Cronos Group Inc CRON-T, the Canadian cannabis producer backed by cigarette maker Altria Group Inc MO-N, is exploring options that include a potential sale after attracting acquisition interest, according to people familiar with the matter.
Toronto-based Cronos, which has a market value of C$972 million ($727.54 million), is working with a financial adviser to handle the expressions of interest in a deal from other companies, including U.S.-based peer Curaleaf Holdings Inc CURA-CN, the sources said.
The sources requested anonymity because the discussions are confidential, and they cautioned that no transaction is certain.
Cronos and Curaleaf declined to comment. Spokespeople for Altria did not immediately respond to a request for comment.
The sale talks involving Cronos come at a time of uncertainty for the cannabis industry, as more favourable regulatory regimes in North America have fuelled fierce competition among a growing field of companies.
The recreational use of cannabis in now legal in 23 U.S. states. Growing and selling marijuana remains illegal under U.S. federal law, although President Joe Biden’s administration has signalled that it is seeking a review on how the drug is classified.
U.S. lawmakers have also been considering making it easier for the cannabis industry to access banking services.
Prior to Thursday, Cronos shares had lost a quarter of their value year-to-date. For the first quarter, Cronos posted a net loss of $19.3 million, compared with a loss of $32.7 million a year ago. Net revenue declined 20% to $20.1 million. Cronos has total cash, including short-term investments, of about $836.43 million, according to its first-quarter report.
Altria, which currently holds a 41% stake in Cronos, invested $1.8 billion in the company in 2019.