EXCLUSIVE: Tobacco Sector Looks To Cannabis For Growth: 'Investments Are Meant For A Very Specific Reason'

Large global tobacco companies are investing in and partnering with cannabis companies with eyes set on future growth for the sector.

Industry experts shared the reasons why the cannabis sector is attractive to tobacco companies during the 2025 Benzinga Cannabis Capital Conference in Chicago.

Tobacco Sector Looks to Cannabis: Among the major global tobacco operators, British American Tobacco BTI and Philip Morris International PM may differ in their approaches to entering and growing in the cannabis sector.

KBS Strategic Advisors Lead Advisor Nick Kenny said Philip Morris has taken a more pharmaceutical and medical approach to the cannabis market, while British American Tobacco has looked more to consumer packaged goods in the sector.

Organigram Global OGI has secured two investments from British Tobacco, something highlighted by CEO Beena Goldenberg during the Benzinga panel.

Goldenberg said British American Tobacco was looking for a product development collaboration and research on cannabinoids in a federally legalized jurisdiction. A follow-on investment will now see the two companies look to international expansion.

This includes both British American Tobacco and Organigram investing in German company Sanity Group.

"More investments to come," Goldenberg said.

Alliance Global Partners Managing Director of Equity Research Aaron Grey said that what the cannabis sector is seeing now, related to tobacco, is a lot more strategic investments through partnerships or capital infusions.

"Investments are meant for a very specific reason," Grey said.

FoxNRTH Founder Chris Murray added that there is still a risk of a reputation for big tobacco companies in some regions, as cannabis is heavily stigmatized in some markets. This could be the reason for slow and steady entry into the sector instead of diving right in.

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What's Next For Tobacco Sector: Grey said Philip Morris could be slower before going heavily into the cannabis sector, with legality issues and recreational use having more risk.

"They've been consistent in their medical angle," Grey said.

Grey said the company will likely be conservative and look to learn more about the product.

"They've always been a little more conservative on that front."

For British American Tobacco, the company is looking at non-combustibles for growth.

"Vapes, edibles, beverages, that's the space," Goldenberg said.

The Organigram CEO said British American Tobacco wants to stay away from combustibles and reduce its risk with new products.

"Most tobacco companies are really looking to the future."

Goldenberg said a recent consumer survey showed that 90% of cannabis consumers are using multiple formats, which means the consumer of tomorrow is likely significantly different from the consumer of today.

With the market currently around 70% flower and pre-rolls, growth of other formats will likely mean 50% for flower and pre-rolls and 50% for vapes, beverages, edibles and other formats in the future, Goldenberg predicted.

Murray said the real exercise for tobacco companies is to investigate and learn more about it. He said the challenge of scaling the business is that you have to be relatively close to the space.

Kenny said there has to be an appetite for risk from the tobacco industry to keep investing in the cannabis space.

"Tobacco has a lot to lose," Kenny said.

Kenny added there are shareholder agreements, banking and insurance that factor into investments in the cannabis space, and there are likely internal battles for opportunity versus risk at tobacco companies.

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Photo: Chris Murray, Aaron Grey, Beena Goldenberg, Nick Kenny, Deepak Anand at Benzinga Cannabis Capital Conference, June 9, 2025; photo by Wendy Davis