Altria to Make Growth Investment In Cronos Group

Altria to Invest USD $1.8 Billion (CAD $2.4 Billion) for 45% Ownership Interest in Leading Global Cannabinoid Company with Warrant to Increase Ownership to 55% Over Next 4 Years

VIRGINIA: Altria Group today announced that it has entered into an agreement to acquire newly issued shares in Cronos Group, a leading global cannabinoid company, headquartered in Toronto, Canada. The transaction represents a 45% equity stake in Cronos Group, at a price of CAD $16.25 per share, for an aggregate investment by Altria of approximately USD $1.8 billion (approximately CAD $2.4 billion).

As part of the agreement, at closing, Altria will have the right to nominate four directors, including one independent director, to serve on Cronos Group’s Board of Directors, which will be expanded from five to seven directors. The agreement includes a warrant to acquire an additional ownership interest in Cronos Group at a price of CAD $19.00 per share exercisable over four years from the closing date. If exercised in full, the warrant would increase Altria’s ownership in Cronos Group by 10% to approximately 55%.

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“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” said Howard Willard, Altria’s Chairman and Chief Executive Officer. “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.”

“Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Mike Gorenstein, Cronos Group’s Chairman, President and Chief Executive Officer. “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 Cronos Group in this area.”

This investment positions Altria to participate in the emerging global cannabis sector, which it believes is poised for rapid growth over the next decade. It also creates a new growth opportunity in an adjacent category that is complementary to Altria’s core tobacco businesses.

Altria expects its investment to help Cronos Group accelerate its growth strategies and its R&D and intellectual property development. Additionally, Altria will provide expertise to help Cronos Group thrive in the growing global cannabis market. These services may include regulatory affairs, regulatory science, compliance, government affairs and brand management.

Major Alcohol Industry Association Announces Support For Right To Legalize Cannabis

DISTRICT OF COLUMBIA: Wine & Spirits Wholesalers of America (WSWA) has announced an official policy position in favor of a state’s right to establish a legal, well-regulated, adult-use cannabis marketplace; it is the first and only beverage alcohol association to do so. In states where cannabis is or will subsequently be legalized, the association calls on the federal government to respect the right of states to legalize cannabis if they adopt cannabis market regulations that meet a framework similar to that governing beverage alcohol.

“Eight decades ago, Americans acknowledged that the Prohibition of alcohol was a failed policy. The state-based system of regulation, adopted after Prohibition, created a U.S. beverage alcohol market that is the safest, most competitive and best regulated in the world,” WSWA Acting Executive Vice President, External Affairs, Dawson Hobbs said.

The legal cannabis market continues to expand in the United States, generating $7.2 billion in economic activity in 2016.

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WSWA believes that, similar to alcohol, the federal government should give states the power to legalize cannabis, but should ensure they meet an appropriate regulatory threshold.

“Legalization should include regulations that set age restrictions on buyers, as well as license and regulate the supply chain of cannabis, including growers, distributors, retailers and testing laboratories.  ” Stuart said.

WSWA outlined the key components of effective cannabis market regulation, similar to those governing beverage alcohol. These include:

  • A minimum age of 21 for purchase, possession and use, along with penalties for providing cannabis to minors;
  • Establishment of Driving Under the Influence impaired driving standards;
  • Licensing of producers, processors, distributors and retailers; Policies to prevent vertical monopoly/integration;
  • Hours and days of sale parity with beverage alcohol;
  • Tax collection and enforcement; Measures to prevent diversion of cannabis to other states;
  • Restrictions on sale/common carrier delivery;
  • Labeling requirements that include potency and health requirements;
  • Testing of formulas to ensure product purity and consistency;
  • Advertising restrictions designed to discourage underage access and promote responsible consumption;
  • Restrictions on health claims on packaging;
  • Establishment of a designated agency overseeing cannabis industry regulation in each state;
  • Penalties for licensee violations on par with the state’s alcohol regulations;
  • and Regulations that ensure all products in market can be tracked/traced to source processor/producer.

 

PRØHBTD Secures $12 Million Funding

CALIFORNIA: PRØHBTD, a leading cannabis lifestyle media and brand platform, has raised USD $12 million in funding, $8 million of which was recently secured from a Series A round of investment. In addition to being a lead investor, the Delavaco Group acted as the sole strategic advisor to PRØHBTD. This financing represents the single largest round of funding for a media related company in the cannabis industry to date and follows an initial $4M of seed funding.

