Tobacco Giant Invests in German Cannabis Producer Sanity Group
British American Tobacco (BAT) has acquired a non-controlling minority stake in the German cannabis producer Sanity Group for an undisclosed amount, as announced by the multinational tobacco giant on September 26. In simple terms, BAT has become a shareholder in the company, but the size of its stake does not allow it to directly participate in company management—it’s less than 50%.
According to Bloomberg, Berlin-based Sanity Group received $37.6 million in a funding round led by BAT. Nearly half of the funds will be used to strengthen Sanity’s medical business, while the rest will go toward preparing for the possible legalization of recreational cannabis in Germany.
As a result of this funding round, Sanity Group’s total capital raised has exceeded $100 million. Founded in 2018, Sanity Group develops and distributes pharmaceutical cannabis-based products, medical goods, and consumer products. In addition to British American Tobacco, the startup is backed by investors such as Snoop Dogg’s Casa Verde Capital, musician Will.I.Am, actress Alyssa Milano, and others.
Germany is currently in the early stages of legalizing recreational cannabis, joining Canada as the only G20 country to do so. The tobacco giant’s investment highlights the potential of the German market, which is the largest economic zone in Europe with a population of over 83 million. As cannabis consumption rises and cigarette smoking declines in developed countries, companies like BAT are seeking new areas for growth.
This is not BAT’s first investment in cannabis. The company spent about $175 million to acquire a 19.9% stake in licensed cannabis producer Organigram Holdings in 2021, and invested an additional $5.1 million this year.
“The investment in Sanity Group is another example of BAT’s ongoing work to explore numerous areas beyond nicotine, positioning BAT for future growth in various categories and regions,” said Kingsley Wheaton, BAT’s Chief Growth Officer, in a company statement.