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Tobacco

Altria Vaporizes MarkTen, Green Smoke

Speculation also grows over Juul buy-in as tobacco maker invests in marijuana
Photograph by CSP Staff

RICHMOND, Va. – The maker of Marlboro cigarettes is making big plays for its future, announcing it will discontinue its electronic-cigarette brands MarkTen and Green Smoke while also declaring its investment in Cronos Group, a collection of cannabinoid-based product manufacturers.

The actions unfold as word that Richmond, Va.-based Altria Group Inc. is in talks with Juul Labs, maker of the popular Juul e-cigarettes. The Wall Street Journal reported that Altria was in talks to purchase a minority interest in the San Francisco-based e-cigarette maker.

Such a move would fall in line with Altria’s official announcement Dec. 7 that it would discontinue the production and distribution of all of its MarkTen and Green Smoke e-vapor products, as well as Verve oral nicotine-containing products. The company said its decision was based on current and expected financial performance of these products, coupled with regulatory restrictions that burden Altria’s ability to quickly improve these products. The company said it will refocus its resources on “more compelling” reduced-risk tobacco-product opportunities.

“We remain committed to being the leader in providing adult smokers innovative, alternative products that reduce risk, including e-vapor,” said Howard Willard, chairman and CEO of Altria Group. “We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources. We recognize the impact this decision has on our employees and business partners, which we do not take lightly.”

Altria’s subsidiaries will begin working with their retailers, wholesalers, contract manufacturers and suppliers to ensure an orderly process, the company said. MarkTen cig-alikes are currently in distribution at retail and through e-commerce, while Green Smoke is primarily available online with limited retail presence. Verve is in limited distribution at retail and e-commerce.

Altria expects to record one-time pretax charges of approximately $200 million, the majority of which would be noncash, asset-impairment charges, in the fourth quarter of 2018 as a result of this decision, the company said. The charges will be excluded from Altria’s adjusted results.

Meanwhile, Altria also made a significant move in the marijuana business, entering an agreement to acquire newly issued shares in Cronos Group Inc., a Toronto-based cannabinoid company. The transaction represents a 45% equity stake in Cronos Group for an aggregate investment of approximately $1.8 billion.

“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” Willard said. “We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential.”

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