BREAKING NEWS Lauderdale County Sheriff's Office investigating possible homicide Full Story

Investors send pot stock soaring on possible tobacco deal

The company that makes Marlboro cigarettes may be looking for a new vice. Altria could find that the red-hot...

Posted: Dec 4, 2018 10:41 AM
Updated: Dec 4, 2018 10:41 AM

The company that makes Marlboro cigarettes may be looking for a new vice. Altria could find that the red-hot cannabis industry is a much-needed supplement to its stagnant tobacco business.

Canadian cannabis company Cronos Group surged Monday after Reuters reported Altria may want to buy the company. The stock was up nearly 30% at one point before it was briefly halted for trading midday Monday. Shares were still up 12% when trading resumed.

Altria Group

Canada

Coca-Cola Co

Companies

Continents and regions

Controlled substances

Drugs and society

Marijuana

North America

Philip Morris International Inc

Society

The Americas

Banking, finance and investments

Business, economy and trade

Financial markets and investing

Securities trading

Stock markets

Business and industry sectors

Tobacco industry

Cronos (CRON) confirmed in a statement that it was discussing a potential investment by Altria, but Cronos said the two companies had not yet reached an agreement. Altria (MO) was not immediately available for comment.

Tobacco sales haven't budged much in recent years. That's why the cigarette giant reportedly had been interested in taking a minority stake in another Canadian pot company, Aphria (APHA) -- although Aphria's shares plunged Monday after one short seller referred to the company as a "black hole."

Altria is also rumored to be considering a big investment in e-cigarette company Juul in order to diversify beyond cigarettes.

Cronos, Aphria and other cannabis stocks have been thrust into the spotlight in the past few months following the legalization of recreational marijuana in Canada in October, as well as legalized recreational and medical pot in several US states last month.

With Democrats winning control of the US House, Congress may finally pass the Farm Bill, which would make it legal to produce hemp and potentially open the door for more products containing cannabidiol, or CBD.

Many alcoholic beverage, tobacco and even other consumer products companies may want to bet on cannabis. One Canadian marijuana company, Canopy Growth (CGC), already has received a multibillion dollar investment from Corona owner Constellation Brands (STZ).

Coca-Cola (KO) teased the possibility it could get into the cannabis business, saying in September it was "closely watching" the growth of CBD as a possible ingredient for so-called wellness beverages. CBD is a non-psychoactive component of marijuana.

At the same time, rumors swirled that Coke was considering an investment in Canadian cannabis company Aurora (ACB).

But Coke shot down the talk in October. CEO James Quincey said the company "doesn't have any plans at this stage" to enter the CBD market.

Coke's archrival Pepsi (PEP) hasn't completely ruled out a move into cannabis. Chief Financial Officer Hugh Johnston told analysts during its earnings call in October that "it's fair to say we look at everything" in response to a question about cannabis.

The Canadian subsidiary of Molson Coors (TAP) has a joint venture with The Hydropothecary Corporation to produce cannabis-infused drinks for the Canadian market.

Lagunitas, a beer brand owned by Heineken (HEINY), is selling a cannabis-infused sparkling water brand in California. UK alcoholic beverage giant Diageo (DEO) also could be interested in cannabis.

So it may be only a matter of time before a large US or European company winds up taking the plunge and buys a pot company outright.

Article Comments

Huntsville
Clear
80° wxIcon
Hi: 93° Lo: 69°
Feels Like: 82°
Florence
Clear
82° wxIcon
Hi: 97° Lo: 71°
Feels Like: 85°
Fayetteville
Clear
79° wxIcon
Hi: 94° Lo: 67°
Feels Like: 81°
Decatur
Clear
79° wxIcon
Hi: 95° Lo: 67°
Feels Like: 81°
Scottsboro
Clear
81° wxIcon
Hi: 93° Lo: 66°
Feels Like: 84°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Community Events