British American Tobacco investing in German cannabis company

British American Tobacco BAT BTI is investing in the German cannabis company Sanity Group GmbH along with Snoop Dogg's Casa Verde Capital as part of the tobacco giant's bid to diversify beyond nicotine. In a Series B funding round, Bloomberg reported that Sanity secured $37.6 million in a Series B funding round.

According to Age H nsel, founder and CEO of Sanity, the financing will be used to strengthen the firm's medical marijuana business and prepare for the legalization of adult-use cannabis in Germany, expected for 2023.

In 2017, Germany decriminalized medical cannabis, and now analysts at the Institute for Competition Economics DICE say that the decision to fully legalize cannabis could bring the country some 3.4 billion euros $3.85 billion in tax revenue. It would save around 1.3 billion euros annually for the judicial system and create 27,000 new jobs.

BAT said that it has a minority stake in Sanity because of the investment, via one of its wholly owned group companies. The total raised by Sanity has gone up to more than $100 million, according to Bloomberg.

Max Narr, CIO at Sanity Group, said that funding is an important milestone for us and a strong signal towards the future of cannabis in Germany and Europe. We are proud to have achieved a funding round of this magnitude against the backdrop of a challenging global economy. H nsel said that Sanity Group sees strong interest not only from tobacco but also from other industries like fast-moving consumer companies.

Investing in Sanity Group is another example of the ongoing work of BAT to explore many areas beyond nicotine. Wheaton said that future portfolio growth could be a priority for future growth across a range of categories and geographies.

In March, Canadian cannabis company Organigram Holdings Inc. announced that BAT had invested $6.3 million $4.97 million to improve its equity ownership position in the company from 18.8% to 19.5%.