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Hard Value Fund

Tobacco Companies Invest in Cannabis (Hemp) - An Overview

The Western world is in a cannabis legalization trend that has been going on for years. The German Minister of Health has now also presented a legislative package for the far-reaching legalization of cannabis (hemp) in Germany, implementing a plan based in the coalition agreement.

Most of the major tobacco companies positioned themselves in the cannabis market years ago through acquisitions and investments. In doing so, they want to open up a rapidly growing business segment for themselves.

Tobacco companies are likely to benefit particularly from the legalization of cannabis (also: weed, pod, hemp). This is because there are strong synergies. In addition to already established distribution structures, the production of tobacco and cannabis is similar, tobacco is mixed with cannabis in joints, and it is possible to consume cannabis via e-cigarettes and tobacco heaters.

In this article, we summarize for you what investments the tobacco companies Altria, Imperial Brands, Phillip Morris International and British American Tobacco have already made in the hemp market.

Hand with E-Vapor Cannabis Hemp
E-Vapor Cannabis


In December 2017, Altria invested $1.8 billion in a 45% stake in Cronos Group, a Canadian cannabis company. With this investment, Altria aims to "help position Cronos as a leader in a highly responsible, regulated and legalized U.S. cannabis market."

Cronos Group is a publicly traded company. Following the bursting of the cannabis bubble in early 2019, the company lost its initial surge in stock market value. As a result, Altria had to significantly write down the value of its investment. Cronos' loss of value is also attributed to the complex legal framework of the US cannabis market.

British American Tobacco

Tobacco group British American Tobacco (BAT) has been investing in various startups in the cannabis (hemp), cannabidiol (CBD) and other "wellness products" sectors since 2020 through its subsidiary BTomorrow Ventures.

In March 2021, BAT invested $221 million in Organigram Holdings, a Canadian cannabis producer. The investment included company shares of approximately 20% and the execution of a collaboration agreement. Organigram Holdings specializes in the cultivation, i.e. primary production, of cannabis.

In June 2021, BAT invested an amount of CAD 31 million in Trait Biosciences. The Canadian company specializes in cannabinoid (CBD) products. Flagship product is water-soluble CBD, which can be further processed into a variety of other CBD products, such as CBD beverages.

In September 2022, BAT acquired a minority stake in unlisted German cannabis company Sanity Group. The investment would result in an "expansion of the Beyond Nicotine strategy into Europe" for BAT. Sanity Group's product portfolio includes CBD products and medical cannabis.

Research Cannabis Legalization Germany
© Sanity Group – SCHMOTT Studios

Another cannabis investment was made in September 2022, when BAT invested an amount of USD 20-25 million in Open Book Extracts. The US company specializes in the production of cannabinoid (CBD) products and special cannabidoid derivatives.

In November 2022, BAT acquired a nearly 20% stake in Charlotte's Web, which specializes in cannabis extract wellness products, for GBP 48.2 million. BAT is looking to profit primarily from its broad portfolio of high-quality products and extensive retail presence in the United States.

According to BTomorrow Ventures' website, BAT also holds an investment in Cannopeia. The Israeli startup specializes in vaporizers (e-vapers, inhalers) for cannabis and as well as active ingredients and flavors. BAT did not disclose further details on this investment.

Further, BTomorrow's website discloses an investment by BAT in London-based fruit shot maker Unrooted. The company also offers drinks with added cannabidiol (CBD). In this respect, too, BAT has not disclosed any further background information on the nature and scope of the investment.

Imperial Brands

In June 2018, Imperial Brands invested in Oxford Cannabinoid Technologies (OCT). According to OCT, the company is developing compounds for pain management using cannabinoid derivatives. The exact amount of the investment is not known.

Matthew Phillips, chief development officer at Imperial Brands, said, "We are pleased to partner with OCT. Cannabinoid products have significant potential, and our investment allows us to support OCT's important research while developing a deeper understanding of the medical cannabis market."

In September 2019, Imperial Brands increased its exposure to the cannabis market via a CAD 123 million investment in Auxly, a Canadian cannabis company. The convertible debenture purchased by Imperial Brands entitles the holder to acquire a 19.9% equity interest in Auxly.

The transaction also grants Auxly certain exclusive rights for the future development, manufacturing, commercialization of cannabis products by Imperial Brands. Whether this deal restricts Imperial Brands from making other cannabis investments is not publicly known at this time.

Philip Morris International

In 2016, Phillip Morris International (PMI) invested $20 million in Israeli company Syque Medical. The company is involved in the development of medical cannabis inhalers. However, PMI has not made any public disclosures about the investment.

Syqe Air, Syqe Medical
Syqe Air, © Syqe Medical

In September 2021, PMI announced the purchase of Fertin Pharma for $820 million. The Danish company is considered a leader in the manufacture of oral delivery systems, including chewing gum, sachets, tablets and other solid oral systems for the delivery of active ingredients, including nicotine. The company is also a manufacturer of nicotine replacement therapy solutions.

Through the purchase of Fertin Pharma, PMI is expected to advance the development of various "botanical and other self-care wellness products." Included in the self-care wellness products aspect of this is the production of oral CBD products. In 2022, Fertin Pharma was integrated into Vectura, also acquired by PMI, and combined to form Vectura Fertin Pharma.

Japan Tobacco

We could not identify any investments in the cannabis sector by the Japanese tobacco company Japan Tobacco. This could be due to the Cannabis Control Act, which strictly regulates cannabis (hemp) for both recreational and medicinal use, and the Japanese government's stake in Japan Tobacco. Japan's government stake is one-third and the Minister of Finance must give his approval for major corporate decisions.

Legal notice 

This article contains general information on the topic presented and no recommendations or suggestions on investments in financial instruments or issuers ("securities"). Possible specific information on individual securities, if applicable by naming them, is for illustrative purposes only and is also neither a recommendation nor a suggestion. An investment always requires a comprehensive consideration of all relevant aspects. This article does not claim to do so. Investments in securities are associated with risks. The value of an investment and returns from it can rise and fall (sometimes substantially). Investors may not get back the full amount originally invested. Past performance is no guarantee of future performance. Investments in securities may also be made for funds advertised on this website ("Fund"), but this is not mandatory. Information on positions of Fund can be obtained from the website and the relevant annual or semi-annual report, if available. The purpose of this article is to provide a rough overview of the relevant topic. No claim is made to completeness. Despite careful compilation of the information, no guarantee can be given for its correctness. We reserve the right to make changes. A purchase of shares in a fund or of securities should always be made only after one's own comprehensive analysis with recourse to various sources of information. Consultation with a financial advisor is recommended. The tax treatment of investment income depends on the personal circumstances of each investor and may be subject to change in the future. The sole basis for the acquisition of shares in a fund is the current sales documentation (sales prospectus, key investor information, annual or semi-annual report, if available). The sales documents and further information are available free of charge in German on the website

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