MO - Could Juul's Problems Make This an Inevitable Move for Altria?
Altria (NYSE: MO) is facing multiple obstacles right now. The federal government is attempting to reduce nicotine levels in cigarettes in an effort to curb addiction. Plus, it's looking at banning the sale of Juul's e-cigarettes. Altria invested $12.8 billion in Juul in 2018 and has already written down most of that investment. A ban could just make it all the more evident that Altria needs to alter its strategy.
Given these challenges, Altria may need to focus on a different growth opportunity, one that could help unlock more potential for its business. The answer may lie within the cannabis industry .
More than three years ago, Altria invested in Canadian-based pot producer Cronos Group (NASDAQ: CRON) . It spent $1.8 billion to take a 45% stake in the business, with the potential to increase its ownership (through warrants) to as much as 55%. As of the end of March, Altria's ownership has fallen to 41.7% due to dilution.
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Could Juul's Problems Make This an Inevitable Move for Altria?