Altria Group’s record-breaking investment of 2.4 billion Canadian dollars ($1.8 billion) in Ontario-based cannabis producer Cronos Group closed Friday, completing what is so far the largest investment by a tobacco company in the cannabis space.
The investment gives Altria a 45% stake in Cronos.
Virginia-based Altria also has a warrant that, if exercised, would bump its ownership in the integrated cannabis firm to 55%.
Cronos CEO Mike Gorenstein said Altria’s investment will:
- Bolster the company’s financial resources.
- Allow Cronos to expand its product development and commercialization capabilities.
- Boost its regulatory expertise.
Altria also agreed to make Cronos its exclusive partner for international cannabis opportunities.
Cronos has its eye on the global market. Part of its core strategic priorities include establishing a global production footprint and developing a global sales and distribution network.
The company previously told Marijuana Business Daily it is comfortable with its current Canadian capacity and does not foresee the need for M&A in this market.
“We will continue to work with our joint venture partners for cultivation in both the Canadian and international markets as well as pursue alternative means of cannabinoid development through our Ginkgo partnership,” a company spokesperson said.
In September, Cronos tapped Boston-based Ginkgo Bioworks in a $122 million venture to biologically engineer a wide range of cannabinoids.
Related to the closing, the board of Cronos has been expanded to seven members.
The new board members include:
- Kevin Crosthwaite, chief strategy and growth officer of Altria
- Bronwen Evans, brand strategist
- Murray Garnick, vice president and general counsel of Altria
- Bruce Gates, Founding Partner of Three Oaks Strategies
Retiring from the Cronos board are Alan Friedman and Michael Coates.
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