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Marlboro Maker Altria May Be In Talks With Cannabis Producer Aphria About A Minority Stake

October 10, 2018 4:15 pm
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Considering the rising prevalence of the cannabis industry, it comes as little surprise that several other industries have announced plans to penetrate the space pending an imminent Canadian legalization and the potential for one in the United States.

Now cannabis may have caught the attention of a major tobacco company.

What Happened

Unidentified sources told The Globe and Mail Altria Group Inc. (NYSE:MO) is interested in taking a minority stake in Canadian cannabis producer Aphria Inc. (OTC:APHQF).

Altria, which makes Marlboro cigarettes, said in September it may explore options in cannabis space in the future while continuing to comply with federal law.

Why It’s Important

A tobacco and cannabis partnership would add a profitable dynamic to consumers and investors who are pulling for a U.S. legalization. In fact, this isn't the first company to do so.

Shares of Pyxus International Inc. (NYSE:PYX) rose more than 3 percent following The Globe's report. The former Alliance One International switched over to cannabis just last month and has since further expanded into tobacco vapes and other cannabis products. Pyxus is up nearly 60 percent over the last five days.

What’s Next

While the announcement has yet to be officially confirmed, several companies have experienced stock movement in light of the comments. The largest exchange-traded fund in the cannabis industry, Horizons Marijuana Life Sciences Index ETF, gained 2.13 percent.

Aphria did release a statement Wednesday afternoon regarding the rumor.

"While Aphria engages in discussions with potential strategic partners and/or investors from time to time, the company notes that there is no agreement, understanding or arrangement in place with a potential investor at this time," the statement said.

Aphria's OTC stock surged 15.44 percent to $15.47, while Altria closed at $62.91 per share.

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