British American Tobacco Archives - Green Market Report

StaffApril 6, 2023


The Daily Hit is a recap of the top financial news stories for April 6, 2023.

On the Site

Feds Charge Former Michigan House Speaker in Marijuana Investigation

Federal prosecutors announced corruption charges Thursday against former Michigan House Speaker Rick Johnson and three others in connection to bribes paid for marijuana licenses. The announcement, made by the U.S. Attorney’s Office in Grand Rapids, comes on the heels of a multiyear investigation into Johnson’s time chairing the former Michigan Medical Marihuana Licensing Board. Read more here.

Tobacco Titan Teams Up with Charlotte’s Web on New Drug Venture

Hemp extract wellness giant Charlotte’s Web Holdings Inc. (TSX: CWEB) (OTCQX: CWBHF) entered into a joint venture with botanical drug developer AJNA BioSciences and London-based British American Tobacco (NYSE: BTI) to develop a new drug for an an undisclosed neurological condition. Read more here.

Ohio’s Second Round of Dispensaries Slow to Open

Ohio’s expansion of its medical marijuana industry last year was supposed to bring another 73 dispensaries to the state, but so far, only 14 of those have opened for business – despite rules that required them to be ready for customers within 270 days. Read more here.

Missouri Continues to Siphon Customers from Illinois

The number of out-of-state buyers coming to Illinois for cannabis dropped in March, a signal that neighboring Missouri’s booming recreational market continues to lure customers away. But the state’s retailers still raked in $134.8 million in sales for the month. Read more here.

Lifeist Grows Roilty Brand as Revenues Rise in 2022

Product expansion has proven to be a winning strategy for Canadian health-tech company Lifeist Wellness Inc. (TSXV: LFST) (OTCMKTS: NXTTF), which owns cannabis brand Roilty. Roilty’s unit sales rose by more than 30% since the fourth quarter of 2022, with the expansion of its product line being a main contributing factor. Read more here.

In Other News

Tilray Brands

Tilray Medical, the medical cannabis division of Tilray Brands Inc. (Nasdaq: TLRY; TSX: TLRY), expanded in the Czech Republic through a new export and distribution partnership with Cansativa Group. The new strategic partnership broadens Tilray Medical’s distribution of EU-GMP certified medical cannabis products across pharmacies and hospitals to support medical cannabis patient care. Read more here.

Jushi Holdings

Jushi Holdings Inc. (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multistate cannabis operator, closed on a secured commercial loan with FVCbank for gross proceeds of $20 million. The proceeds of the loan will be used for working capital and other corporate purposes. Read more here.

Amesbury, Massachusetts

A Massachusetts appeals panel cleared the former mayor of Amesbury against allegations that he interfered with a cannabis company’s application for a license, saying the company failed to show that the former mayor acted in bad faith. In an order filed Wednesday, the three-judge panel of the Massachusetts Appeals Court affirmed the dismissal of two counts against C. Kenneth Gray and one against the city in a suit brought by Kirby Mastrangelo and Candace Kattar, who run CKR Natural Solutions LLC. Read more here.

Debra BorchardtMarch 11, 2021


The cannabis industry’s fear of big tobacco trying to elbow into the industry has finally come true with today’s announcement of a $175 million investment into Organigram Holdings Inc. (NASDAQ: OGI) from a wholly-owned subsidiary of British American Tobacco or BAT (NYSE: BTI). The BAT subsidiary has subscribed for approximately 58.3 million common shares of OGI, which represents a 19.9% equity interest on a post-transaction basis for total proceeds of approximately C$221 million (“Investment Proceeds”) at a price per share of C$3.792.

Big Tobacco has had to keep its distance from cannabis due to the restrictions and regulations for that industry. Cannabis remains a federally illegal product. However, the cannabis industry has always feared that as soon as legality occurred, big tobacco would try to take over. While BAT isn’t stepping into the THC portion of the business, it is dipping its toes in the legal CBD side.

