Daily Management Review

BAT to join cannabis market


British American Tobacco, which owns the Kent and Lucky Strike brands, has decided to enter the marijuana market. It has agreed to buy a stake in Canadian cannabis products maker Organigram, whose shares have risen more than 30% since the deal.

jobsdbmalaysia via flickr
jobsdbmalaysia via flickr
One of the world's largest tobacco suppliers British American Tobacco (BAT) has taken up the development of cannabis products. The company said it had entered into an agreement with Organigram, a Canadian licensed producer of marijuana products. BAT will take 19.9% of the company for about £126m ($176m) and become the largest shareholder. Organigram shares are traded on the Nasdaq and Toronto stock exchanges. Organigram was up more than 30% on both platforms on Thursday.

As part of the agreement, BAT and Organigram will create a joint centre of excellence to develop new cannabis products. Both companies will send scientists, researchers and product developers to the centre, which will be headed by a committee made up equally of managers from both companies. BAT and Organigram will mutually share intellectual property and can independently launch any jointly created product under their brands.

Earlier in March, the world's largest medical marijuana producer Curaleaf announced its decision to enter the European market. To do so, Curaleaf is buying Emmac Life Sciences, the largest vertically integrated independent cannabis company in Europe, for $286 million. The deal could allow it to eventually "attack" markets in Poland, Ukraine, South Africa or even Egypt, said Curaleaf co-owner Curaleaf shares were down 1.316 per cent on Thursday.

source: forbes.com