Organigram’s stock soars premarket as British American Tobacco invests C$124.6 million

“The opportunity set within the cannabis space has grown significantly,” Organigram said. “The category continues to expand globally as more adult consumers incorporate cannabis into their lives. The competitive nature of the industry also means that the opportunity for investments is ample for companies with strong balance sheets, industry experience and a proven track record of M&A success.”

Organigram
OGI,
+3.92%

OGI,
+4.50%
plans to use C$83.1 million of the investment from British American Tobacco Plc
BATS,
-0.59%
to create “Jupiter,” an investment pool for emerging growth opportunities aimed at growing Organigram’s geographic footprint.

The remaining C$41.5 million be used for general corporate purposes.

The investment marks the latest move since the companies started collaborating in 2021.

“This transaction furthers BAT’s support of Organigram as a trusted partner and accelerates the focus on innovative cannabis science and R&D outside of combustibles,” Organigram said in a statement.

A product development collaboration is now in late-stage development of emulsions, vapor formulations, new flavors and packaging to be applied to Organigram products in 2024.

Organigram’s stock has fallen 64% in the year to date, while the AXS Cannabis ETF
THCX,
+3.43%
has fallen 36% and the S&P 500
SPX,
+0.94%
has gained 13.5%.

Along with British American Tobacco, other big corporations have already waded into the cannabis space.

Altria
MO,

owns a stake in Cronos Group
CRON,
+1.64%

CRON,
+0.40%,
and Constellation Brands Inc.
STZ,
+1.55%
has invested billions in Canopy Growth Corp.
CGC,
+6.08%.

Imperial Bands
IMBBY,
+1.85%
  has invested in Canada’s Auxly Cannabis Group
CBWTF,
0.28.