Altria Group Inc. is scheduled to report third-quarter earnings on Thursday, and investors are hoping the company will have news on its plans for the cannabis market.

The tobacco giant MO, -0.15% has eschewed cannabis in the past because it remains an illegal substance at the federal level, even though 31 U.S. states and the District of Columbia have laws that allow medical marijuana and 10 states allow it for recreational use. Under federal law, it remains a Schedule 1 drug, putting it on par with heroin and cocaine.

Last week, Canada became the first G-7 country to fully legalize cannabis for adult recreational use, sparking enthusiasm for a sector that has already seen big investments by drinks companies, including Constellation Brands Inc. STZ, -0.02% , which has pumped $4 billion into Canada’s Canopy Growth Corp. CGC, -0.70% WEED, -0.36% . Those investments have prompted speculation that tobacco companies can’t be far behind.

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Murray Garnick, executive vice president and general counsel at Altria, told an investor conference in September that the company is now “exploring options and [is] mindful of the possibility [that] in the future cannabis may no longer be illegal under federal law,” according to a FactSet transcript. The comment was interpreted as signaling a break with the company’s past stance.

Wells Fargo analyst Bonnie Herzog said last week that her bank’s “Tobacco Talk” survey of retailers and wholesalers representing about 35,000 convenience sores in the U.S. found them excited about cannabis or cannabidiol (CBD), the ingredient in weed that is already being added to drinks and food and that is reported to have health benefits.

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“Retailers see cannabis/CBD as a huge potential opportunity with one retailer noting, ‘Bring it on!’ ” she wrote in a note, reiterating Altria as a top stock pick.

Canadian newspaper the Globe and Mail said earlier this month that Altria was talks with cannabis company Aphria Inc. on potentially buying an equity stake.

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The survey also found sentiment toward Marlboro improving, suggesting the brand is stabilizing, said Herzog. Altria owns Philip Morris, the manufacturer of Marlboro, which has been struggling to grow sales as more people give up tobacco for health reasons. Marlboro was a weak spot in the company’s second-quarter earnings released in July.

“Retailers are more optimistic about Marlboro, with about 60% characterizing the brand as ‘stabilizing’ aided by a robust loyalty program (‘a differentiator’), ‘improved focus’ and effective use of mobile couponing,” said Herzog.

Retailers are also upbeat on iQOS, a smokeless tobacco heating system that generates a nicotine-containing vapor without fire or ash. The product is expected to greatly reduce the levels of chemicals ingested by smokers, as compared with cigarette smoke. The product is already available in 43 markets, according to the Philip Morris PM, -1.24% website, while it is still awaiting authorization from the U.S. Food and Drug Administration.

Last week, Philip Morris said as it reported third-quarter earnings that it expects an FDA decision by year-end. The company said heated-tobacco shipments grew in the third quarter in every market except Japan, which it blamed on retailers prepping for new-device launches.

Meanwhile, FDA concern about teen use of e-cigarettes may also benefit Altria. The company has ceded market share to e-cigarette rival Juul, which offers flavored products that appeal to teenagers such as “crème brûlée” and “cool cucumber.” Juul has come under growing scrutiny from the FDA and its top official, Scott Gottlieb, who has said efforts to convert adult smokers to less harmful e-cigarettes should not come at the expense of younger people.

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Just last week, Gottlieb told CNBC that teen use of e-cigarettes is at epidemic levels and said the agency would release evidence on its findings next month. The FDA is considering a full ban on flavored e-cigarettes and further restrictions on online sales, moves that would likely play in Altria’s favor.

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Here’s what to expect when Altria reports:

Earnings: Altria is expected to report per-share earnings of $1.07, according to analysts polled by FactSet, up from 90 cents a year ago. Estimize, which crowdsources earnings estimates from buy- and sell-side analysts, academics and others, is expecting EPS of $1.08.

Revenue: Altria is expected to report revenue of $5.213 billion, up from $5.193 billion a year ago, according to FactSet. Smokable products are expected to chalk up sales of $4.493 billion, while smokeless products generate sales of $537 million. Wine — Altria owns Ste. Michelle Wine Estates Ltd. — is expected to generate sales of $182 million.

Estimize is forecasting revenue of $5.196 billion.

Altria has beaten EPS estimates in eight of the last 10 quarters, but has missed sales estimates in six of the last 10 quarters.