Tobacco giant eyes cannabis, says it's the future

As it tries to move away from selling traditional cigarettes, a giant tobacco company in the UK says cannabis will be a part of its future.

In an effort to accelerate its transformation, British American Tobacco says it will reduce the negative health effects associated with its products.

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In March, BAT acquired a 19.9 per cent stake in Canada-based medical marijuana manufacturer Organigram.

Additionally, the company signed a deal to research cannabidiol (CBD)-based adult cannabis products.

In analysing the future of BAT's portfolio, Jack Bowles, boss of the company, said the company is eyeing other markets beyond nicotine products as an additional wave of growth.

Bowles believes cannabis-related products will be part of the company's future growth. The company is currently testing a trial of a CBD vape product in Manchester.

He added that despite the fact that CBD vaping is part of the future, the immediate challenge is to present alternatives for smoking and nicotine to reduce harm.

The tobacco giant's half-year results to the end of June saw revenue rise 8.1 per cent to £12,18billion.

Vuse, Velo, and Glo contribute more than a third of the company's revenues in the UK.

Non-combustible product users —including vapes — grew by 2.6 million from 16.1 million, making it the company's largest gain in new customers.

After the end of coronavirus lockdowns, some countries were able to resume cigarette sales following a ban. BAT reported that cigarette sales have recovered in some developing nations since the end of the lockdowns.

In markets such as Brazil, Turkey and Pakistan, sales of brands such as Dunhill, Kent, Lucky Strike and Rothmans increased in the first half of the year.

However, combustibles revenue, which includes cigarettes and heated tobacco products, has fallen three per cent to £10.5bn, the company reported.