Philip Morris International (PMI), the largest tobacco company in the world by market cap, is further extending its reach into cannabis through its subsidiary, Vectura Fertin Pharma (VFP). In a press release that went mostly unnoticed, the company announced this week a collaboration with Avicanna, a Canadian biopharmaceutical firm specializing in cannabinoid-based medicine. This partnership aims to advance medical cannabis research and improve accessibility in Canada. By leveraging Avicanna’s expertise and its MyMedi.ca platform, PMI continues its measured pivot toward health and wellness.
The collaboration between PMI’s Vectura Fertin Pharma and Avicanna signals a continuation of PMI’s calculated strategy in the cannabis sector, particularly its focus on medical applications over recreational cannabis. Aaron Grey, managing director at Alliance Global Partners, an investment firm highly active in the cannabis space, observes, “PMI has consistently shown interest in the medical side of cannabis. Their 2016 investment in Syqe Medical was medical-focused, and this Avicanna partnership continues in that vein. PMI’s public-facing interest in cannabis has been more about the medical side than recreational or consumer products.”
PMI Eyes The Future With Medical Cannabis Investments
PMI’s deliberate focus on medical cannabis aligns with its broader strategy of research-driven innovation. Grey elaborates, “This seems like a continuation of PMI’s interest in cannabis, particularly in medical opportunities. Back in 2016, they invested in Syqe Medical, and in July 2023, they agreed to purchase the remaining shares of that company. There were contingencies around getting FDA approval for their device, but that investment was also medical-focused. This partnership with Avicanna appears to align with that strategy.”
Beyond its medical cannabis initiatives, PMI is also positioning itself for a long-term shift in consumer preferences. Grey explains, “I think this is a multi-decade strategy. Usage trends among young adults are shifting—they’re moving away from tobacco and alcohol and toward cannabis. Big Tobacco sees this and wants to capture that new, growing consumer base. Companies like British American Tobacco have divisions like ‘Beyond Nicotine’ to address these trends, and cannabis is part of that vision. This isn’t just about hedging; it’s about preparing for a long-term consumer shift.”
Dan Ahrens, managing director of AdvisorShares, highlights PMI’s cautious approach: “Big Tobacco has made numerous investments and joint ventures into the cannabis space—especially in Canada—but we’ve always felt that they are holding off on large additional investments until they can do so in U.S. markets following federal reforms.”
Todd Harrison, founder of CB1 Capital, adds, “The tobacco and alcohol industries have been circling cannabis for some time, but the rate and pace of integration will be dictated by the regulatory landscape.”
A Strategic Detour: Why PMI Isn’t Following The Crowd
PMI’s approach to cannabis differs from competitors like Altria and British American Tobacco (BAT), which have taken more consumer-oriented paths. Altria made a $1.8 billion investment in Cronos Group, while BAT formed a CAD 125 million R&D partnership with Organigram in 2023. Unlike its competitors, PMI has focused on medical cannabis as a cornerstone of its diversification strategy.
“For big tobacco in general, most of the major players have made investments in cannabis,” explains Grey. “For example, Altria invested $1.8 billion in Cronos Group, and Imperial Brands invested CAD 125 million in Auxly. In November 2023, BAT invested CAD 125 million in Organigram, forming an investment pool and an R&D partnership. These are all ways Big Tobacco is exploring the cannabis space, and I see PMI’s partnership with Avicanna as part of that broader trend.”
By centering its efforts on Canada’s well-regulated cannabis market, PMI not only gains a strategic testing ground but also positions itself to gather insights into patient-focused care and market dynamics. Grey adds, “When Canada first legalized cannabis, we saw companies like Altria, Constellation Brands and Molson Coors make significant investments or form joint ventures with cannabis firms. Many of those early moves didn’t pan out as expected, but recently, we’ve seen more targeted investments, like BAT’s partnership with Organigram.”
Avicanna: A Key Player In PMI’s Long-Term Game Plan?
This collaboration adds to Avicanna’s history of notable partnerships. In 2023, the company took over Shoppers Drug Mart’s Medical Cannabis by Shoppers platform, integrating it into its MyMedi.ca ecosystem, which provides pharmacist-led support and curated medical cannabis products. Avicanna also operated out of Johnson & Johnson’s JLABS incubator for years, where it focused on cannabinoid-based research and development. Additionally, its partnership with Daabon, one of the world’s largest organic agribusinesses, strengthens its supply chain with sustainably cultivated cannabinoids.
Avicanna’s selection by PMI, despite its smaller market cap compared to other cannabis companies that have received investments from tobacco giants, highlights its distinct focus on medical cannabis. The company has prioritized research and development (R&D) and clinical studies over consumer-driven recreational markets since its inception. It has also maintained long-term commitments to advancing cannabinoid-based therapeutics and developing evidence-based solutions for patients.
Other companies in the cannabis space have also invested heavily in medical cannabis. For instance, GW Pharmaceuticals, now part of Jazz Pharmaceuticals, developed Epidiolex, the first FDA-approved cannabis-derived drug for epilepsy. Tilray has pursued research partnerships with institutions like New York University and the University of Sydney to explore cannabis treatments for anxiety and chemotherapy-induced nausea, among other conditions. While these companies excel in targeted therapeutic areas, Avicanna’s research spans multiple conditions, including epilepsy, dermatological disorders and pain management, through collaborations with institutions like the University Health Network and SickKids Hospital in Canada.
Although companies such as Canopy Growth and Cronos Group have developed consumer-facing products, including recreational cannabis, both have also made notable advancements in medical cannabis and R&D. However, Avicanna differentiates itself with its integrated approach to patient care through MyMedi.ca and its broad focus on clinical development. This unique combination positions Avicanna as a specialized partner for advancing cannabinoid-based therapeutics across diverse medical applications.
What’s Next For PMI And Cannabis?
PMI’s partnership with Avicanna raises questions about its long-term intentions. Some analysts view the collaboration as a potential precursor to an acquisition. Grey notes, “PMI’s 2016 investment in Syqe Medical eventually turned into full ownership in 2023. This could follow a similar path, depending on how the partnership progresses and regulatory developments.”
Ahrens provides additional context: “It could be [that PMI ends up acquiring Avicanna], but it’s way too early to say. The information on the collaboration so far is pretty limited.”
While Canada provides a stable testing ground, Ahrens believes PMI’s ambitions likely extend to the U.S.: “We’ve already seen [similar activity] on a limited basis in Canada. I feel big tobacco (and big alcohol) is waiting for entry into the U.S. markets and MSOs.”
Looking ahead, this collaboration positions Avicanna as a key partner for multinational firms. By focusing on medical cannabis, PMI avoids the risks of recreational markets while laying the groundwork for long-term diversification. Harrison concludes, “Traditional CPG has largely remained at arm’s length until regulatory clarity emerges. [However, this partnership is] yet another proof point of the eventual entry of traditional CPG,” signaling how established industries are increasingly integrating cannabis into their portfolios.
Disclosure: The author does not own shares of any of the companies mentioned in this article, their peers or competitors. Furthermore, the author does not intend to initiate any positions in these stocks within 72 hours of publication.
This article is for informational purposes only and should not be considered investment advice. Individuals considering investments in any securities should consult with a qualified financial professional and perform their own thorough research. All investments carry risks and decisions should be made based on individual financial circumstances and goals.
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