Altria May Strike a Deal With a Cannabis Startup

As the declining cigarette sales keep pushing Altria to explore other possible avenues of income, besides vaporizers, the tobacco giant is now also eyeing cannabis.

Diane Caruana

December 7, 2018

Earlier this week, an article on The New York Times reported that Juul Labs and Altria are in talks, and that if a deal is struck, Altria will get a chunk of the three-year-old company, which this summer was valued at approximately $16 billion.

The value of Marlboro maker Altria Group Inc., has dropped by 13% over the past 12 months, which explains why it is aiming for other markets.

The value of Marlboro maker Altria Group Inc., has dropped by 13% over the past 12 months, which explains why it would want a slice of Juul Lab’s pie, especially when the renowned e-cigarette startup is known to be ever expanding in foreign markets.

Subsequently, earlier this week, MarketScreener has reported that the tobacco giant is also in separate talks with Canadian cannabis company Cronos Group Inc. The latter is the fourth most valuable publicly listed marijuana company, with a total valuation of about $1.9 billion.

Losing credibility when partnering with “Big Tobacco”

Certainly, both Juul and Cronos must be aware that striking a deal with a tobacco company would taint their images and lead to a loss of credibility on their part. In fact, last week The Wall Street Journal reported that current and former Juul employees are displeased by the ongoing talks, as they feel that a deal with Altria would betray Juul’s stated mission; helping addicted cigarette smokers switch to less harmful products.

Similarly Cronos might be reluctant to agree to a deal, as this could preclude other potential partnerships with pharmaceutical, food or beverage companies. Last Monday, the Cannabis firm did confirm that it was in early discussions with Altria, however “there can be no assurance such discussions will lead to an investment, ” it emphasized.

Read Further: MarketScreener