of 2019.

Altria can nominate four directors, including one independent director, to the Cronos board, giving it 4-to-3 control. There is also a warrant giving Altria the right to purchase additional shares at $14.25 a share over the next four years. If exercised in full, Altria would own 55% of the company.

Cronos shares were up 23% in pre-market trading, while Altria’s stock gained 2%, according to CNBC.

The cannabis industry has been hot beyond stocks. It projected to grow 220% in 2019 alone according to a report from a cannabis recruitment and job placement agency, and job listings are exploding.

Other companies are trying to cash in on the trend. Walmart Canada is taking a preliminary look at selling cannabis-related products. And Food and Drug Administration-approved, cannabis-based drug Epidiolex is available for sale in all 50 states.

In addition, U.S. Drug Enforcement Agency is expected to drop CBD—a cannabis compound that doesn’t include the psychoactive compound tetrahydrocannabinol, or THC—from the Schedule I list of controlled substances. That could set off increased interest in hemp production. Hemp and marijuana are separate plant varieties of cannabis.

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