Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., April 14, 2016. Organigram Holdings Inc. says a subsidiary of British American Tobacco has signed a deal to buy a 19.9 per cent stake in the cannabis company for $221 million. THE CANADIAN PRESS/Ron Ward

Cannabis company Organigram signs deal with British American Tobacco

Cannabis company Organigram signs deal with British American Tobacco

MONCTON, N.B. — Organigram Holdings Inc. stock soared by more than 40 per cent Thursday as a subsidiary of one of the globe’s biggest tobacco companies purchased a stake in the business.

Organigram’s stock jumped by $1.45 to reach $5.07 on the Toronto Stock Exchange after British American Tobacco announced that its subsidiary will buy a 19.9 per cent stake in the Moncton, N.B.-based cannabis company for $221 million.

BAT, whose website advertises a portfolio of brands including Camel and Lucky Strike tobacco and Vype and Vuse vapour products, will buy 58.3 million Organigram shares at a price of $3.792 per share.

Chief executive Greg Engel said Organigram had long been looking for strategic partnerships with consumer packaged goods, beverage and alcohol companies and BAT’s offer came at the right time.

“Now there’s a significant injection of capital so that’s a key for us … to expand our own research and development efforts and for potential market expansion as we prepare to look at international markets,” said Engel.

As part of Organigram’s deal with BAT, the pair signed a product development collaboration agreement that will see the creation of a “centre of excellence.”

It will focus on developing the next generation of cannabis products with an initial focus on cannabidiol (CBD), a compound found in cannabis and hemp that doesn’t produce a high but is believed to relax consumers.

Organigram has been delving into producing high quality chocolate and beverage products with CBD, but the centre will speed that up.

It will be located at Organigram’s indoor facility in Moncton and both companies will contribute scientists, researchers, and product developers.

Engel expects the centre’s creation will involve some hiring.

Many staff at a townhall meeting Thursday morning were pleased at the announcement and are looking forward to working at the centre, Engel said.

“Any time you can say, ‘hey, we’re bringing this research hub to our facility, it generates a lot of interest and excitement among employees.’ “

BAT be entitled to add members to Organigram’s board.

The company, which was founded in 1902, has been encouraging people who smoke to switch completely to reduced-risk alternatives.

It has committed to providing adults with a wide range of enjoyable and less risky products.

It wants to increase the number of its non-combustible product consumers to 50 million by 2030.

This report by The Canadian Press was first published March 11, 2021.

Companies in this story: (TSX:OGI)

The Canadian Press

cannabis

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
Alberta vaccine rollout expanding to front-line health-care workers

More than 240,000 eligible health-care workers can begin booking vaccine appointments starting… Continue reading

File photo
The Red Deer Rebels will have three new assistant coaches when the WHL regular season starts on Friday. Brad Flynn (left), will be on the bench alongside fellow assistant Ryan Colville (right) head coach Brent Sutter (middle). (Photo by BYRON HACKETT/Advocate Staff)
Sutter steps down as Red Deer Rebels head coach

Red Deer Rebels Owner, GM and head coach Brent Sutter has stepped… Continue reading

Premier Jason Kenney announced $200 million more money that will benefit seniors living in continuing care on Wednesday. (photography by Chris Schwarz/Government of Alberta)
Alberta’s in-school rapid screening test program expanding

Alberta’s in-school rapid screening test program will expand to as many as… Continue reading

Parents and students learned Tuesday what the coming school year will look like. It's pretty much back to business as usual, said Education Minister Adriana LaGrange. School precautions include frequent cleaning, keeping students in the same groups where possible, planning the school day to allow for physical distancing and staying home when sick. (photography by Chris Schwarz/Government of Alberta)
Alberta’s largest school board says no to United Conservative draft school curriculum

CALGARY — Alberta’s largest school board says it will not use the… Continue reading

Red Deer-South MLA Jason Stephan is among those who have signed an open letter criticizing the government’s return to stricter health measures. (Advocate file photo).
Updated: Kenney tells UCP caucus COVID-19 dissent OK, breaking health rules means expulsion

15 MLAs released letter on Wednesday critical of new health restrictions

Prime Minister Justin Trudeau watches a speaker appear by videoconference during a news conference in Ottawa, Friday, April 9, 2021. Grassroots Liberals have overwhelmingly endorsed a resolution calling on the federal government to develop and implement a universal basic income — despite Prime Minister Justin Trudeau's apparent lack of enthusiasm for the idea. THE CANADIAN PRESS/Adrian Wyld
Trudeau winds up Liberal convention with election campaign-style speech

OTTAWA — Justin Trudeau wound up a three-day Liberal convention Saturday with… Continue reading

Team Canada skip Brendan Bottcher makes a shot against Italy at the Men's World Curling Championships in Calgary, Alta., Tuesday, April 6, 2021.THE CANADIAN PRESS/Jeff McIntosh
Men’s world curling championship in Calgary in COVID limbo

CALGARY — The men’s world curling championship in Calgary remained suspended Saturday… Continue reading

Pipes intended for construction of the Keystone XL pipeline are shown in Gascoyne, N.D. on Wednesday April 22, 2015. THE CANADIAN PRESS/Alex Panetta
Non-profit Quebec law centre to aid environmental group targeted by Alberta oil firm

QUEBEC — The Quebec Environmental Law Centre is coming to the aid… Continue reading

Conservative leader Erin O'Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
Conservatives cite empathy, relationships as ways to help expand their movement

OTTAWA — Conservatives should show empathy with Black residents who say they’ve… Continue reading

NDP Leader John Horgan celebrates his election win in the British Columbia provincial election in downtown Vancouver, B.C., Saturday, Oct. 24, 2020. New Democrats are reconvening for the second day of a three-day policy convention as they look to push past the glitches of the virtual event's opening sessions and rally around keynote speaker John Horgan. THE CANADIAN PRESS/Jonathan Hayward
New Democrats reconvene as hiccups, frustrations plague national policy convention

OTTAWA — New Democrats reconvened Saturday for the second day of a… Continue reading

FILE - In this Monday, Oct. 23, 2017 file photo, President Donald Trump speaks during a joint statement with Singapore's Prime Minister Lee Hsien Loong in the Rose Garden of the White House in Washington. Former President Donald Trump plans to affirm his commitment to the Republican Party — and raise the possibility that someone else will be the GOP's next presidential nominee — in a closed-door speech to donors Saturday night, April 10, 2021. (AP Photo/Evan Vucci, File)
Trump in 2024? He says only that ‘a Republican’ will win

PALM BEACH, Fla. — Former President Donald Trump plans to affirm his… Continue reading

A cruise ship sits docked waiting for passengers to be evacuated in Kingstown, on the eastern Caribbean island of St. Vincent, Friday, April 9, 2021 due to the eruption of La Soufriere volcano. (AP Photo/Orvil Samuel)
Ash-covered St. Vincent braces for more volcanic eruptions

KINGSTOWN, St. Vincent — People who ignored an initial warning to evacuate… Continue reading

Owner of 4 Point Taekwondo Kevin Mejia holds a board as organizer and martial artist Kevin Olsen breaks it in Edmonton on Friday, April 9, 2021. One hundred martial artists from around the world, will be breaking a board for an event called "Break for a Breakthrough." The idea is for martial artists to unite and re-engage with the arts because they may have drifted away or lost enthusiasm as a result of the pandemic. THE CANADIAN PRESS/Jason Franson
Break for a Breakthrough: Canadian hosts international martial arts demonstration

EDMONTON — Whether he’s breaking a wooden board, a clay tile, cement… Continue reading

Most Read