Cigarette company Marlboro invests in Cronos

Published Feb 14, 2019 12:00 p.m. ET

 Have you thought about what will become of the tobacco industry? This industry has been around forever. Today struggling tobacco companies are evidence of a declining business globally. Tobacco, once a formidable business has seen a sharp decline as of late. Global tobacco companies are looking for ways to diversify, to change the direction of their company’s business. On October 17, 2018, the date of the legalization of cannabis in Canada, along with several states already having legalized  cannabis, helped to open a niche that the struggling tobacco industry could benefit from by investing their money and expertise.

A 2.4  billion dollar investment by one of the worlds biggest tobacco companies, to a Canadian medical and recreational marijuana company, has put this particular  tobacco company in the forefront of the cannabis business.The falling stocks in their parent company Marlboro, seem to have prompted this move. Altria will be a 45% owner of the Toronto based Canadian company Cronos Group. The deal provides for Altria to increase their ownership within four years to 55% under this agreement.

Altria is a company to be watched. It is moving forward with great business savvy. Now that they have a big seat at the round table, they will get 4 votes leaving 3 remaining votes on the board of directors. This number was increased from a 5 member board to accommodate 7 members.

This deal is the second biggest cannabis deal in history following the 4 million Constellation Brand in the Canopy Growth deal.

The Cronos company is located in Toronto. Canada. Time will tell if previous consumers will continue to support knowing the investor's tobacco involvement. We are known for empathy in this country, will Canadians be capable of overlooking this component of the deal? Or will the association with tobacco make it difficult to move forward with health-oriented products?

Time will tell, the stock market will show us the overall business mindsets of Canadians.

Cronos is steadfast in believing the benefits that Altria will bring to the table are enough to provide a promising business environment. Enough for them to flourish with this new business venture. Altria's experience in regulatory, compliance and government affairs along with their marketing techniques will be of great value in interacting with the new global cannabis markets opening up today.

The Altria Group Inc brings knowledge of a big tobacco company and cultivation of crops. They are at the forefront of vaporizing technology. To some, it is clear that Altria wants to project a healthier front. They disclosed at the time of the deal that they would be discontinuing a couple of their products. Perhaps this is showing good faith in promoting healthier products.

The deal will provide cash to Cronos enabling them to spread out their expansions. Cronos has indicated that it will use the capital funds to move forward with  their global growth expansions. The deal that was reached does not limit Cronos from any other partnerships in the future.

Cronos has closed a good deal, the second biggest deal in cannabis history. Keep an eye out for Marlboro weed and weed related products in the near future. It will be interesting to see Marlboro weed cigarette prices.

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