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Why Big Tobacco is all in on $OGI

After Moncton-based Organigram announced a subsidiary of British American Tobacco (BAT) was taking a 19.9% stake in the company for $220 million, CEO Greg Engel shared what he believes the deal means for the company.

Getting down with R&D — and shared IP

Initially, the BAT subsidiary and Organigram will conduct research and development on CBD products under a R&D Health Canada license at their Moncton indoor facility, Engel told MJ Biz. All IP will be registered under BAT, but “each company is free to commercialize products in any market globally,” he continued. With different regulatory frameworks emerging, both companies will be free to bring various brands and products to life to target various markets.

All about alignment

Engel said his team previously explored other partnerships with CPG companies, but none aligned quite like this one.

“We both look at it from the perspective of creating the strongest products first, and the way we come to market would be very different in different markets and segments,” Engel said.

More tobacco takeovers to come?

The BAT deal is part of a larger trend and isn’t the first time big tobacco has taken an interest in the cannabis space. Notably, Altria took an approximate 45% stake in Cronos for $1.8 billion in 2018, and in 2019, Imperial Brands invested a more modest $123 million in Auxly. 

And this is likely just the beginning — in fact, our latest Twitter and LinkedIn poll showed 85% of our followers who answered believed we’ll see more alignment between tobacco and cannabis this year.

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