Marlboro maker places $2.4 billion bet on marijuana – Daily News
Marlboro,maker,leaps,cannabis,trade,2,4B One of the world’s biggest tobacco companies is investing $3.8 billion into the cannabis market.Marlboro maker Altria Group Inc. is paying $2.4 billion for a 45 percent stake in Cronos Group, the Canadian medical and recreational marijuana provider said on Friday.Altria will also pay another $1.4 billion for warrants that if exercised, would give the Altria a 55 percent ownership stake in the Toronto company. ‘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 Chairman and Chief Executive Officer, in a statement. ‘We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential,’ Willard said.Altria’s total investment will be in the same league as the $4 billion spent earlier this year by Constellation Brands to acquire shares of Canopy Growth Corp., another Canadian pot producer. Share this article Share The August investment by Constellation, which makes Corona and other beverages, was the largest to date by a major U.S. corporation in the cannabis market.Whatever hesitation larger corporations in the U.S. had about entering the cannabis market appears to be fading if there is a financial justification.Altria’s huge investment lit up shares of cannabis companies that have begun to set up shop in Canada, where recreational use was legalized nationwide this year. Shares of Cronos Group Inc. jumped 31 per cent and neared an all-time high at the opening bell Friday.Rapid growth in the cannabis market is expected to continue as legalization expands in the U.S. and social norms change. On Tuesday, conservative Utah became the latest state to legalize marijuana use for medical purposes.Consumers are expected to spend $57 billion per year worldwide on legal cannabis by 2027, according to Arcview Market Research, a cannabis-focused investment firm. In North America, that spending is expected to grow from $9.2 billion in 2017 to $47.3 billion in 2027.
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