British American Tobacco takes 19.9% of Organigram

A subsidiary of the British cigarette manufacturer British American Tobacco (BAT) acquired a 19.9% stake in Organigram, a Canadian producer of, for 175 million $ (150 million €) cannabis.

BAT and Organigram have agreed to establish a center of excellence to collaborate on product development, with an initial focus on CBD. The center will be located at Organigram’s indoor facility in Moncton, New Brunswick, which holds the necessary Health Canada licenses to conduct cannabis research and development.

The influx of cash at Organigram will also enable the company to roll out its U.S. strategy.

«Thanks to this significant capital injection, Organigram is even better positioned to expand into the United States and other international markets at the appropriate time and subject to applicable law,» said declared the company said in the press release.

«Global tobacco and alcohol giants are investing in Canadian limited partnerships to gain insight into the cannabis markets and generate intellectual property for deployment in U.S. markets, which will likely lead to similar investments in U.S. multi-state operators,», analysis Max Mausner, from Vantage Asset Management for MJBizDaily.

This isn't the first time a tobacco or alcohol producer has ventured into the cannabis industry. The alcohol giant Constellation Brands, for example, paid more than $4 billion for a stake in the Canadian producer Canopy Growth, and the tobacco company Altria spent 1.8 billion dollars for its 45% stake in Cronos Group. To a lesser extent, the tobacco company Imperial Brands has invested 85 million € in Auxly Cannabis Group.