British American Tobacco Acquires Minority Stake in German Cannabis Business, Leads $38 million Raise

Sanity Group will use the funds to further expand in Germany and prepare for additional growth once cannabis is fully legalized there.

Tobacco giants are keeping a close eye on the burgeoning cannabis industry, and as further evidence of that interest, London-based British American Tobacco (BAT) just acquired a minority stake in German marijuana company Sanity Group, and led the company to what it claims is the largest capital raise in European cannabis history.

The BAT Group, according to a press release, led the $37.6 million Series B capital raise for Sanity Group, which the release claimed was “Europe’s largest cannabis investment round to date.”

The money will be used by Sanity Group to further expand its existing footprint and to prepare for further expansion once cannabis is fully legalized in Germany.

In concert with the funding announcement, BAT revealed in a press release of its own that it had purchased a “non-controlling minority stake” in Sanity Group, a furtherance of BAT’s collaboration with Canada-based Organigram Holdings, which was announced last year.

“The stake in Sanity Group adds a European dimension to one of the many BAT explorations beyond nicotine,” the BAT release stated.

BAT has rebranded as “A Better Tomorrow,” and is among several tobacco companies that have been dipping their toes into cannabis waters in recent years.

Altria, the maker of Marlboro cigarettes, has invested huge sums into cannabis already, through both a $1.8 billion investment in Cronos Group and its lobbying through the Coalition for Cannabis Policy, Education and Regulation.

Many observers expect a headlong rush into the marijuana sector by tobacco companies once the U.S. legalizes the plant federally, along with alcohol and pharmaceutical titans of industry, which have largely been sitting on the sidelines awaiting Congressional reform.

Tobacco companies aren’t the only ones eyeing the European cannabis markets, however. Other high-profile investors in Sanity Group include music producer Will.I.Am of the Black Eyed Peas, actress Alyssa Milano, Swiss venture capital firm Redalpine, Snoop Dogg-backed Casa Verde Capital, and many other U.S. and European investment firms, according to the Sanity release.

John Schroyer

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