(1) Our investment in Cronos at March 31, 2022 and December 31, 2021 consisted of our equity method investment in Cronos of $551 million and $617 million, respectively, and also included the Cronos warrant and the Fixed-price Preemptive Rights, which are measured at fair value (collectively, “Investment in Cronos”). See below for further discussion.


	For the Three Months Ended March 31,
(in millions)	2022		2021
ABI (1)	$	(200)	$	(318)
Cronos (1)	66		67
(Income) losses from investments under equity method of accounting	(134)		(251)
JUUL	100		200
(Income) losses from equity investments	$	(34)	$	(51)

(1) Includes our share of amounts recorded by our investees and additional adjustments, if required, related to (i) the conversion from international financial reporting standards to GAAP and (ii) adjustments to our investment required under the equity method of accounting.

At March 31, 2022, we had an approximate 10% ownership interest in ABI, consisting of 185 million restricted shares of ABI (the “Restricted Shares”) and 12 million ordinary shares of ABI. The Restricted Shares:

The Restricted Shares were subject to a five-year lock-up period that ended October 10, 2021. As of this filing, we have not elected to convert our Restricted Shares into ordinary shares of ABI.

We account for our investment in ABI under the equity method of accounting because we have the ability to exercise significant influence over the operating and financial policies of ABI, including having active representation on ABI’s board of directors and certain ABI board committees. Through this representation, we participate in ABI’s policy making processes.

The fair value of our equity investment in ABI is based on (i) unadjusted quoted prices in active markets for ABI’s ordinary shares and was classified in Level 1 of the fair value hierarchy and (ii) observable inputs other than Level 1 prices, such as quoted prices for similar assets for the Restricted Shares, and was classified in Level 2 of the fair value hierarchy. We can convert the Restricted Shares to ordinary shares at our discretion. Therefore, the fair value of each Restricted Share is based on the value of an ordinary share.

The fair value of our equity investment in ABI at March 31, 2022 and December 31, 2021 was $11.9 billion for both periods, which exceeded its carrying value of $11.3 billion and $11.1 billion by approximately 5% and 7%, respectively.

In the first quarter of 2022, ABI will record a non-cash impairment charge of $1.1 billion on its investment of AB InBev Efes JSC, which has direct exposure to the Russia and Ukraine regions. Consistent with the one-quarter lag for reporting ABI’s results in our financial results, we expect to record our share of the financial statement impact related to this impairment, which we do not expect to be material, in the second quarter of 2022.

In December 2018, we made an investment in JUUL for $12.8 billion and received a 35% economic interest in JUUL through non-voting shares, which were convertible at our election into voting shares (“Share Conversion”), and a security convertible into additional non-voting or voting shares, as applicable, upon settlement or exercise of certain JUUL convertible securities (the “JUUL Transaction”). At March 31, 2022, we had a 35% ownership interest in JUUL, consisting of 42 million voting shares.

We received a broad preemptive right to purchase JUUL shares, exercisable each quarter upon dilution, to maintain our ownership percentage and we are subject to a standstill restriction under which we may not acquire additional JUUL shares above our 35% interest. Furthermore, we agreed not to sell or transfer any of our JUUL shares until December 20, 2024.

As part of the JUUL Transaction, we entered into a services agreement with JUUL pursuant to which we agreed to provide JUUL with certain commercial services, as requested by JUUL, for an initial term of six years. In January 2020, we amended certain JUUL Transaction agreements and entered into a new cooperation agreement. In conjunction with these amendments, the parties agreed that we would discontinue all services as of March 31, 2020 except regulatory affairs support for JUUL’s pursuit of its pre-market tobacco applications and/or its modified risk tobacco products applications.

We also agreed to non-competition obligations generally requiring that we participate in the e-vapor business only through JUUL. However, we have the option to be released from our non-compete obligation (i) in the event JUUL is prohibited by federal law from selling e-vapor products in the United States for a continuous period of at least 12 months (subject to tolling of this period in certain circumstances), (ii) if the carrying value of our investment in JUUL is not more than 10% of its initial carrying value of $12.8 billion or (iii) if we are no longer providing JUUL services as of December 20, 2024.

Additionally, with respect to certain litigation in which we and JUUL are both defendants against third-party plaintiffs, we agreed not pursue any claims against JUUL for indemnification or reimbursement except for any non-contractual claims for contribution or indemnity where a judgment has been entered against us and JUUL.

In April 2020, the U.S. Federal Trade Commission (“FTC”) issued an administrative complaint challenging our investment in JUUL. In February 2022, the administrative law judge dismissed the FTC’s complaint. FTC complaint counsel appealed that decision to the FTC, which appeal remains pending. For further discussion, see Note 10. Contingencies - Antitrust Litigation.

In November 2020, we exercised our rights to convert our non-voting JUUL shares into voting shares. We do not currently intend to exercise our additional governance rights obtained upon Share Conversion, including the right to elect directors to JUUL’s board, as described below, or to vote our JUUL shares other than as a passive investor, pending the outcome of the FTC litigation.

▪ restructure JUUL’s current seven-member board of directors to a nine-member board that will include independent board members. The new structure will include: (i) three independent directors (one of whom will be designated by us and two of whom will be designated by JUUL stockholders other than us) unanimously certified as independent by a nominating committee, which will include at least one Altria designee, (ii) two directors designated by us, (iii) three directors designated by JUUL stockholders other than us and (iv) the JUUL chief executive officer; and

▪ create a litigation oversight committee, which will include two Altria designated directors (one of whom will chair the litigation oversight committee). The committee will have oversight authority and review of litigation management for matters in which JUUL and we are co-defendants and have, or reasonably could have, a written joint defense agreement in effect between them. Subject to certain limitations, the Litigation Oversight Committee will recommend to JUUL changes to outside counsel and litigation strategy by majority vote, with disagreements by JUUL’s management being resolved by majority vote of JUUL’s board of directors.

