Marlboro cigarette maker places a $2.4-billion bet on marijuana

Altria Group Inc., one of the world’s biggest tobacco companies, is diving into the cannabis market with a $2.4-billion buy-in.

The Marlboro cigarette maker is taking a 45% stake in Cronos Group Inc., the Canadian medical and recreational marijuana provider said Friday.

Altria will pay an additional $1.4 billion for warrants that, if exercised, would give Altria a 55% ownership stake in the Toronto company.

That would put Altria’s investment in the same league as the $4 billion spent this year by Constellation Brands to acquire shares of Canopy Growth Corp., another Canadian pot producer.

The August investment by Constellation, which makes Corona beer and other beverages, was the largest to date by a major U.S. corporation in the cannabis market.

Whatever hesitation larger corporations in the United States had about entering the cannabis market appears to be fading if there is a financial justification.

Altria’s huge investment lighted up shares of cannabis companies that have begun to set up shop in Canada, where recreational use was legalized this year.

Cronos shares jumped 22% in Toronto. Altria shares initially climbed, but they ended down 0.4% at $54.18.

Rapid growth in the cannabis market is expected to continue as legalization expands in the United States and social norms change. On Tuesday, ultra-conservative Utah became the latest state to legalize marijuana use for medical purposes.

Consumers are expected to spend $57 billion per year worldwide on legal cannabis by 2027, according to Arcview Market Research, a cannabis-focused investment firm. In North America, that spending is expected to grow from $9.2 billion in 2017 to $47.3 billion in 2027.