There could be a big bonus for Altria shareholders if the existing Cannabis laws get modified in the United States. As the largest tobacco company in the Unites States Altria would be in a great position to benefit from this new market segment.
Many tobacco companies have started forays into the cannabis industry. Last year Imperial Brands(OTCQX:IMBBY) appointed the Chairman of PharmaCielo, a Canadian Supplier of cannabis oil extracts. Alliance One International a small US tobacco company from North Carolina- bought a 80% stake in Goldleaf Pharm Inc., a pot grow facility in Canada. Philip Morris International of Switzerland bought a patent for GMO plants with higher terpenes- which is the name of the substance that produces the aroma of cannabis.
Tobacco companies have a precedence of preparing for the sale of Cannabis. A search of tobacco company archives revealed some interesting data points from the 1970’s- during the period when it appeared that cannabis might become legal. A hand-written note from Philip Morris President George Weissman stated:
“While I am opposed to its use, I recognize that it may be legalized in the near future…..Thus, with these great auspices, we should be in a position to examine:1. A potential competition, 2. A possible product, 3. At this time, cooperate with the government.
Phillip Morris also requested a sample of marijuana from the Department of Justice for research purposes. The Justice Department drug science’s chief Milton Joffee obliged with a promise to deliver “good quality” marijuana.
To put this in historical context- Philip Morris was a spin-off of Altria which was completed in 2008. And the 1970’s saw eleven states decriminalized marijuana, until political tides went the other way during President Reagan “zero tolerance” and “Just say No” era.
Disclosure: I am/we are long MO, PM.