>> Reuters reporting exclusively on Monday that Altria Group, one of the world's largest producers of tobacco products and formerly known as Philip Morris, is in early stage talks to buy Canadian cannabis producer Cronos. That's according to people familiar with the potential deal which, if closed, would represent one of the biggest tie-ups between mainstream tobacco and the booming, but risky marijuana sector.
Reuters deals editor Greg Roumeliotis broke the story.>> There's a tricky calculation that Altria and other tobacco companies looking to get into the space have to make. On the one hand, they don't want to invest too early because, for many of those marijuana producers, it's not clear where regulations will go, how quickly the market will expand.
On the other hand, if they want to play it safe and sit it out, they may have to pay up big time by the time these companies look like they're a safer bet. Or a competitor can swoop in and buy them, so it's a tricky calculus. The talks we reported on today show that Altria has decided now's the time.
>> Canada, where Cronos is based, legalized recreational use of marijuana this year. And is seen as a testing ground for pot companies that expect to expand globally, as other countries like the US could potentially follow suit.>> State by state in the United States, you have more jurisdictions approving the use of recreational marijuana.
Same initiatives exist around the world, and this would be a major, bold bet by Altria to diversify its business beyond traditional smokers.>> Sources tell Reuters that Cronos has not agreed to any deal and there is no certainty it will do so. But the report of deal talks lifted shares of Cronos up more than 20% and took other Canadian cannabis stocks up with it.