WORLD – Cigarette manufacturer British American Tobacco (BAT), has announced plans to buy a 19.9 percent equity stake in the Canada-based cannabis producer, OrganiGram, for about US$176 million, even as the London based company seeks to diversify beyond its main tobacco business.

The deal makes BAT the largest shareholder in OrganiGram, with the ability to appoint two directors to Organigram’s board of directors and representation on its investment committee.

Further, as part of the agreement, a Centre of Excellence will be established to focus on developing the next generation of cannabis products with an initial focus on CBD (cannabidiol).

The Centre of Excellence will be located in New Brunswick, Canada, which holds the Health Canada licenses required to conduct Research & Development activities with cannabis products.

“The deal with OrganiGram will give BAT access to research and development technologies, product innovation and cannabis expertise”

BAT and OrganiGram will then contribute scientists, researchers, and product developers to the centre.

OrganiGram grows cannabis and makes cannabis-derived products in Canada, where the drug’s non-medical use was legalised in 2018.

The Toronto Stock Exchange listed firm is focused on research and product development activities of adult cannabis products, with an initial focus on CBD.

Big tobacco and drinks companies in North America have already made large investments in the cannabis industry, with the drug seen as a less-harmful alternative to cigarettes.

Democratic lawmakers in the US are promising to decriminalise cannabis use at a national level, prompting analysts and experts to predict record investment in the industry this year.

Both parties will be able to commercialise under their own brands any products developed from the collaboration.

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