Big tobacco just made a big investment in cannabis. Altria, the parent company of Phillip Morris just invested 1.8 billion dollars in the Canadian cannabis company known as the Cronos Group.
The tobacco industry has seen a decline in consumer support while watching an increase with consumer support for cannabis. It would only make sense for them to stake a major investment in the cannabis sector.
For 2018 and 2019 Altria is only expected to report a 1% growth. Shares in Altria stock have decreased by as much as 25% in 2018. Altria CEO Howard Willard released a statement saying;
“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting New growth opportunity for Altria.”
For their investment in Cronos Group, Altria has a 45% stake in the company with the option of increasing that state to 55% over a period of 5 years.
The Immediate Return Everyone Wants In On
Furthermore, showing that investors have more faith in cannabis than they do in tobacco early morning trading on Friday after the announcement of the investment by Altria, the market saw a 2% rise in stock for Altria while Cronos blazed a trail increasing by 30%.
It seems everyone wants in on the sector. From Molson Coors, Constellation Brands (owner of Corona), Heineken and even Coca-Cola are either already in the cannabis space or are eyeing it heavily! This is quite natural considering that the cannabis industry offers an attractive financial allure.
Coca-Cola may have their eye on the market, but CEO James Quincey told the public that the company, doesn’t have any plans at this stage, referring to entering the cannabis sector. Pepsi, however, is not ruling out that possibility.
Everybody that has good business sense is getting in on the green rush of the new legal cannabis industry that is emerging. From snack food companies to beverage companies and more cannabis keeps opening doors.