“This is a tremendous milestone in the evolution of Organigram. It is instrumental in advancing our commitment to offering consumers innovative cannabis products and to furthering our long-term international strategy,” said Greg Engel, Chief Executive Officer of Organigram. “We have been extremely selective about aligning with a strategic partner and, in BAT, we’ve found a leading consumer goods business with sophisticated management, innovative product platforms, an impressive dedication to research and development, deep consumer insights, regulatory expertise and a commitment to responsible stewardship and consumer safety among many other enviable attributes. This collaboration is the culmination of extensive discussions and workshops and in-depth due diligence.”

A Balance Sheet Decision

BAT’s investment is expected to strengthen Organigram’s balance sheet, accelerate its R&D program and product development activities and bolster its ability to enter the U.S. and other international markets. In January, Organigram  released its results for the first-quarter ending in November causing the stock to tumble. A shift to value products hurt the company, which also warned that the second-quarter revenue could be impacted as well. The company delivered net revenue of $19.3 million for the first fiscal quarter of 2021 versus last year’s $25.2 million, which the company blamed on significantly lower wholesale revenue from licensed producers and a lower average selling price in the quarter.

Organigram also told investors that a negative non-cash adjustment to cost of sales for unabsorbed fixed overhead costs in Q2 Fiscal 2021 was anticipated to persist as a result of the company’s plans to cultivate less than its cultivation capacity. “Some production inefficiencies are anticipated to persist in the near to medium term and impact gross margins while Organigram continues to launch new products and optimizes production and staffing.”

“In our view, the cannabis industry is still in the nascent stages of product development. We believe that product innovation backed by core fundamental R&D is necessary to establish a long-term competitive advantage in the cannabis industry,” stated Paolo De Luca, the Company’s Chief Strategic Officer.

The company acknowledged that with the significant capital injection, Organigram is better positioned to expand into the U.S. and further international markets at the appropriate time and subject to applicable law. Upon closing, Organigram will have pro-forma cash and short-term investments of approximately C$296 million (of which approximately C$30 million will be reserved in order to satisfy certain of Organigram’s obligations under the PDC Agreement and the balance of which can be used, among other things, for growth opportunities and other strategic investments including advancing Organigram’s international strategy).

Tobacco Use Declining

According to the World Health Organization, “During nearly the past two decades, overall global tobacco use has fallen, from 1.397 billion in 2000 to 1.337 billion in 2018, or by approximately 60 million people, according to the WHO global report on trends in the prevalence of tobacco use 2000-2025 third edition.”

The WHO also said that a new report shows that the number of male tobacco users has stopped growing and is projected to decline by more than 1 million fewer male users come  2020 (or 1.091 billion) compared to 2018 levels, and 5 million less by 2025 (1.087 billion). “By 2020, WHO projects there will be 10 million fewer tobacco users, male and female, compared to 2018, and another 27 million less by 2025, amounting to 1.299 billion. Some 60% of countries have been experiencing a decline in tobacco use since 2010.”

So, it was inevitable that big tobacco would look to replace its declining sales and cannabis was the logical choice.

Center Of Excellence

Licensed cannabis producer Organigram Inc. said it entered into a Product Development Collaboration Agreement with BAT to create a “Center of Excellence” to focus on developing the next generation of cannabis products with an initial focus on CBD. The company said the Center of Excellence will be located at Organigram’s indoor facility in Moncton, New Brunswick, which holds the Health Canada licenses required to conduct research and development activities with cannabis products.

According to the statement, both companies will contribute scientists, researchers, and product developers to the Center of Excellence which will be governed and supervised by a steering committee consisting of an equal number of senior members from both companies. Under the terms of the PDC Agreement, both Organigram and BAT have access to certain of each other’s intellectual property and, subject to certain limitations, have the right to independently, globally commercialize the products, technologies and IP created by the Center of Excellence pursuant to the PDC Agreement.

Dr. David O’Reilly, Director, Scientific Research at BAT, commented: “Today’s announcement underscores BAT’s commitment to accelerating our transformation and building A Better Tomorrow. Our multi-category, consumer-centric approach, which is key to our transformation, aims to provide choice and meet the evolving needs of adult consumers. Choice that provides reduced-risk alternatives to combustible cigarettes, as well as going beyond tobacco and nicotine into new and exciting areas of product innovation.”


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