Where there is smoke, as the saying goes, there is fire. But not always, when it comes to cigarette-makers as it turns out. At least not when they are eyeing the cannabis sector of late.
As the marijuana industry is heating up again, tobacco companies that have not ventured in the space are keeping a close eye on the growing legal cannabis market.
Several cigarette-makers have already made strategic investments and partnerships. The most notable ones have involved some of the biggest tobacco companies.
These partnerships include Altria Group (NYSE:MO), which markets Malboro in the US teaming up with Canadian marijuana grower Cronos Group (NASDAQ:CRON) (TSX:CRON) back in 2018, during the early days of cannabis legalization in that country; and more recently, British American Tobacco (NYSE:BTI) teaming up with OrganiGram Holdings (NASDAQ:OGI).
Last week, however, it was Philip Morris International (NYSE:PM) looking like it was kicking the tires on the cannabis industry. In an interview, the cigarette-maker’s CEO, Andre Calantzopoulos, said the company is looking at “avenues to pursue” in the cannabis space. And although that sounded vague, the international tobacco giant was very specific about a less intuitive route.
According to the a report by Bloomberg News, Calantzopoulos said:
“… our priority is what we’re doing with our smoke-free products, and that’s where I would stay on cannabis.”
The multinational tobacco firm that is behind such brands as Virginia Slims, Benson & Hedges and Marlboro outside the US, is perhaps telegraphing that it will be making a less obvious play in the marijuana space. Perhaps it could be something that would align with the small investment it made early on when it invested in a small Israeli medical cannabis company, Syqe Medical. That deal reportedly aimed at locking down global rights to technology for smoke-free nicotine projects and applications.
Tilray Marks Merger With Buy Rating
Canadian cannabis companies Tilray (NASDAQ:TLRY) and Aphria (NASDAQ:APHA) (TSX:APHA) finally announced the closing of their merger on Monday, putting the ultimate stamp of approval on the creation of the largest marijuana grower in the world.
The measure of the largest cannabis company is based on revenue generated. The new merged company, which will function and trade under the Tilray name on the US NASDAQ exchange, will have a market capitalization of about $81 million.
The final go-ahead for the merger came last Friday, when Tilray shareholders approved the move.
Last week, Merrill Lynch analyst Heather Balsky initiated coverage of Tilray stock, giving it a ‘buy’ rating and setting a target of $23. Shares of Tilray on Monday traded down more than 7% to close at $17.02, which predicts a possible 35% gain.
Tilray stock has increased by just over 150% in the last year.