British American Tobacco Invests $37M In German Cannabis Company, Joining Snoop Dogg - OrganiGram Holdings (NASDAQ:OGI), British American Tobacco (NYSE:BTI)

British American Tobacco (BAT) BTI is investing in German cannabis company Sanity Group GmbH along with Snoop Dogg’s Casa Verde Capital as part of the tobacco giant’s bid to diversify beyond nicotine. On Monday, Bloomberg reported that Sanity secured $37.6 million in a BAT-led Series B funding round.

According to Age Hänsel, founder and CEO of Sanity, the financing will be used partly to strengthen the firm’s medical marijuana business and prepare for the legalization of adult-use cannabis in Germany, expected for 2023.

Germany decriminalized medical cannabis in 2017, and now analysts at the Institute for Competition Economics (DICE) suggest that the decision to fully legal cannabis could bring the country some 3.4 billion euros ($3.85 billion) in tax revenue. It would also save roughly 1.3 billion euros annually for the judicial system and create 27,000 new jobs.

“BAT said the investment, via one of its wholly owned group companies, gives it a noncontrolling minority stake in Sanity. The round brings the total raised by Sanity to more than $100 million,” reported Bloomberg.

“This funding is an important milestone for us and a strong signal towards the future of cannabis in Germany and Europe,” said Max Narr, CIO at Sanity Group. “Against the backdrop of a challenging global economy, we are proud to have achieved a funding round of this magnitude.”

Sanity Group sees “strong interest, not only from tobacco but also from other industries like fast-moving consumer companies,” Hänsel said.

Kingsley Wheaton, chief growth officer at British American Tobacco agreed.

“Investing in Sanity Group is another example of BAT’s ongoing work to explore numerous areas beyond nicotine…for future portfolio growth across a range of categories and geographies,” Wheaton said.

In March, Canadian cannabis company Organigram Holdings Inc. OGI revealed that BAT had invested an additional CA$6.3 million ($4.97 million) to enhance its equity ownership position in the company from 18.8% to 19.5%.

Photo by Patrick Hendry on Unsplash

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