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Altria Likely to Venture Into Cannabis Space With Cronos Deal

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Per sources, Altria Group, Inc (MO - Free Report) is interested in investing in the Canadian cannabis company, Cronos Group Inc (CRON - Free Report) . However, Altria has made no official comments on this matter. Per industry experts, the companies are engaged in initial discussions regarding a potential deal. Let’s wait and see if the market hearsay takes shape and how it impacts the tobacco giant’s performance.

Prospects From Cannabis

Persistent regulatory pressure on tobacco consumption along with mass awareness about negative impacts of nicotine has lowered cigarette consumption rates significantly. This has been marring the performance of several tobacco players. Such aspects have compelled companies like Altria to explore other business advents for sustenance. In this respect, the company has been apparently considering to venture into the nascent but booming cannabis industry.

Well, this is not the first time that Altria has been interested in the marijuana sector. In October, there were rounds that the tobacco giant is considering to buy a stake in Aphria Inc. — another major cannabis producer in Canada.    

Moreover, with the legalization of recreational use of marijuana in Canada, many companies are foraying into the cannabis space. In fact, companies have been monitoring the health impacts of cannabis and have started viewing cannabis-infused products as another recreational option.

Although Altria is the first tobacco player to depict an interest in cannabis, it appears to be behind behemoths from the beverage arena. Few months back, Constellation Brands (STZ - Free Report) invested in Canada’s Canopy Growth Corp. Also, Coca-Cola (KO - Free Report) is eyeing prospects in the market and plans to make an entry through investment in Aurora Cannabis. That said, it is yet to be seen what type of cannabis offerings Altria will come up with and how it markets them, if the company actually invests in Cronos.



Wrapping Up

Notably, Altria has been consistently taking robust strides to stay afloat in the tobacco space on the back of effective pricing and expansion in the e-cigarette’s arena. This Zacks Rank #3 (Hold) company’s e-vapor products like MarkTen and Green Smoke are performing well in the smokeless category. In fact, sources are speculating that Altria might be considering investment in the e-cigarette company, Juul Labs, Inc. Also, the company’s entry into the cannabis space is likely to provide it significant growth opportunities and boost brand portfolio. We expect that such well-chalked efforts will revive the company’s stock that has lost 6.9% in the past three months, almost in line with the the industry’s fall.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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