Global

British American Tobacco Invests in Cannabis, Looking at Non-Smokable Options

british-american-tobacco-invests-in-cannabis,-looking-at-non-smokable-options

As the legal cannabis market continues to boom across the globe, many have raised questions as to what powers may get involved in the growing industry, with “Big Tobacco” sitting high on the list as a long-time industry that could eventually pair with cannabis. The recent investment of British American Tobacco Plc (BAT) in Trait Biosciences Inc. could be one union indicative of what we can expect in the future.

BAT invested C$31 million ($25 million USD) in Canada’s Trait Biosciences last month, according to Bloomberg, and the deal specifically calls for BAT to help commercialize technology that could be used in beverages that would help make the timing of cannabis effects more predictable.

Trait’s strongest patents are around technology that makes cannabidiol (CBD) water-soluble, which suggests that BAT, which produces vape products and Newport cigarettes, might move toward other formats of cannabis consumption. Neither company commented on any specifics in regard to the future of non-smokable CBD products, or the realm of beverages in particular, though BAT Head of Scientific Research David O’Reilly hinted at the new formats they might look into going forward.

The company will expand business in heated tobacco products and vaping, O’Reilly said, and if consumers’ needs are met with different products, they plan to develop other platforms, “which could be anything,” he said.

Ultimately, this leaves BAT to potentially compete with large consumer products companies, like Molson Coors beverage Co., should they embrace the beverage space. Should BAT look more into CBD cigarettes or chewable products, it would pit them against smaller firms, which are largely run by former tobacco execs. 

It’s unclear in this instance where exactly BAT, or “Big Tobacco” as a whole, plan to do with CBD or other weed-based products, and this is in part because of the legality of cannabis in many countries, where regulations still have yet to take shape.

The tobacco industry is faced with the phenomenon of many people quitting smoking around the developed world, and companies are forced to look forward, beyond nicotine. Cannabis proves to be just one promising market that could work to help these companies tread forward into their next chapter.

With BAT, it is clear they are focusing on CBD instead of THC, and in general looking at cannabis more broadly, beyond the psychoactive cannabinoid. O’Reilly notes that there is a growing demand for CBD products, and while Trait has other specialties, the water-soluble technology is definitely something they are looking at in the new joint venture.

In the US, with an abundance of states hopping on-board the train of cannabis legalization, cannabis and tobacco still appear in the same conversations.

Specifically, the US Food and Drug Administration (FDA) recently addressed a question on whether cannabis is as dangerous, or more dangerous, than tobacco, the FDA Acting Commissioner Janet Woodcock stating, “I don’t know that a direct comparison has been made. I cannot answer that question.”

And with the slew of newly drafted cannabis regulations come laws that affect both cannabis and tobacco smokers, like Connecticut’s new bill that restricts public smoking areas and distances from businesses.

The US tobacco industry faces the same dilemma of marketing their products, in that the rate of Americans who smoke has dropped from 42 percent in 1965 to 14 percent in 2019. In addition, movements to restrict the legal age to purchase tobacco have recently been pushed through successfully, while the industry continues to grapple with conversations around banning menthols and vapes.

The Trait and BAT union overseas provides just one observable insight as to where these two prominent and unique industries might join forces moving forward.

“(BAT) were interested for the same reason I was; it’s a tremendous opportunity for new product development and building new brands in this territory,” Trait CEO Peter McDonough said.

Leave a Reply

Your email address will not be published. Required fields are marked *