British American Tobacco (BTI) has become a big player in the cannabis industry with a 20% acquisition of Canadian company OrganiGram (OGI). This deal cost British American Tobacco $220 million Canadian dollars, or about $176.6 million American, to purchase 58 million shares of OrganiGram. British American Tobacco is one of the largest tobacco companies, with a portfolio of brands including: Camel, Newport, Kool, Lucky Strike, and Pall Mall. BTI also produces Vuse vaporizers as well as a number of smokeless tobacco brands.
Experts say this deal is less about the Canadian market and more about laying the groundwork to capitalize on the growing global marketplace for cannabinoid-based products and delivery systems. This partnership is a strategic collaboration with a focus on research and product development. News of this partnership have caused both BTI and OGI stock prices to surge in the past couple days.
Other news causing some buzz in the cannabis industry came Thursday morning when Mexico’s Chamber of Deputies passed landmark legislation to legalize recreational sales in the country. The Mexican Senate is expected to back the bill in the coming days. Mexican President Andres Manuel Lopez Obrador’s party strongly backs the proposal and he is expected to sign the bill after the Senate passes it. Legalizing cannabis in Mexico would make it the largest country to do so, with it’s population of almost 130 million people.
Mexico would dwarf the Canadian (pop. 37.6 million) and Uruguay (3.4 million) markets, and put the U.S. sandwiched in between two fully legalized countries. This will put added pressure on the U.S. to federally legalize cannabis. Like I mentioned in my previous blog regarding cannabis, 15 U.S. states and 3 U.S. territories including Washington D.C. have already legalized adult recreational use, now our neighboring countries to the North and South are legal.
The big question is when will the U.S. end it’s federal prohibition on cannabis and allow the flood gates of tax revenue to open. Large corporations are waiting on the sidelines ready to take action. I personally think this industry is a great investment opportunity because it is so new with so much room to grow, I equate this to investing in the internet back in the 90s. What are your thoughts? Leave me a comment and let me know what you think about the cannabis industry as an investment opportunity.