Cronos Group confirmed that it is involved in discussions “concerning a potential investment by Altria Group”, Investopedia reported.
The Canadian outfit stressed that no agreement had been reached and played down any notion that an agreement was inevitable.
It’s not the first time that Altria has approached cannabis producers in Canada: the Financial Times reported that it had also held talks with Tilray while back in October it was said to be on the verge of taking a minority stake in Aphria.
The attraction of such an investment is more immediately obvious for a tobacco company – most people currently smoke the product – than a business operating in soft drinks or alcoholic beverages, but both Coca-Cola and Diageo have looked at possibilities here, while Constellation Brands, the third largest brewer in the US, invested $4bn (C$5bn) in Canopy Growth back in August.
The interest in this market has intensified since Canada’s parliament passed a law to legalise the recreational use of marijuana nationwide, which came into force in mid-October.
While investors are looking for strategic opportunities, producers are looking for staff. Bloomberg data suggests that the eight largest cannabis businesses in Canada are currently recruiting for 1,700 positions – and more openings are expected to follow as the number of legal cannabis products is expanded to include edibles and concentrates.
“We’re going to see a lot of R&D positions and a lot of science-based positions around extraction and formulations,” Alison McMahon, founder of recruitment and training site Cannabis At Work, told the Financial Post.
At the same time as developing new formats, producers will need to create sustainable brands.
Commentators have contrasted the size of the local market (37 million people in Canada) with the US (326 million) and warned of the risk for Canadian producers that they become commodity suppliers to US businesses selling widely recognised brands.
Sourced from Investopedia, Financial Post, Financial Times; additional content by WARC staff