Philip Morris parent Altria invests $2.4 billion in Cronos cannabis

One of the world’s biggest tobacco companies is bullish on bud.

Altria, parent company of New York-based Philip Morris and maker of Marlboro cigarettes, invested $2.4 billion into a Toronto medical and recreational marijuana company.

The deal gives Altria a 45 percent stake in Cronos Group.

Cronos said Friday that the Richmond, Virginia, tobacco company will pay another $1.4 billion for warrants that, if exercised, would give Altria a 55 percent majority ownership stake.

Cronos confirmed that it was in talks with Altria this week.

Cronos Group’s chairman, president and CEO Mike Gorenstein praised the deal in a prepared statement:

Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth. 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.

Importantly, Altria shares our vision of driving long-term value through innovation, and we look forward to continuing to differentiate in this area. As one of the largest holding companies in the adult consumer products sector, Altria has decades of experience in regulatory, government affairs, compliance, product development and brand management that we expect to leverage, particularly as new markets for cannabis open around the world.

Howard Willard, Altria’s chairman and CEO said investing in Cronos underscores the company’s interest in an emerging market and represents a new growth opportunity for Altria.

“We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential,” he said.

Altria’s wholly-owned subsidiaries include Philip Morris USA Inc., U.S. Smokeless Tobacco Company LLC, John Middleton Co., Sherman Group Holdings LLC. The company also holds an equity investment in beer giant Anheuser-Busch InBev SA/NV (NYSE: BUD).