Canadian cannabis producer Cronos Group announced Friday that it will receive a $2.4 billion equity investment from Altria Group, the maker of Marlboro cigarettes.
Cronos had previously confirmed reports that it was in talks with Altria, which joins Molson Coors, Constellation Brands, and other established companies that are making moves in the cannabis space.
For its initial investment, the tobacco giant will acquire a 45% ownership stake in Cronos. The arrangement also allows for Altria to invest up to a further $1.4 billion to increase its ownership stake in Cronos to 55%.
“Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Mike Gorenstein, Cronos Group Chairman, President, and Chief Executive Officer. “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers.”
According to a news release, Altria’s resources will better position the Cronos Group “to support cannabinoid innovation, create differentiated products and brands across medicinal and recreational categories, and expand its global footprint and growing production capacity.”
The deal will leverage Altria’s decades of experience navigating the complex regulatory landscape, government affairs, compliance, and brand management. Tapping into Altria’s expertise in product development, Chronos also expects to expand its product offerings including device technologies such as cannabis vape products, as regulations permit.
With files from The Canadian Press.