Marlboro cigarette maker Altria on Friday said it’s investing nearly $2 billion in a Canadian cannabis company and pivoting away from its e-cigarette business, which faces new regulatory hurdles and has struggled for market share against major players like JUUL.
The Richmond-based company said it is investing in Cronos Group, of Toronto, because it thinks the marijuana sector is poised for rapid growth over the coming decade. Canada legalized recreational marijuana in October.
Marijuana is still illegal at the federal level in the U.S., though many states have approved it for medicinal use. Others allow limited recreational use among adults, or have decriminalized possession. Congress has also debated ways to open the door to more products containing hemp.
Altria said Cronos has a market presence on five continents and serves both the medicinal and recreational-use markets.
“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,” Altria Chairman and CEO Howard Willard said.
At the same time, Altria said it is discontinuing its MarkTen and Green Smoke line of vaping products, saying the potential for growth isn’t there.
“We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources,” Mr. Willard said.
The changes will cost the company about $200 million.
“We recognize the impact this decision has on our employees and business partners, which we do not take lightly,” Mr. Willard said.
The shakeup comes amid a crackdown on vaping products by the Food and Drug Administration, which is alarmed by skyrocketing use of e-cigarettes among teenagers.
Commissioner Scott Gottlieb recently proposed walling off flavored e-cigarettes to retailers with age-restricted access and online vendors with tough age-verification protocols. He also wants to ban menthol cigarettes.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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