Camel cigarette maker plans to make legal weed an important part of its future

Picture above

After a century in which trillions of cigarettes were sold all over the world, many large tobacco companies are now apparently trying to change their name from suppliers of toxic “cancer sticks” to health and wellness companies.

Just last week, tobacco giant Philip Morris’ CEO asked the UK government to ban all cigarettes by the end of this decade. Until then, the company hopes to stop selling cigarettes and other smoke-based products in favor of healthier alternatives. The company will largely focus on selling smokeless nicotine vapes, but executives also pioneered the idea of ​​launching their own cannabis vape brand.

Not to be outdone, British American Tobacco (BAT), Great Britain’s largest tobacco company, has just announced that it will also switch from cigarettes to smoke-free alternatives. But while Philip Morris is hesitant to consider weed products, BAT is already committed to the cannabis sector. In March, the company spent over $ 175 million to become the largest shareholder in Organigram, a licensed Canadian cannabis company.

BAT’s initial investment in the cannabis industry is comparatively modest by company standards, but according to Chief Marketing Officer Kingsley Wheaton, legal cannabis products will play an important role in the company’s future. “When we think about our portfolio for the future, nicotine products are certainly interesting for us as a further growth wave,” Wheaton told BBC Radio 4.

Of course, adult cannabis remains illegal across the UK and most of the world, so BAT will focus its initial efforts on legal, hemp-derived CBD. As a first attempt, the company has already started selling a new CBD vape product in Manchester. Wheaton told the BBC that he believes CBD vaping “is part of the future, but the current challenge is to lessen the harm from tobacco and nicotine alternatives and encourage people to switch”.

BAT has sold over 316 billion cigarettes this year and increased the company’s half-year profit by 8 percent to over $ 17 billion. But more than a third of the company’s sales now come from vaping brands like Vuse, Velo, and glo. The company also saw the largest increase in new customers, with users of vapes and other non-flammable products growing from 2.6 million to 16.1 million.

By 2025, BAT hopes to sell “new category” products such as cannabis and nicotine vapes worth $ 7 billion each year. But even if the company achieves that goal, cigarettes and other smokable products will still make up over half of the company’s total sales. “Right now … BAT is still addicted to cigarettes,” Hargreaves Lansdown’s equity analyst William Ryder told the BBC. “Traditional tobacco products still pay off and will continue to do so for some time.”

With the UK government unwilling to pass major cannabis reform, tobacco companies are watching the flourishing adult consumption market in the US and Canada. In 2018, cigarette giant Altria spent $ 1.8 billion to buy a 45 percent stake in Canadian cannabis producer Cronos.

Tobacco and alcohol companies are also preparing to pounce on America’s legal cannabis industry when the US finally ends prohibition. However, Senate Majority Leader Chuck Schumer’s new weed bill contains provisions that would prevent these companies from dominating the market.