Start the conversation
As I've been predicting since I first started covering the field in late 2016, Big Tobacco is diving headfirst into legal cannabis.
Altria Group Inc. (NYSE: MO), maker of Marlboro cigarettes and other major brands, said early last Friday, Dec. 7, that it's taking a $1.8 billion, 45% equity stake in Canadian cannabis leader Cronos Group Inc. (Nasdaq: CRON). Plus, Altria has the option to take over Cronos through 55% ownership over the next four years.
The "bigness" of this news is evident in the price. Altria paid $12.14 per share – an 18% premium over Cronos' stock price as of Thursday, Dec. 6, and approaching the stock's all-time high of $15.30.
And it's evident in how Cronos absolutely skyrocketed on the news.
Altria's dive into pot makes sense, of course. Its long-running global experience in the highly regulated tobacco industry is going to come in handy for an internationally oriented cannabis firm like Cronos, which has operations not just in Canada, but also in Colombia, Germany, Poland, Israel, and Australia.
And Cronos should supply a nice shot in the arm for Altria, which, like all tobacco firms, has been hit hard by public health laws and anti-tobacco campaigns. It no doubt hopes the Cronos deal will help turn the tide.
As for what happens from here – for Cronos and the rest of the legal cannabis industry we follow so closely – no one can say for sure.
But we've seen this story play out before – and can make some pretty good guesses.
Recall Aug. 15, one of legal cannabis' biggest days ever.
That's when Corona beer parent Constellation Brands Inc. (NYSE: STZ) announced that it was taking a major stake in Canadian marijuana leader Canopy Growth Corp. (NYSE: CGC) in a headline-grabbing $3.8 billion deal.
Canopy went on to surge 19% in one day, and then explode another 51% in the week following.
But here's the even more important point: Canopy's rise brought up just about every other pot stock along with it.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.