Sat. Feb 23rd, 2019

The manufacturer of Marlboro bets heavily on the business of cannabis

El fabricante de Marlboro apuesta fuerte por el negocio del cannabis

The Altria group, manufacturer of Marlboro in the USA., has starred in the first major incursion of a major tobacco company in the cannabis business. The US company announced the purchase, for 1,800 million dollars, of a 45% stake in Cronos Group Inc., the fourth largest Canadian producer of cannabis by market value, based in Toronto. The operation includes a payment option of another 1,400 million dollars that would grant Altria 55% and raise its investment to 3,200 million dollars (2,800 million euros).

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With the rates of Smoking in the United States Falling fast, Altria, based in Richmond, Virginia, is under pressure to find new avenues to increase revenues. Marijuana, while still illegal at the federal level in the United States, is now allowed in a growing number of states, while Canada represents a great laboratory for the nascent industry. A few months ago, the group of alcoholic drinks Constellation Brands invested 4,000 million in Canopy Growth Corp., another Canadian producer of marijuana.

Altria, based in Richmond, Virginia, is under pressure to find new ways to increase revenue

Altria's huge investment has sparked a heightened interest in cannabis companies that have begun to settle in Canada, where recreational use was legalized this year. After the initial euphoria, the sector had two months on the stock market. But yesterday, the shares of Cronos Group Inc. rose 31% and approached a record high.

It is expected that the rapid growth in the cannabis market will continue as legalization in the United States expands and social norms change. On Tuesday, the ultraconservative state of Utah became the last to legalize the use of marijuana for medical purposes. "An investment of this magnitude gives overall legitimacy to the industry as a whole and should represent a positive catalyst for the sector, as the news is likely to increase valuations," said a Canaccord Genuity analyst.

The rapid growth in the cannabis market is expected to continue as legalization in the United States expands

Arcview Market Research, an investment firm focused on cannabis, estimates that by 2027, consumers will spend $ 57 billion a year worldwide on legal cannabis; in North America, that spending is expected to increase from 9.2 billion in 2017 to 47.3 billion in 2027.

"We believe that cannabis is an excellent strategic option for tobacco," said one Jefferies analyst, because "they know production, how to deal with regulators, and are at the forefront of vaporization technology."

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