Major tobacco companies like Philip Morris International, British American Tobacco, Imperial Brands, Japan Tobacco International, and China Tobacco have naturally wanted to get in on the marijuana market for some time.
Stocks dealing with the production and selling of cannabis have been going through the roof and these “pot stocks” as they’re being called, are here to stay.
So how will these “big tobacco” companies profit from the growth of their upcoming cousin “pot stocks”?
One way and it has always worked before, is to simply buy out the competition.
Tobacco giant Altria, which is the parent company of Philip Morris USA, and the producer of the massive Marlboro cigarettes brand, is in talks to buy Cronos Group.
UPDATE: Altria has invested $1.8 Billion into Cronos Group
Cronos Group (CRON) is one of the biggest marijuana produces and a top cannabis stock that investors are getting in on.
While this is going on of course many marijuana puritans who beliebe that weed is better than medicine, say that…
Having big tobacco companies come into the cannabis space is a real shame because what we have here is a plant which could potentially cure cancer… and suddenly we’re partnered with the cancer-producers like Philip Morris and Marlboro cigarettes.
Many consider the active chemicals in marijuana like CBD and THC to be saviors and provide affordable alternative medicines for the sick and elderly.
However one way or another it is clear that money talks. And for the managing directors of big marijuana companies having a partner like Altria could greatly improve production and marketing and distribution.
Making it likely that business will prevail and this will be how the tobacco companies get in on the lucrative marijuana business.
Cronos, as an example, the company has been able to produce as much as 258,000 pounds per year. Although they have an extremely high rate of production, the company is showing that they may not be able to end up selling all of this excess cannabis.
If they had a strategic partnership with major tobacco companies they could increase their distribution and earn more profit for their company.
What’s more with a company like Altria being worth over $100 billion they can swallow up a smaller company like Cronos ($1.8 billion market-cap) with relative ease.
They can also use this to gain a foothold in the marijuana market and from there begin to scale our their operations.
Altria has been working to diversify their investments as they move into the vaping space with the potential investment in the company Juul Labs.
And while many from the marijuana market will detest the association with these big tobacco companies they can’t deny the fact that it will allow the market to grow and expand globally.
While right now cannabis is only legal in a handful of states it is likely soon to have many more states, possibly the whole of America, will have access to legal medical – and recreational – weed.
If this is the case then companies like Altria who deal in recreational tobacco have means, marketing and reach to grow the market share.
What’s more if there is a global shift and marijuana becomes globally accepted, likewise Phillip Morris and friends will be good to have.
And while many seek to advertise cannabis’ medicinal effects in an attempt to take on the pharmaceutical market, short term it seems clear that marijuana joining efforts with big tobacco companies is in it’s best interest.
So, controversies aside, it is a profitable business agreement. Marijuana will have to show it’s medicinal effects when being marketed as a medicinal product.
If the marijuana market can make advantageous partnerships both recreationally, and medicinally, it seems that would bode well for the budding industry.