Cronos-Altria Deal Boosts Marijuana ETF: Will This Continue?

The marijuana industry is super busy with deal activities. A number of alcoholic beverage companies are investing in or partnering with cannabis producers in a move to benefit from Canada's move to legalize marijuana for recreational use. The latest catalyst is the Marlboro cigarette maker Altria Group (MO  - Free Report), which announced that it will invest $1.8 billion (C$2.4 billion) in Canadian cannabis producer Cronos Group (CRON  - Free Report).

As part of the deal, Altria will buy 146.2 million Cronos shares at C$16.25 a piece, which marks a 16.2% premium to the Dec 6 close on the Toronto Stock Exchange and a 41.5% premium to the company's 10-day volume weighted average price ending Nov 30. The investment will represent a 45% equity stake in Cronos with a warrant to increase ownership to 55% over the next four years. The transaction is expected to finalize within the first half of 2019. Shares of CRON rallied 21.7% at the close on Dec 7.

The news sparked a rally in the broad cannabis sector and raised hopes of further investments. Corona beer maker Constellation Brands (STZ - Free Report) in August announced a $4 billion investment in Canadian cannabis producer Canopy Growth (CGC  - Free Report), marking the biggest investment in the industry.

In other news, Aurora Cannabis jumped 10.8% after it announced its expansion into Mexico with the establishment of an exclusive supply deal with Farmacias Magistrales S.A. The company said Farmacias, a pharmaceutical manufacturer and distributor that reaches 80,000 retail points and 500 pharmacies and hospitals, recently received the first import license graded from Mexico's Federal Commission for Protection Against Health Risks, which allows the company to import medical cannabis containing THC.

Leafbuyer Technologies recently partnered with recreational and medical cannabis dispensaries throughout several legal markets to bring consumers the best deals for the 2018 Green Friday Deals Event in late November.

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