Altria (MO) will invest $1.8 billion in cannabis company Cronos Group (CRON), taking about a 45% stake in the company. Additionally, Altria announced plans to exit some of its e-cigarette products, including MarkTen and Green Smoke. According to a report, citing a source, the company is still considering an investment in e-cigarette company Juul.

ALTRIA BETS ON CANNABIS

Altria announced on Friday that it will buy a 45% stake in Cronos Group for about $1.8 billion. As part of the agreement, Altria will gain the right to nominate four directors, including one independent director, to serve on Cronos Group's board of directors, which will be expanded from to seven from five directors. The agreement also includes a warrant to acquire an additional ownership interest in Cronos. Cronos Group Chairman, President and Chief Executive Officer Mike Gorenstein said in a statement that Altria "is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth." He added that "The proceeds from Altria's investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers. Importantly, Altria shares our vision of driving long-term value through innovation, and we look forward to continuing to differentiate in this area." On Monday, Reuters reported that Altria was in early stage talks to acquire Cronos Group as it looks to diversify business beyond traditional smokers.

ALTRIA TO DISCONTINUE SOME E-CIG PRODUCTS

 Altria also said it will discontinue its MarkTen and Green Smoke e-cigarette products and its Verve oral nicotine. In a statement, Altria cited the current and expected financial performance of these products combined with regulatory restrictions that burden Altria's ability to quickly improve these products. The company said it plans to refocus its resources on more compelling reduced-risk tobacco product opportunities. Altria expects to record a one-time pretax charge of about $200M in the fourth quarter in connection with these steps. Most of the charge will be a non-cash asset impairment charge, and will be excluded from the company's adjusted earnings, it said.

ALTRIA STILL CONSIDERING JUUL INVESTMENT

Last week, The Wall Street Journal reported that Altria is in talks to take a "significant" minority interest in Juul Labs, a controversial e-cigarette startup that was last valued at $16 billion in a private fundraising round this summer. Juul has drawn criticism over its products' popularity with teens and the U.S. Food and Drug Administration previously announced plans to place restrictions on sales of flavored e-cigarettes. Juul also said it would restrict sales of nearly all its flavored pods to the internet, and stop most social media promotion to combat youth vaping. Following the FDA statement on the agency's proposed steps against underage smoking, Altria General Counsel Murray Garnick said it "welcomed" the FDA's efforts to address the underage use of e-vapor products and said it believes Congress should raise the legal age of purchase for all tobacco products to 21. Altria previously said it would pull its pod-based e-vapor products from the market until approved by FDA. Following the Cronos stake news, a person familiar with the situation told CNBC that Altria is still considering an investment in Juul and that talks could conclude as soon as later this month. In October, Altria was said to be in talks to acquire an equity stake in Canadian cannabis grower Aphria (APHA). Further, the report said Altria executives had met with Aphria's management on several occasions, but it could take time for the two companies to strike a deal. On Monday, The Financial Times said Altria has held discussions with Aphria and Tilray (TLRY).

WHAT'S NOTABLE

 On Friday, CBS News correspondent Paula Reid tweeted that President Trump confirmed that conservative William Barr will be nominated as the next Attorney General. Barr served as Attorney General from 1991-1993 during the administration of President George H. W. Bush. Height Capital Markets analyst Stefanie Miller said that "It is our understanding that Barr has not made comments about marijuana policy in the years since he was AG, which leaves us in a holding pattern until more information is released," Seeking Alpha reported. Miller also noted that "Notable drug policy under Bush either happened before Barr became AG or through agencies other than the DOJ, leaving Barr with no expectation to comment. Moreover, even if Barr made critical comments while he was AG, those comments would be dated by a quarter century and in line with the beliefs of the majority of Americans in the early 1990s."

OTHER CANNABIS STOCKS

Other publicly traded companies in the space include Aurora Cannabis (ACB), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Canopy Growth (CGC), General Cannabis (CANN), India Globalization Capital (IGC), ICC International Cannabis (KNHBF), MedMen Enterprises (MMNFF), Biome Grow (ORTFD), MediPharm Labs (MLCPF) and Indiva (NDVAF).

PRICE ACTION: Shares of Altria are up 2.2% in morning trading to $55.59, while Cronos Group surged 21.2% to $12.66.