Canopy Growth received a multibillion-dollar investment from Corona owner Constellation Brands in August, CNN Business reported. The investment will give Altria a 45% stake in Cronos at C$16.25 per share.
Altria will also pay another $1.4 billion for warrants that if exercised, would give the Altria a 55 percent ownership stake in the Toronto company.
"Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth", said Mike Gorenstein, Cronos Group's chairman, president and chief executive officer.
Pending regulatory approval, the deal is expected to close within the first half of 2019. Reuters reports that the initial purchase price represents a 16.2% premium compared to the cannabis company's stock price at closing on Thursday on the Toronto Stock Exchange.
For others, however, the investments mark the beginning of the end for the independent cannabis industry as Big Tobacco and Alcohol, which have fought against cannabis legalization for decades, start to take over the market.
"We plan to use a lot of it this to open new markets and keep growing out, but our innovation hub is Peace Naturals in Canada, and that will continue", he said.More news: Comey: Russia investigation initially looked at 4 Americans
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"In Canada the focus seems to still be on capacity, but that is not what this is about", the Cronos CEO added. We want to work with local partners to create value in the supply chain.
As part of the agreement, Altria will be able to nominate four members to Cronos Group's board of directors.
Altria had been assessing market opportunities in the cannabis industry since at least September.
Cannabis investors can't miss the Benzinga Cannabis Capital Conference, the No. 1 networking event for institutional capital and the leading cannabis companies. One canadian can be up to 30 grams of marijuana.
At time of publication, Cronos Group was trading up 32 percent to $13.88 per share.
As well, USA tobacco leaf merchant Alliance One International said its subsidiary acquired a 75 per cent equity stake in Charlottetown-based Canada's Island Garden in January.