With a market as bizarre and (in a very strange twist) promising as the one for marijuana, you can imagine that some big players have set their sights on the little green plant. From applications to the medical industry to its use in cosmetics and hair care, this fragrant herb has somehow managed to integrate itself into even the strictest of cultures. Recently, though, one of the strangest pairings took place when Altria Group (the creators of the Marlboro cigarette brand) developed an interest in the Cronos Group, a marijuana company based in Canada. Now, the move is official. As of today, Altria is preparing to drop $2.4 billion to invest in Cronos, which leads us to wonder: “What would a cigarette company want with this drug?” Let’s take a closer look at this situation and find out more.
Forming an Ideal Partnership
As part of the initial investment, Altria Group will be granted a 45% ownership stake in the Cronos Group, which will ultimately allow the tobacco giant to provide an additional investment of $1.4 billion to boost the ownership stake to 55%. According to Mike Gorenstein (Chairman, President, and CEO of the Cronos Group), Altria will serve as an ideal partner that will provide invaluable resources and expertise to help Cronos expand into a larger, better developed company. Ultimately, through Altria, Cronos will also have opportunities to expand its global position and distribution capability.
What Else Is in Store?
Based on a recent news release, Altria’s position as a partial owner and solid investor will help Cronos provide resources for marijuana innovation, create high-quality and unique products for medical and recreational use, and expand global/distribution footprints and production capabilities.
As part of this massive deal, Altria will provide numerous years of experience navigating through a sea of complex, tangled government regulations. With their help, Cronos can easily deal with drug regulations, government policies, and compliance and can develop a stronger brand, overall. Likewise, through its partnership, the Canadian pot company wants to look into new technology like vape pens and related products.
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