between Altria and Philip Morris International have now been thrown into some uncertainty as the industry faces its greatest regulatory threat since the 1990s.
“While U.S. litigation risk was sufficient to break these companies apart back in 2008, U.S. regulatory risk is on the same plane, in our view,” Stifel analyst Chris Growe said in a recent note. Trying to offset decades of declining sales in traditional cigarettes, both companies have invested a good deal in e-cigarettes and cannabis Since the FDA’s announcement, Altria and Philip Morris shares have fallen by 7.5% and 3.5%, respectively.
Assuming e-cigarette flavors do become banned in the U.S., Altria will need the merger with Philip Morris to happen “so it can distribute Juul to the developed markets, all of which have varying rules and regulations,” CFRA Research analyst Garret NelsonThere is also “preliminary concern” among marijuana companies, with many worrying how the FDA’s proposed restrictions could “negatively impact cannabis-related regulations” in the U.S.
that he is “very worried” about the vaping situation in the U.S.—Aurora’s stock has dropped almost 15% since the FDA’s announcement last week.
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