American cigarette maker wants to invest in Canadian weed company

by Team Inc.

2018-12-4 American Cigarette Maker Wants to Invest in Canadian Weed Company

Altria, producer of cigarette brands such as Marlboro and Lucky Strike, may step in the weed. The American company is discussing an investment in the Canadian cannabis company Cronos Group.

Cronos, which owns two brands for medicinal weed and has a market value of about 2,8 billion euros, emphasized that no agreement has been concluded yet. Cronos stock rose a whopping 30 percent after the announcement. Shares in Altria rose 2,4 percent.

Cronos would not have agreed a deal with Altria and says that the negotiations will not guarantee an investment. An investment in Cronos, now the fourth largest cannabis company in Canada in terms of market value, would give Altria access to the fast-growing weed industry as the first tobacco company.

New markets

Weed companies have become interesting for regular companies, now that Canada has legalized the recreational use of the drug in October. For tobacco manufacturers such as Altria, cannabis offers an opportunity to enter new markets alongside traditional smokers. That market is declining, partly due to government measures.

CEO Howard Willard, who took charge of Altria in May, is clearly looking for a way to deal with the declining number of cigarette smokers. The company therefore continues to negotiate with Juul Labs, manufacturer of popular electronic cigarettes, an initiate knows.

Besides cigarette manufacturers, other large companies are also interested in the 'green gold'. For example, beer and wine producer Constellation Brands took a stake in cannabis company Canopy Growth last year. Soft drink giant Coca-Cola is reportedly also investigating the possibilities of getting into cannabis products.

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