Early yesterday morning, Canadian cannabis firm Cronos Group Inc. (Nasdaq:CRON) was up an astounding 25% in mere hours.
At open yesterday morning, Cronos was trading around $9.25. By noon, it has reached $11.63.
So why the sudden pop?
Well, the rumor mill has been swirling lately, and sources say that Altria Group Inc. (NYSE:MO), maker of Marlboro cigarettes, is looking to make a deal to buy Cronos.
Hence, Cronos stock’s incredible 25% pop in only a few hours. Of course, it didn’t stay at this high – but it’s certainly still up, by about 15%.
This rally isn’t unheard of, especially in the marijuana sector. When Aurora Cannabis (NYSE:ACB) was rumored to have struck a deal with The Coca-Cola Co. (NYSE:KO), prices for Aurora jumped nearly 29%.
And when Canopy Growth Corp. (NYSE:CGC) signed a $3.8 million contract with Constellation Brands Inc. (NYSE:STZ), Canopy surged 19% in one day, then exploded another 30%, and brought other pot stocks with it.
So, we know that buyout rumors these stocks skyrocketing – and that’s just one more reason to own them.
Altria has expressed interest in the cannabis market before – in fact, much before it was legal, even medically, in any state. In a memo sent in 1970, Altria execs recognized marijuana as an “alternate, perhaps a superior, method of satisfying the needs that cigarette smoking satisfies.”
More recently, in 2016, Altria invested $20 million into Syqe Medical Ltd., an Israel-based company that produced 3D-printed cannabis inhalers.
Of course, this was after they announced that the company had “no plans to sell marijuana products.”
Altria has also taken an interest in Juul, a tobacco company that makes e-cigarettes. There is nothing to say that these deals are or aren’t connected – Altria has refused to comment.
We do know that cannabis and e-cigarette companies are growing rapidly. Counting both legal and black-market sales, the cannabis market has hit approximately $52.5 billion, according to Marijuana Business Daily. The e-cigarette market is projected to hit $6.6. billion, according to Wells Fargo, partly in thanks to the rising popularity of Juul’s products.
So it’s no surprise that Altria is looking to get into these markets. Since the 1970s, the tobacco industry’s bottom line has been hit hard by public health laws and anti-tobacco campaigns. The laws restrict and heavily tax cigarette use, and campaigns such as D.A.R.E. have been introduced in schools to educate students on the dangers of cigarettes.
As a result, the industry’s stocks have fallen precipitously. Altria specifically is down more than 20% in 2018 alone. However, with the rumors of Juul and now Cronos, Altria’s stock has rallied about 5% in the past week.
Cronos, Aurora, and Canopy are only three of the pot stocks that have made waves recently. There are so many players on the field, so to speak, that it can be hard to make a sound investment.
That’s why we’ve put all the information in one place. At the National Institute of Cannabis Investing (NICI), we’ve gathered a handful of cannabis investing experts to give you the best advice on everything cannabis. Even former Speaker of the House John Boehner is getting in on the “green rush” cannabis is creating!
I am personally on the advisory board, which means I have the inside scoop to share with my readers. You can click here to access the rebroadcasting of NICI’s first-of-its-kind conference.
Cheers and good investing,
Michael A. Robinson