Cramer: CVS’ tobacco move won’t fly on Wall Street

Cramer: Nobody walks out of a drugstore because it sells tobacco
Cramer: Nobody walks out of a drugstore because it sells tobacco

CNBC's Jim Cramer hates tobacco.

Cramer swears he never smoked a cigarette, he said Wednesday on "Squawk on the Street." But he's not in the business of telling people how to lose money, he said, and that's why he believes CVS Caremark's decision to stop selling tobacco products in its stores will hurt shareholders.

It might make money in Oz, Cramer said, but Wall Street is not Oz.

(Read more: CVS kicks the habit,dropping tobacco products)

"This is not a market that's saying, 'You know what? I am going to buy CVS because they are good citizens,' " Cramer said during an earlier appearance on "Squawk Box." "It just doesn't work like that. That's a nice world, like Oz. Oz is terrific."

Marlboro cigarettes are on display in a CVS store in Pittsburgh. CVS is planning to stop selling tobacco products.

CVS announced Wednesday morning it would end tobacco sales at its 7,600 stores by Oct. 1, a move met with scorn from critics and praise from President Barack Obama and health-care advocates. CVS expects to take a $2 billion hit from the decision, but claimed tobacco sales made up a small share of its revenue.

Losing out on tobacco sales—despite their bad margins—means CVS' earnings per share will take a hit, Cramer said. And in a competitive retail space, rivals such as Rite Aid, Walgreens and even Dollar General, look like better bets now that CVS decided to handicap itself, Cramer said.

(Read more: CVS takes to Twitter to defend tobacco move)

"These are great statements," Cramer said on "Squawk on the Street." "Look I have to put another hat on—I am so glad about that CVS is doing this. I absolutely hate tobacco. I think tobacco is the scourge of this country."

Cramer added: "Again I'm stuck with the four walls of trying to figure out the earnings per share. And the earnings per share for CVS just got worse."

In the appearance on "Squawk Box," Cramer said he wouldn't be surprised if market watchers began speculating that CVS could replace tobacco with medical marijuana, in states that allow such prescriptions. Cramer questioned the move by drawing parallels to Walmart selling guns.

"We're in a market where someone could say that shelf space is going to be taken up by medical marijuana, and that gets the stock right up, because that group is the hottest group in the world," Cramer said. "But no, cutting up more of CVS is not what I want if I own a stock in what has become a very treacherous environment."

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters contributed to this story.