The marijuana industry certainly lived up to the hype in 2018. After years of promises that recreational cannabis would be legalized from Prime Minister Justin Trudeau, Canada made his vision a reality. As the first industrialized country to give the green light to adult-use pot, Canada opens its doors to what could be billions of dollars in added annual sales within the next two or three years.
Of course, quite a few marijuana stock investors didn’t share in the weed industry’s game-changing year. In fact, 10 pot stocks saw at least half of their value disappear in 2018. One of the few pot stocks to have bucked that trend was Ontario-based Cronos Group (NASDAQ:CRON), which gained 34% last year.
The big question is: Can Cronos Group continue this momentum into the new year? With valid arguments to be made on both sides of the aisle, let’s take a closer look…
Cronos Group could again be a top performer
Arguably one of the most followed and liked pot stocks on major U.S. exchanges, Cronos Group brings a number of catalysts to the table that investors can stand behind.
Last year, nothing stood out more than the December-announced deal that Marlboro-cigarette maker Altria (NYSE:MO) would be investing $1.8 billion into Cronos Group. Assuming regulatory approval of the equity investment, Altria is set to become a 45% stakeholder in Cronos, with the option of increasing this stake to 55%, if the warrants it’s also receiving are fully exercised.
This equity investment has multiple purposes. For Altria, it gives the company access to the fast-paced cannabis space at a time when tobacco cigarette volumes in the U.S. are in precipitous decline. Although Altria has managed to grow its business via price hikes, it’s really lacked the innovation needed to take the next step. Cronos Group’s products and partnerships in vape products could be that stepping stone. Not to mention, Altria’s 45% stake demonstrates a larger belief that the marijuana industry is legitimate and here to stay.
Meanwhile, Cronos Group gains a partner with an excellent track record of marketing new products and expanding into new territories. Plus, it doesn’t hurt that Altria has a lot of cash on hand to facilitate research. Assuming Canada’s Parliament approves new consumption options in 2019, such as…
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