Organigram inks $221M deal with British American Tobacco

·2 min read

Moncton-based Organigram has signed a $221 million deal with British American Tobacco, focused on research and product development, the company announced Thursday.

BAT, which manufactures and sells cigarettes, tobacco and nicotine products, will now have 19.9 per cent equity interest in Organigram, and become the company's largest investor, said Paolo De Luca, Organigram’s chief strategy officer

De Luca told the Times & Transcript the move puts the company on a strong financial footing and will help them invest more into research. British American has also seconded some of its employees to conduct research and development with Organigram, he said.

A Centre of Excellence will be established at Organigram’s indoor facility in Moncton and 40 new jobs are expected to be created, said De Luca.

“It’s a great opportunity for Moncton and should bring a lot of economic development,” he said. “It solidifies Organigram as a key employer in the region.”

Organigram had an overall workforce of 816 employees company-wide by the end of Feb. 2020. Early in the pandemic, Organigram announced temporary layoffs affecting about 400 workers, or roughly 45 per cent of its workforce. As of this month, there are 638 employees at the company, said spokesperson Marlo Taylor.

The collaboration between Organigram and BAT will also help the company expand into other markets, said De Luca, noting they hope to patent systems or products in Canada, then take that intellectual property to other markets.

De Luca said they are looking to develop products no one else has. “CBD-based products will be the initial focus of the collaboration and derivative products like tincture oils, vapours and edibles,” he said.

Organigram believes the market for CBD is larger than that for THC, De Luca said, noting that building consumer confidence and focusing on safety is a priority.

The company has no plans to work with BAT on anything to do with tobacco, he said.

Organigram, a publicly traded company, saw an increase in its shares following the announcement, but De Luca noted that cannabis has often been fairly volatile in the market, and often sensitive to press releases involving deals. The company doesn’t make predictions on this front, he said.

-- With files from David Gordon Koch

Clara Pasieka, Local Journalism Initiative Reporter, Telegraph-Journal