According to company press release the funding will be used to accelerate the continued production and distribution of PRØHBTD’s slate of original content, make new key hires and deepen the expertise and capabilities across the company through strategic acquisitions, as it continues to help cannabis companies build their businesses and reach global audiences.

PRØHBTD will soon announce its plans for a Canadian public offering that will provide investors with an opportunity to participate in the future growth of the cannabis industry’s leading modern media company.

Aaron Serruya from Serruya Private Equity said “We’ve seen every media opportunity in the cannabis industry but none of them compare to what the team at PRØHBTD has built. We expect great things from the company and we’re excited to support the team’s global vision.”

PRØHBTD has built a first of its kind cannabis ecosystem that includes a brand creation and product development platform, complemented by an original content studio and expansive media distribution network. Through the company’s in-house creative agency, more than 60 cannabis brands partner with PRØHBTD for brand and product development, design, market strategy and branded integration within its original content, which is led by Chief Content Officer Josh Otten and his team of award winning content creators.

PRØHBTD built the first and largest multi-platform video network in the cannabis industry. In addition to the company’s flagship lifestyle destination www.prohbtd.com, video content is syndicated across 15 different partner platforms including Apple TV, Roku, Amazon, Android TV, Dailymotion and others, which saw more than 21 million video views in May with an average view through rate of 3:45 minutes. This reach and engagement provides cannabis brands with effective means to reach an available audience of more than 100 million consumers when many traditional media platforms are restricted or closed to them.

In an online universe littered with throw-away social videos and outdated cannabis narratives, PRØHBTD has quietly built the world’s largest cannabis lifestyle original video library. This library is currently being licensed to third parties to extend the PRØHBTD brand into new global markets.

“We started PRØHBTD to tell cutting edge stories through premium lifestyle cannabis content in a way that no-one else was doing,” said Drake Sutton-Shearer, CEO of PRØHBTD. “We are fortunate to have such an incredible group of investors and advisors so now it’s time to turn up the heat and accelerate our global mission to mainstream cannabis and connect brands to consumers. Game on.”

The financing comes with additional revenue generating agreements from leading companies across the cannabis industry who have selected PRØHBTD to invest in and partner with. This is a testament to the momentum and strength of the core business that the company has built over the past four years.

PRØHBTD continues to strike exclusive strategic partnerships that connect the company and the industry with Wall Street and Madison Avenue. Its partnership with Advertising Week helps mainstream companies to connect with the cannabis brands of the future and understand who the cannabis consumer is. After last year’s history making event in Times Square, the company is headed to Sydney, Australia on July 30th to introduce international cannabis thought leaders to the APAC region, before returning for Advertising Week New York in October.

Additionally, the exclusive partnership with Entrepreneur Magazine will produce the inaugural “Top 100 Cannabis Entrepreneurs” list, which will spotlight 100 visionaries and leaders in this exciting industry and introduce them to the mainstream business community.

Future plans include launching educational and experiential programs to help consumers better understand the many benefits of cannabis as a health and wellness tool.

In addition to the PRØHBTD founders Drake Sutton-Shearer (CEO), Josh Otten (CCO) and Kieve Huffman (COO) investors and advisors include Donald Glover, Swedish House Mafia’s Axwell Hedfors, Joel and Benji Madden, Peter Lewit, Steve Shapiro, Joey Houssian, Serruya Private Equity, Delavaco Capital, Cresco Capital, Green Acre Capital, Clarus Securities, Explorer Equity Group, Vector Management Partner Andy Mendelsohn, Advertising Week founders Lance Pillersdorf and Matt Scheckner, Guggenheim Media Managing Director Kraig Fox, Wharton Marketing Professor David Bell, former Tribeca Film Festival and droga5 CEO Andrew Essex, NYC design firm 2X4, Mesh Ventures, former Coca-Cola and MDC Partners executive Craig Binkley, Shevin Law Group founder Eric Shevin, Peter Witting, EPIC Records EVP and CFO Lynn Hazan, 414 Media Advisors, Therapy Studios and Therapy Content, Chris Berman, Format Entertainment CEO Dave Jordan, CAA’s Ryan Harlacher, Executive Producer and former HBO and Televisa executive Michael Garcia, Language Media CEO Ryan Tomlinson and Sheppard Mullin Blockchain and Digital co-team leader Jim Gatto.