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Marlboro owner Altria invests $1.8 billion in cannabis company Cronos
Altria hopes pot is the key to help it grow beyond its stagnant cigarette business. Tobacco giant Altira 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. 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. Altria's stock has fallen nearly 25% this year and the company is expected to report revenue growth of only about 1% this year and in 2019.
[...] 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. With Democrats winning control of the US House, Congress may finally pass the Farm Bill, which would make it legal to produce hemp and potentially open the door for more products containing cannabidiol, or CBD. Many alcoholic beverage, tobacco and other consumer products companies may want to bet on cannabis. Canadian marijuana company Canopy Growth (CGC) already has received a multibillion dollar investment from Corona owner Constellation Brands (STZ). Coca-Cola (KO) was rumored to be considering an investment in Canadian cannabis company Aurora (ACB). [...] Coke's archrival Pepsi (PEP) hasn't completely ruled out a move into cannabis.
Altria's Canadian Pot Bet Is Really About the U.S.
It's official: Big Tobacco is now a player in the cannabis market. That will change the game.
Previously: Another Major Beermaker is Looking at Ways to Enter the Cannabis Business
Coca-Cola Is Eyeing the Cannabis Market
Peter Thiel's Cannabis Company Was Briefly Worth More Than Twitter
Cannabis Becomes Legal in Canada
(Score: 3, Interesting) by legont on Sunday December 09 2018, @05:05PM (3 children)
I am invested in Cannabis as well and increased the position recently. Here are my 3 reasons:
1. Obvious. The Attorney General nut was forced out.
2. Less obvious. We elected Democratic congress which will likely mean that any serious legislation is doomed. This will give the industry at lest 2 years or even 6 or more to establish itself. By then it should be better protected.
3. Not obvious to most. Since bank financing of Cannabis businesses is virtually prohibited by the government, they should have a relatively low debt load. This means they will enjoy pure leverage run at some point. It also means that if/when the next crisis hits it would be less painful for them as I expect the crash to be debt related.
It appears that Altria has similar thoughts.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by MichaelDavidCrawford on Sunday December 09 2018, @06:20PM
And would like to subscribe to your newsletter.
_None_ of those had occurred to me.
If I get any money at all from my Indiegogo, I'm going to invest a fair-sized chunk of it, not just my own money but what I expect to spend later on for my employees' salaries and the like.
These absolutely _must_ be wise investments. What I'd really enjoy doing though is to put the lot of it on a single spin of the wheel at Vegas. But such a Vegas investment would be unwise.
Among other things, I'm planning to buy some unimproved land in cold-climate places, then will subdivide, partially develop - install septic tanks and such - then sell to Global Warming Refugees.
Yes I Have No Bananas. [gofundme.com]
(Score: 2) by crafoo on Sunday December 09 2018, @10:26PM
Your point #3 is pretty interesting. Banks not owning an industry top-to-bottom? What does that even look like? That will be fun to watch.
(Score: 2) by dry on Monday December 10 2018, @03:32AM
Pretty sure the Canadian banks are involved with the Canadian producers that everyone is investing in.