Tobacco farmers already switching to Hemp may look at Cannabis
Some of the tobacco farmers are watching their future in cannabis
An astounding investment amounting $1.8 billion was done by Altria Group Inc., the U.S. maker of Marlboro cigarettes in Cronos Group Inc. This investment was made last week in the course of pressure to look for new growth avenues as the smoking rates of U.S. gradually witnessed a drop.
Mike Gorenstein, CEO of Toronto-based Cronos stated that this partnership also comprises the alternative for Altria to take major controlling steps in the future to watch the firm’s U.S. tobacco suppliers switching to cannabis once it gets legalized. With many states legalizing marijuana, it is still banned at the federal level.
Speaking to a source, he further added, “It’s certainly helpful that Altria already has a relationship with local contract farmers”. However, these farmers can be helped with transition without delay into the cultivation of cannabis.
According to the firm’s website, Altria is now outsourcing the production of tobacco to thousands of farmers. Steven Callahan, Altria’s spokesperson said that they’ve been working with thousands of tobacco farmers in today’s date and the relationship is being valued. However, no speculation has been made on the future.
Cronos is growing cannabis at a facility designed about 80 miles in the north of Toronto. Though, it is highly focused on intellectual property and genetic than cultivation. Moreover, it also shares a surge of approximate 22% of a market value amounting $2.3 billion on the contract while forming the 4th largest pot company.
The notable fact is that Altria is not at all into growing its own tobacco. According to the thoughts, the representation of growing own plants is not easy to scale and even to execute very well.
The farmers in certain parts of the U.S. tobacco belt such as Kentucky are already switching to hemp that is one of the kinds of cannabis without the high. The transition is expected to persist with the passing of the U.S. farm bill leading to legalizing the use of hemp products entirely.
Cultivation of cannabis can be a great option for the farmers of the U.S. who are into growing soybean and have been ruined by Chinese tariffs. According to a recent report, the soybean farmers of the U.S. with approximately 444-acre farm and a 49 bushels yield tend to lose an estimated $43,500 in the trade war. However, this amount can be covered by the profit of 16 kilograms of cannabis that can be cultivated on 300 square feet of area.
Cronos is not the only one Canadian pot company who’s looking to minimize its reliance on cultivation in support of higher-margin. Even CannTrust Holdings Inc. is in talks with the farmers of the Niagara region to switch their crops with cannabis.