Big Tobacco Doubles Down on Cannabis

After lots of chatter regarding when big tobacco would enter the Canadian cannabis space, it has ramped up. British American Tobacco (BAT) is set to purchase a near 20% stake in Canadian licensed producer Organigram (OGI.TO) for $175.81 million, CNBC reports. Once the deal goes through it will make British American Tobacco Organigrams the largest shareholder.

This deal follows another larger deal between Altria Group and Cronos. Wherein Altria invested $1.8B in Cronos group for a 45% stake. We'll have to wait and see if others decide to follow suit. 

After years of declining Tobacco sales it makes sense that these companies would be looking to diversify into the next big thing. Whether you like to admit it or not, that next big thing is cannabis. This plant has a proven track record on both the medical/ recreational fronts and doesn't come close to having the negatives from both alcohol and tobacco. 

With BAT's portfolio including brands like: American Spirit, Camel, Pall Mall, Rothman's, Newport, Lucky Strike, Kent, and Dunhill cigarettes.  Oral tobacco brands: Camel Snus and Grizly and vape/ non combustible brands Vuse, Vype, Glo and Velo. While earlier this year it launched a pilot CBD vape product in Manchester England so it only makes sense that they would take the plunge further into the Canadian recreational market to get a leg up on their peers. 

Only time will tell whether the entrance of these tobacco behemoths is good for the industry. 

 

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