Marlboro maker places $1.8 billion bet on marijuana company
Altria Group Inc., maker of Marlboro cigarettes, said it's taking a 45 percent stake in Cronos Group, a major Canadian medical and recreational marijuana provider.
- The deal includes the option for Altria Group to take a 55 percent stake in the Cronos Group over the next five years.
- It marks a continuing trend of big tobacco companies moving into the marijuana industry.
- If legalized at the federal level in the U.S., the marijuana industry could shape up to be like the current alcohol market in the U.S.
Big tobacco companies have been quietly eyeing a move into the marijuana industry for decades. Now, as cigarette sales slump and more states move to legalize marijuana, big tobacco is finally gearing up for its long-awaited move.
On Friday, Altria Group Inc., maker of Marlboro cigarettes, said it's taking a 45 percent stake in Cronos Group, a major Canadian medical and recreational marijuana provider. The deal amounts to a $1.8 billion investment and includes an option to increase its stake to 55 percent over the next five years.
"Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria," said Howard Willard, Altria's Chairman and Chief Executive Officer.
Per the agreement, Altria will be able to nominate four members to Cronos Group's board of directors, which will increase from five to seven members.
"The proceeds from Altria's investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers," Cronos Group CEO Mike Gorenstein said.
Shares of Cronos Group soared nearly 30 percent following the announcement, while Altria's stock, which had fallen almost 25 percent this year, rose by 2 percent.
Big tobacco's advantage in the U.S.
Altria just invested in a Canadian marijuana company, but it's not hard to see how tobacco companies might soon begin investing big money in American cannabis companies. Giants like Altria and Phillip Morris would have an especially easy time doing so because they already have legal experts to navigate the regulatory mazes of legalization, sophisticated distribution networks and massive amounts of capital to invest. It'd be similar to how big tobacco companies quickly conquered a vast share of the e-cigarette industry as vaporizers became increasingly popular among American smokers.
Will there soon be a Budweiser of the marijuana industry?
In short, probably.
Many experts estimate the legal recreational pot market will eventually look like the beer or cigarette market in the U.S., where giant names like Budweiser or Marlboro dominate the cheaper side of the market, and craft companies like American Spirit or Sierra Nevada offer customers a higher-end product for a few bucks more.
"There are still tobacconists out there, you still have these craft beers and things like that, but the big sales are from the Budweisers," Stanton Glantz, a tobacco industry researcher and professor of medicine at the University of California, San Francisco, told Rolling Stone. "The big sales are in the national brands."
What remains harder to predict is how the corporatization of the marijuana industry will change the product itself.
Dominique Crenn, the only female chef in America with three Michelin stars, joins Big Think Live this Thursday at 1pm ET.
Scientists discover the inner workings of an effect that will lead to a new generation of devices.
- Researchers discover a method of extracting previously unavailable information from superconductors.
- The study builds on a 19th-century discovery by physicist Edward Hall.
- The research promises to lead to a new generation of semiconductor materials and devices.
Credit: Gunawan/Nature magazine
The number of people with dementia is expected to triple by 2060.
The images and our best computer models don't agree.
A trio of intriguing galaxy clusters<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQzNDA0OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNTkzNzUyOH0.0IRzkzvKsmPEHV-v1dqM1JIPhgE2W-UHx0COuB0qQnA/img.jpg?width=980" id="d69be" class="rm-shortcode" data-rm-shortcode-id="2d2664d9174369e0a06540cb3a3a9079" data-rm-shortcode-name="rebelmouse-image" />
The three galaxy clusters imaged for the study
Mapping dark matter<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="d904b585c806752f261e1215014691a6"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/fO0jO_a9uLA?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>The assumption has been that the greater the lensing effect, the higher the concentration of dark matter.</p><p>As scientists analyzed the clusters' large-scale lensing — the massive arc and elongation visual effects produced by dark matter — they noticed areas of smaller-scale lensing within that larger distortion. The scientists interpret these as concentrations of dark matter within individual galaxies inside the clusters.</p><p>The researchers used spectrographic data from the VLT to determine the mass of these smaller lenses. <a href="https://www.oas.inaf.it/en/user/pietro.bergamini/" target="_blank" rel="noopener noreferrer">Pietro Bergamini</a> of the INAF-Observatory of Astrophysics and Space Science in Bologna, Italy explains, "The speed of the stars gave us an estimate of each individual galaxy's mass, including the amount of dark matter." The leader of the spectrographic aspect of the study was <a href="http://docente.unife.it/docenti-en/piero.rosati1/curriculum?set_language=en" target="_blank">Piero Rosati</a> of the Università degli Studi di Ferrara, Italy who recalls, "the data from Hubble and the VLT provided excellent synergy. We were able to associate the galaxies with each cluster and estimate their distances." </p><p>This work allowed the team to develop a thoroughly calibrated, high-resolution map of dark matter concentrations throughout the three clusters.</p>
But the models say...<p>However, when the researchers compared their map to the concentrations of dark matter computer models predicted for galaxies bearing the same general characteristics, something was <em>way</em> off. Some small-scale areas of the map had 10 times the amount of lensing — and presumably 10 times the amount of dark matter — than the model predicted.</p><p>"The results of these analyses further demonstrate how observations and numerical simulations go hand in hand," notes one team member, <a href="https://nena12276.wixsite.com/elenarasia" target="_blank">Elena Rasia</a> of the INAF-Astronomical Observatory of Trieste, Italy. Another, <a href="http://adlibitum.oats.inaf.it/borgani/" target="_blank" rel="noopener noreferrer">Stefano Borgani</a> of the Università degli Studi di Trieste, Italy, adds that "with advanced cosmological simulations, we can match the quality of observations analyzed in our paper, permitting detailed comparisons like never before."</p><p>"We have done a lot of testing of the data in this study," Meneghetti says, "and we are sure that this mismatch indicates that some physical ingredient is missing either from the simulations or from our understanding of the nature of dark matter." <a href="https://physics.yale.edu/people/priyamvada-natarajan" target="_blank">Priyamvada Natarajan</a> of Yale University in Connecticut agrees: "There's a feature of the real Universe that we are simply not capturing in our current theoretical models."</p><p>Given that any theory in science lasts only until a better one comes along, Natarajan views the discrepancy as an opportunity, saying, "this could signal a gap in our current understanding of the nature of dark matter and its properties, as these exquisite data have permitted us to probe the detailed distribution of dark matter on the smallest scales."</p><p>At this point, it's unclear exactly what the conflict signifies. Do these smaller areas have unexpectedly high concentrations of dark matter? Or can dark matter, under certain currently unknown conditions, produce a tenfold increase in lensing beyond what we've been expecting, breaking the assumption that more lensing means more dark matter?</p><p>Obviously, the scientific community has barely begun to understand this mystery.</p>
Scientists have found evidence of hot springs near sites where ancient hominids settled, long before the control of fire.