Following Share Conversion in the fourth quarter of 2020, we elected to account for our equity method investment in JUUL under the fair value option. Under this option, our condensed consolidated statements of earnings include any cash dividends received from our investment in JUUL and any changes in the estimated fair value of our investment, which is calculated quarterly. We believe the fair value option provides quarterly transparency to investors as to the fair market value of our investment in JUUL, given the changes and volatility in the e-vapor category since our initial investment, as well as the lack of publicly available information regarding JUUL’s business or a market-derived valuation.

We use an income approach to estimate the fair value of our investment in JUUL. The income approach reflects the discounting of future cash flows for the United States and international markets at a rate of return that incorporates the risk-free rate for the use of those funds, the expected rate of inflation and the risks associated with realizing future cash flows. Future cash flow projections are based on a range of scenarios that consider various potential regulatory and market outcomes.

In determining the estimated fair value of our investment in JUUL, at March 31, 2022 and December 31, 2021, we made various judgments, estimates and assumptions, the most significant of which were sales volume, operating margins, discount rates and perpetual growth rates. All significant inputs used in the valuation are classified in Level 3 of the fair value hierarchy. Additionally, in determining these significant assumptions, we made judgments regarding the (i) likelihood and extent of various potential regulatory actions and the continued adverse public perception impacting the e-vapor category and specifically JUUL, (ii) risk created by the number and types of legal cases pending against JUUL, (iii) expectations for the future state of the e-vapor category, including competitive dynamics, and (iv) timing of international expansion plans.


	Investment
(in millions)	Balance
Balance at December 31, 2020	$	1,705
Unrealized gains (losses) included in (income) losses from equity investments	—
Balance at December 31, 2021	$	1,705
Unrealized gains (losses) included in (income) losses from equity investments	(100)
Balance at March 31, 2022	$	1,605

For the three months ended March 31, 2022, we recorded a non-cash, pre-tax unrealized loss of $100 million as a result of a decrease in the estimated fair value of our investment in JUUL. The decrease in the estimated fair value was primarily driven by an increase in the discount rate due to an increase in U.S. interest rates, partially offset by the effect of passage of time on the projected cash flows.

For the three months ended March 31, 2021, we recorded a non-cash, pre-tax unrealized loss of $200 million as a result of a decrease in the estimated fair value of our investment in JUUL. The decrease in the estimated fair value was primarily driven by (i) our projections of lower JUUL revenues in the U.S. over time due to lower JUUL volume assumptions resulting from a continuation of heightened competitive dynamics in the U.S. e-vapor category and (ii) an increase in the discount rate due to a change in market factors.

At March 31, 2022, we had a 41.7% ownership interest in Cronos, consisting of 156.6 million shares, which we account for under the equity method of accounting. We report our share of Cronos’s results using a one-quarter lag because Cronos’s results are not available in time for us to record them in the concurrent period.

The fair value of our equity method investment in Cronos is based on unadjusted quoted prices in active markets for Cronos’s common shares and is classified in Level 1 of the fair value hierarchy. At March 31, 2022, the fair value of our equity method investment in Cronos exceeded its carrying value by $55 million or approximately 10%. At December 31, 2021, the fair value and carrying value of our equity method investment in Cronos were $617 million. At April 25, 2022, the fair value of our equity method investment in Cronos was below its carrying value by $74 million or approximately 13%.

▪anti-dilution protections to purchase Cronos common shares, exercisable each quarter upon dilution, to maintain our ownership percentage. Certain of the anti-dilution protections provide us the ability to purchase additional Cronos common shares at a per share exercise price of Canadian dollar (“CAD”) $16.25 upon the occurrence of specified events (“Fixed-price Preemptive Rights”). Based on our assumptions as of March 31, 2022, we estimate the Fixed-price Preemptive Rights allows us to purchase up to an additional approximately 11 million common shares of Cronos; and

▪a warrant providing us the ability to purchase an additional approximate 10% of common shares of Cronos (approximately 83 million common shares at March 31, 2022) at a per share exercise price of CAD $19.00, which expires on March 8, 2023.

If exercised in full, the exercise prices for the warrant and Fixed-price Preemptive Rights are approximately CAD $1.6 billion and CAD $0.2 billion, respectively (approximately U.S. dollar $1.2 billion and $0.1 billion, respectively, based on the CAD to U.S. dollar exchange rate on April 25, 2022). At March 31, 2022, upon full exercise of the Fixed-price Preemptive Rights, to the extent such rights become available, and the warrant, we would own approximately 52% of the outstanding common shares of Cronos.

The Fixed-price Preemptive Rights and Cronos warrant are derivative financial instruments, which are required to be recorded at fair value. The fair values of the Fixed-price Preemptive Rights and Cronos warrant are estimated using Black-Scholes option-pricing models, adjusted for observable inputs (which are classified in Level 1 of the fair value hierarchy), including share price, and unobservable inputs, including probability factors and weighting of expected life, volatility levels and risk-free interest rates (which are classified in Level 3 of the fair value hierarchy). We elect to record the gross assets and liabilities of derivative financial instruments executed with the same counterparty on our condensed consolidated balance sheets in investments in equity securities.

We record in our condensed consolidated statements of earnings any changes in the fair values of the Fixed-price Preemptive Rights and Cronos warrant as gains or losses on Cronos-related financial instruments in the periods in which the changes occur.