The ETFMG Alternative Harvest ETF (NYSEArca: MJ) rallied Monday on news that tobacco giant Altria Group (NYSE: MO) is mulling an acquisition of Canadian cannabis firm Cronos Group Inc (CRON.TO).
MJ tracks the Prime Alternative Harvest Index and Cronos is the fund’s largest holding at a weight of 9.50% as of Dec. 3rd, according to issuer data.
“Marlboro cigarette maker Altria Group Inc (MO.N) is in early talks to acquire Canadian cannabis producer Cronos Group Inc (CRON.TO), as it seeks to diversify its business beyond traditional smokers, people familiar with the matter said on Monday,” reports Reuters.
Cannabis stocks have been receiving a bevy of positive news, including investment firm Morgan Stanley saying that GW Pharmaceuticals’ new cannabinoid-based therapy will be a “blockbuster.” Additionally, beverage giant Coca-Cola is looking to enter the marijuana industry space with purported interest in Canadian company Aurora Cannabis Inc to help stymie slowing soda sales.
Earlier this year, Constellation Brands, an international producer and beer marketer, invested $5 billion in Canopy Growth Corp. Canopy Growth hopes to parlay this capital infusion, along with a high-level management team and a high-tech distribution center, into becoming a global powerhouse in its respective market.
Cronos Marijuana Deal
“Cronos has not agreed to any deal and there is no certainty it will do so, the sources said. The discussions between Cronos and Altria are expected to last for several weeks, one of the sources added,” according to Reuters.
The midterm election results went as political analysts planned with the Democrats gaining majority in the House of Representatives, while the Republicans maintained control of the Senate. Analysts posit that a more Democratic House would offer the least path of resistance for further marijuana-related legislation, such as the SAFE Act and STATES Act.
On Election Day, three of four states successfully passed cannabis-related legislation. Michigan became the 10th state to legalize recreational marijuana, joining Washington, Oregon, California, Nevada, Colorado, Maine, Vermont, Massachusetts, Alaska.
“The sources asked not to be identified because the matter is confidential. Altria did not immediately respond to a request for comment, while Cronos declined to comment,” reports Reuters.
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