British American Tobacco said on Thursday it will buy a nearly 20% stake in Canada-based cannabis producer Organigram for about 126 million pounds ($175.81 million) as it diversifies beyond its main tobacco business.
Organigram grows cannabis and makes cannabis-derived products in Canada where marijuana was legalised in 2018.
Big tobacco and liquor companies in North America have already made large investments in the nascent cannabis industry. Marlboro maker Altria has invested in pot producer Cronos Group Inc, while Corona beer-maker Constellation Brands Inc has bought a stake in Canopy Growth, the largest weed company by market value.
The deal with Organigram will give BAT access to R&D technologies, product innovation and cannabis expertise.
"Organigram has a proven track record of consumer-led innovation and developing high quality adult-use recreational and medical cannabis products, which are legally available in Canada," BAT said in a statement.
($1 = 0.7167 pounds)