More

    BAT takes stake in Canadian cannabis producer

    Photo: iStock

    British American Tobacco said on Thursday it will buy a nearly 20 per cent stake in Canada-based cannabis producer Organigram for about £126 million as it seeks to expand beyond its main tobacco business.

    Organigram grows cannabis and makes cannabis-derived products in Canada, where marijuana was legalised in 2018.

    Big tobacco and liquor companies in North America have already made large investments in the nascent industry, with cannabis seen as a less harmful alternative to cigarettes.

    With top Democratic lawmakers in the US also promising to decriminalise marijuana use, analysts and experts predict record investment in the industry this year.

    The deal will give BAT access to R&D technologies, product innovation and cannabis expertise, it said in a statement, with an initial focus on natural remedy cannabidiol (CBD).

    “This move takes us into a new space and we are not ruling out any product innovation,” David O’Reilly, director of Scientific Research at BAT, told Reuters.

    Organigram Chief Executive Greg Engel said the companies will jointly develop new products for cannabis delivery, both oral and vapour based, and will be able to commercialise any products developed under their own brands.

    Both BAT and Organigram will contribute scientists, researchers, and product developers, BAT said. It will become Organigram’s largest shareholder and can appoint two directors to its board.

    “We view this move as a strong positive. Cannabis overall provides a natural fit for tobacco and a big incremental growth opportunity,” Jefferies analyst Owen Bennett wrote in a note.

    BAT has expertise in operating in a regulated environment and experience of growing a crop similar to hemp CBD, Bennett said, adding that the timing of the deal before Organigram’s possible entry into the US is also a big positive.

    BAT’s investment comes two days after the Lucky Strike maker laid out environmental, social and governance (ESG) targets, including switching more people to less harmful products.

    The group aims to achieve at least £5 billion in revenue from sales of e-cigarettes, tobacco heating and oral nicotine products in 2025.

    Elsewhere in the industry, Marlboro maker Altria has invested in pot producer Cronos Group, while Corona beer-maker Constellation Brands  has a stake in Canopy Growth, the largest cannabis company globally by market value.

    Latest

    Family-owned plant-based startup secures funding

    UK-based family-owned startup Shicken has raised £4 million in...

    KP Snacks launches new Tyrrells recycled plastic pack

    KP Snacks today announces the introduction of 25 per...

    Brew Dog delivers low ABV with new Cold Beer

    This summer, BrewDog is cooling down the beer aisle...

    Mangrove portfolio dominates at World Whiskies Awards 2024

    The independent distributor Mangrove’s world whisky portfolio recently cleared...

    Don't miss

    Family-owned plant-based startup secures funding

    UK-based family-owned startup Shicken has raised £4 million in...

    KP Snacks launches new Tyrrells recycled plastic pack

    KP Snacks today announces the introduction of 25 per...

    Brew Dog delivers low ABV with new Cold Beer

    This summer, BrewDog is cooling down the beer aisle...

    Mangrove portfolio dominates at World Whiskies Awards 2024

    The independent distributor Mangrove’s world whisky portfolio recently cleared...

    Co-op’s net zero targets validated global body

    Co-op has become the first UK convenience retailer to...

    Family-owned plant-based startup secures funding

    UK-based family-owned startup Shicken has raised £4 million in funds from Matthew Glover’s Veg Capital, which has tripled its investment in the plant-based meat...

    Co-op’s net zero targets validated global body

    Co-op has become the first UK convenience retailer to have its net zero targets validated by the globally recognised Science Based Targets initiative (SBTi). According...

    Kitwave Group acquires 130-year-old delivered wholesaler

    Kitwave Group plc, the delivered wholesale business, has acquired Total Foodservice Solutions Limited, a leading independent food wholesaler in the North of England. Established over...