Altria to invest $1.8 billion in Canadian marijuana grower

Tobacco giant Altria on Friday said it was investing $1.8 billion in Canadian marijuana company Cronos, while also discontinuing its e-cigarette products after struggling to gain traction in a market dominated by Juul.

In October, Altria stopped selling e-cigarette “pods” and pulled almost all its flavored products from the market in an attempt to help curb teen vaping.

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A spike in teen vaping has prompted a Food and Drug Administration crackdown on e-cigarettes, including severe restrictions on the sales of vaping products.

“We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources. We recognize the impact this decision has on our employees and business partners, which we do not take lightly,” Howard Willard, Altria Chairman and CEO, said in a statement.

But Willard said the company remained committed to alternatives to regular cigarettes.

"We remain committed to being the leader in providing adult smokers innovative alternative products that reduce risk, including e-vapor," he said in the statement.

Eliminating its e-cigarette products is expected to cost the company $200 million, Willard said.  

The FDA is also proposing a ban on menthol-flavored cigarettes, which would have a major impact on Altria, which manufactures Marlboro and Virginia Slim cigarettes, and could force the company to rethink its sales strategy.

The large investment in one of Canada’s leading cannabis companies could provide that shift. Toronto-based Cronos grows and sells medical and recreational marijuana products. Canada legalized recreational marijuana in October. 

Marijuana remains illegal in the U.S. on a federal level, even as more states are passing laws legalizing both medical and recreational marijuana.

Altria said the emerging global cannabis sector is “poised for rapid growth over the next decade.”

The company added the investment also creates a new growth opportunity in an “adjacent category” that is complementary to Altria’s core tobacco businesses.