British American Tobacco (BAT) has announced plans to buy a 19.9% equity stake in the Canada-based cannabis producer, OrganiGram, for about £126 million ($176 million), even as the 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.
Furthermore, 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). It will be located in New Brunswick, Canada, which holds the Health Canada licenses required to conduct R&D activities with cannabis products. 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. It is focused on research and product development activities of adult cannabis products, with an initial focus on CBD.
Meanwhile, BAT Kenya posted a 42% jump in net profit for the year ended December 30, 2020. The company’s net profit hit KSh5.518 billion at the end of 2020, from KSh3.885 billion reported in 2019.
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