Marlboro Investment Lights-Up Fortunes of Canada’s Cronos Group

May 19, 2019

Sales have doubled at Canada’s third largest cannabis company following a near $2 billion investment by Marlboro parent Altria.

Mike Gorenstein, CEO of The Cronos Group told the NASDAQ that Marlboro / Altria’s investment has ignited the business. Announcing its first quarter results, last week, he said: “We’re delighted to have officially closed our transaction with Altria and to kick off a relationship we expect to lead to significant growth and value creation.

“Altria’s investment and the services that Altria will provide to Cronos Group will enhance our financial resources and allow us to expand our product development and commercialization capabilities. Altria’s skills in these areas as well as its regulatory expertise position Cronos Group to compete, scale and lead the rapidly growing global cannabis industry as markets open and welcome legalization.”

Next Generation Vaporizer Move

The added clout of Altria is fuelling the ambitions of Cronos; last week it announced a bold move into the vaporizer market. In a market statement Cronos said it was expanding its Israeli research and development program by opening a facility focused on cannabinoid devices.

Cronos Device Labs, the company’s new R&D facility, is intended to support Cronos Group’s efforts to develop next-generation vaporizer products for cannabinoid applications.

It will serve as the global center of Cronos’ R&D program for vaporizer devices and host a team of 23 people, including product designers; mechanical, electrical and software engineers; and analytical and formulation scientists, the company said.

Cronos believe that while flower dominates cannabis sales around the world, vaporization is quickly catching up – saying many believe it has the potential to become as popular as flowers. Cronos first quarter revenues rose by 120% to $6.5 million primarily driven by the launch of the adult-use market in Canada, said the company in a statement to the Nasdaq.

Management went on to say there were large increases in flower and CBD oil sales.

Nearly $2bn to Invest and Diversify

Marlboro-maker, Altria, invested $1.8 billion in the cannabis company, boosting Cronos stock price and making it the third-largest cannabis stock by market cap, at $5.55 billion.

“The Cronos investment, which gave Altria a 45% non-diluted stake in the company, should allow the duo to work on pre-rolled and vape products, among other initiatives, and it gives Altria, which is a cash-flow machine, the opportunity to acquire Cronos Group at some point down the line.

“As for Cronos, it walked away from this investment with $1.82 billion in cash on its balance sheet after having ended the previous quarter with around $24 million.

“It now has the capital to consider expanding its production capacity, to diversify its product portfolio, or to move into new markets,” reports The Motley Fool financial news website.

For more on industry deals and predictions, make sure to subscribe to our Weekly Newsletter, the top source for all things cannabis-related.

The post Marlboro Investment Lights-Up Fortunes of Canada’s Cronos Group appeared first on Cannadelics.

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