Altria takes stake in Canadian cannabis company
Henrico County-based Altria Group Inc. announced on Friday it had entered into an agreement to acquire newly issued shares in Toronto-based Cronos Group Inc., a cannabis and marijuana company.
The transaction between the two publicly traded companies represents a 45 percent equity stake in Cronos Group at a price of $16.25 (CAD) per share for an aggregate investment by Altria of approximately USD $1.8 billion.
Altria CEO Howard A. Willard III was a panelist at the Virginia Chamber of Commerce’s annual economic summit in Williamsburg on Friday. Willard framed the investment as a response to the declining cigarette market in the U.S. He said medical cannabis industry especially has a lot of potential.
“It’s a very attractive future growth opportunity for Altria,” Willard said of the cannabis industry. “We believe it is an adjacent business and a complementary business.”
Willard called Canada a trailblazer in the cannabis space. Canada federally legalized medical cannabis in 2001 and in October legalized recreational cannabis.
“It’s really become a place where many of the leading companies that want to compete for leadership throughout the world in the cannabis business have been locating,” Willard said of Canada.
Willard emphasized that Cronos does business in Canada where cannabis is legal at the federal level. Cronos won’t be operating in the U.S. because cannabis is illegal at the federal level, Willard said.
“(It) certainly will position us well if that were to change in the future,” Willard said of the U.S. law.