Altria Group Inc., the US maker of Marlboro cigarettes, is moving into the pot sector, paying $1.8 billion for a 45% stake in Canadian cannabis firm Cronos, according to reports from Bloomberg.
In the US, legal ambiguity over marijuana use makes domestic wheeling and dealing too risky for many national and multinational businesses. But north of the border, the newly legal weed market is open for business—and Altria is the latest company to make a move to Canada, joining other companies such as liquor giant Constellation Brands.
For Altria, once known as Phillip Morris, it’s an opportunity to get comfortable in a nascent market and position itself for the potential national legalization in the US. With cigarette sales plummeting, now can hardly be a bad time to diversify, and the company is reportedly also in talks to invest in vaping startup Juul.
For Cronos, as the company said in a press release, Altria’s long history in the industry means it offers “product development and commercialization capabilities, and deep regulatory expertise.” In the meantime, Altria is paring back some of its tobacco alternatives, discontinuing vaping products MarkTen and Green Smoke, with the objective of focusing on other “more compelling reduced-risk tobacco product opportunities.”
While Marlboro-branded “weed cigarettes” are not in the pipeline, the news comes after nearly 50 years of speculation to that end. As far back as the late 1960s, Business Week reported tales through the “underground grapevine” of major cigarette companies lying in wait of legalization “so they can start producing grass-laced smokes.” Those in the know alleged that names such as Acapulco Gold and Tijuana Gold were already copyrighted in anticipation, while an unnamed cigarette company had bought up swathes of pot-appropriate farmland in Louisiana, Mexico, and Central America.
A few months later, however, letters to the Rolling Stone editor from key players in the tobacco industry sought to put the record straight. ”Rumors about the cigarette industry’s involvement with marijuana are as persistent as they are false,” said a spokesman for the Tobacco Institute. The then-president of now-defunct tobacco company Brown & Williamson was clearer still: “We are unalterably opposed to the legalization of marijuana, and therefore disclaim any activity which would remotely involve marijuana.” The times, they are a changin’.