Altria, which also owns Philip Morris USA, will invest $1.8 billion in Canada-based Cronos Group for a 45 percent stake in the company.
The first Canadian cannabis grower to list its shares on a US stock market, Cronos said it plans to spend the money on product innovation, noting Altria's expertise in device technology and automation, and fuel Cronos's expansion into new countries amid a global shift toward loosening restrictions on the drug.
Cronos Chairman and CEO Mike Gorenstein said Altria is an ideal partner as it can offer the "resources and expertise we need to meaningfully accelerate our strategic growth".
Shares of Altria (MO) rose 2% in early trading Friday while Cronos (CRON) soared more than 30%.
Cronos shares jumped 22% in Toronto.
Shares of other cannabis companies rallied after the announcement.
Gorenstein said the proceeds will enable Cronos to continue to grow the business overseas and in Canada.
Altria will nominate four directors to an expanded seven-member Cronos board. Marijuana, while still illegal on the federal level in the US, is now allowed in an increasing number of states, while Canada now represents a large laboratory for the nascent industry.
The Marlboro maker's $2.4 billion bet on Cronos is by far the largest move by Big Tobacco into cannabis, and bodes well for the overall sector, said Martin Landry, an analyst with GMP Securities. "And they're seeing a ton of growth", he said in an interview.
Canada on October 17 became the second country in the world to legalize pot for recreational use.
With U.S. smoking rates falling fast, Richmond, Virginia-based Altria is under pressure to find new avenues to expand revenue.
Investors seem to be betting that more deals could be coming. There is also a warrant giving Altria the right to purchase additional shares at $14.25 a share over the next four years.
In February, Pyxus bought controlling stakes in two Canadian marijuana producers, Canada's Island Garden and Goldleaf Pharm.
Separately Altria also said it would discontinue some of its e-cigarette brands, including all of MarkTen and Green Smoke e-vaper products, based on their financial performance and will take a related pretax charge of US$200 million in the fourth quarter.
Cronos confirmed last Friday that it was in talks with Altria after a Reuters report.