An almost 20 per cent stake in Canada-based cannabis producer Organigram for an estimated value of $175.8 million would be taken up by British American Tobacco, as a part of its strategy to diversify into businesses other than tobacco, said the maker of Lucky Strike and other cigarette brands.
Organigram grows its own cannabis and manufactures cannabis-derived products in Canada, where the government had legalized marijuana in 2018.
Large investments in the cannabis industry have already been made by big tobacco and liquor companies in North America as a section of people view cannabis to be a less harmful alternative to cigarettes.
According to analysts and experts, the industry is set to see record investments this year as top Democratic lawmakers in the United States have also promised to decriminalize the use of marijuana.
It was just two days ago that BAT had unveiled its environmental, social and governance (ESG) targets which included trying to take more people towards products that are less harmful. Revenues of at least $6.9 billion from the sales of e-cigarettes, tobacco heating and oral nicotine products in 2025 has been set as a target for itself by the group.
On the other hand, pot producer Cronos Group was chosen for its investment by Marlboro maker Altria while a stake in Canopy Growth, the largest cannabis company in the world in terms of market value, was taken up by Corona beer-maker Constellation Brands.
Last month BAT had said that is plans to sell cannabis based products as a part o fits diversification strategy.
CBD, or cannabidiol, is one of the consumer spaces that it has its eye onm Kingsley Wheaton, the company’s chief marketing officer, had said in a television interview.
CBD is an active ingredient in cannabis that is derived from the hemp plant, which is a cousin of the marijuana plant. While manufacturers have widely touted the health benefits of CBD, scientists have stressed on the need for more research before arriving at a conclusion.
“We are indeed going to think about, and we are going beyond, just the tobacco and nicotine space,” said Wheaton and added that CBD is an “exciting growth area for our business for the future.”
While two cannabis companies were listed on the London Stock Exchange, BAT is taking a more cautious approach.
“It’s a very different regulatory landscape as you go around the world and many markets remain currently inaccessible for regulatory reasons,” said Wheaton.
“We draw a very big distinction between CBD and other forms of cannabis,” he said. “We’re interested in CBD. But I think the bigger point is we’re trying to build the portfolio of the future for our business. We’re trying to build the brands of the future. We’re trying to meet consumer needs that smoking used to meet with a new transformed portfolio.”
(Adapted from WashingtonPost.com & CNBC.com)