Tobacco companies invest in cannabis
While tobacco companies expand their operations investing in the cannabis sector, cannabis companies like GreenStar Biosciences (CSE: GSTR) make it their core mission
Last Wednesday, Auxly Cannabis Group announced a partnership agreement with Imperial Brands, formerly Imperial Tobacco Group. Imperial Brands invests €85 million in Auxly against a 19.9% stake by Auxly.
Imperial Brands will provide Auxly with worldwide licenses for its vaporization technology and access to its vaporization innovation activities. Auxly will also become an exclusive partner for Imperial’s cannabis-related business activities.
Auxly is a Canadian cannabis producer. The company has numerous distribution agreements, for example with Dixie, producers of CBD and/or THC infused beverages, and a production subsidiary in Uruguay.
“We are delighted to announce the closing of this transaction to formally mark the beginning of our strategic partnership with Imperial Brands,” said Hugo Alves, Auxly’s CEO, in the release.
“We believe that there are significant opportunities for growth and value creation for both companies. We look forward to working with Imperial Brands’ incredible team to prepare for the upcoming launch of our portfolio of branded derivatives products, formulated and manufactured in our subsidiary, Dosecann”.
Tobacco companies are watching the cannabis market closely and are looking for opportunities. Altria (Marlboro) has invested €1.8 billion in Cronos Group, a Canadian cannabis producer, while Philip Morris markets a cannabis inhaler through their €20 million investment in the Israeli company Syqe Medical.
Not only tobacco companies take an interest in the cannabis sector. Companies like GreenStar Biosciences Corp. (CSE: GSTR) have built their core business model around creating a diverse portfolio of most promising cannabis companies the North American market. They aim at becoming the key leader in the industry by creating partnerships with top companies touching on every aspect of cannabis life cycle.
One of their partnerships is already a success. Cowlitz, a Washington state-based producer, marketer and distributor of recreational marijuana, recorded a tremendous revenue of $14.6 million in 2018, which is an impressive result after only five years of operations. They regularly deliver a quarterly revenue of $4 million and growing, being well on track to achieve even more in 2019.
GreenStar also secured a joint venture with Progressive Herbs Inc. called Capri. With this partnership, Capri became a sole licence owner of a patent-pending cultivation technology which makes the production process quicker and cheaper, while maintaining high quality and the highest THC levels on the market. Once the company starts selling the license to other producers, their profits will be even higher.
By investing in cannabis, companies make sure they are participating in the growing and hugely profitable new sector. Companies that make cannabis their core investment strategy, make the sector grow and contribute to the profits of all cannabis investors.