Tobacco Giant BAT Invests in Cannabis Startup Alongside Snoop Dogg

As Big Tobacco does its best to keep up with market demands and divert from tobacco towards alternative products, British American Tobacco Plc (BAT) has invested in German cannabis startup Sanity Group.

Diane Caruana

September 29, 2022

BAT has recently reported a 51% rise to 2.05 billion pounds in adjusted sales of its “new categories” product line which includes e-cigarettes, heated tobacco and oral nicotine products.

Along with rapper Snoop Dogg’s Casa Verde Capital, BAT has invested in the Berlin-based Sanity Group GmbH. Securing $37.6 million in the deal, it is believed that the cannabis startup will use half the amount towards strengthening Sanity’s medical business, while the rest will be spent on preparing for the potential legalization of recreational marijuana in Germany.

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

BAT’s expansion into new categories

In other news, announcing a 2 billion-pound buyback, BATS.L has recently reported a 7% rise in full-year adjusted revenue, and also a dividend increase of 1.0% to 217.8 pence and a 2 billion pound share repurchase programme for 2022.

The tobacco company has also reported a 51% rise to 2.05 billion pounds in adjusted sales of its “new categories” product line which includes e-cigarettes, heated tobacco and oral nicotine products. Despite the fact that this division has not generated any profit yet, BAT said that it was on track to report revenue of 5 billion pounds and profitability by 2025.

“Continued growth in new categories is a cornerstone of BAT’s long-term plans for success,” Third Bridge analyst Ross Hindle said. “With over 1.1 billion smokers still using combustibles, the opportunity to convert consumers towards New Categories is highly attractive.”

Read Further: Bloomberg