Philip Morris International (PMI), the world’s largest tobacco company by market capitalization, continues to expand its footprint in the medical cannabis market through its subsidiary Vectura Fertin Pharma (VFP). In a press release that went largely unnoticed, this week the company announced 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 balanced focus on health and wellness, as reported by Forbes.
The collaboration between PMI Vectura Fertin Pharma and Avicanna is a continuation of PMI’s thoughtful strategy in the cannabis sector, including its focus on medical applications rather than recreational cannabis. Aaron Gray, Managing Director of Alliance Global Partners, an investment firm very active in the cannabis sector, said: “PMI has consistently shown interest in the medical side of cannabis. Their investment in Syqe Medical in 2016 was focused on medicine, and this partnership with Avicanna continues in that vein. PMI’s interest in cannabis directed at the public has been more related to the medical side rather than recreational or consumer products.”
PMI looks to the future with investment in medical cannabis
PMI’s focused attention on medical cannabis is consistent with its broader strategy of research-driven innovation. Gray clarifies: “This looks like a continuation of PMI’s interest in cannabis, especially medical opportunities. Back in 2016, they invested in Syqe Medical, and in July 2023, they agreed to purchase the remaining shares of this company. There were unforeseen circumstances related to getting FDA approval for their device, but this investment was also focused on medicine. This partnership with Avicanna seems to be in line with that strategy.”
Beyond medical cannabis initiatives, PMI is also positioning itself for a long-term shift in consumer preferences. Gray explains: “I think this is a multi-decade strategy. Consumption trends among young people are changing: they are moving away from tobacco and alcohol to cannabis. Big Tobacco sees this and wants to capture this new, growing consumer base. Companies like British American Tobacco have divisions like “Beyond Nicotine” that address these trends, and cannabis is part of that vision. It’s not just about hedging; it’s about preparing for a long-term consumer shift.”
Dan Ahrens, managing director at AdvisorShares, emphasizes PMI’s cautious approach: “Big Tobacco has made numerous investments and joint ventures in cannabis, especially in Canada, but we’ve always felt they’ve been holding off on making major additional investments until they can do so in the U.S. markets after federal reforms.”
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Todd Harrison, founder of CB1 Capital, adds: “The tobacco and alcohol industries have been involved in cannabis for some time, but the speed and pace of integration will be dictated by the regulatory landscape.”
Strategic detour: why PMI does not follow the crowd
PMI’s approach to cannabis differs from that of competitors such as Altria and British American Tobacco (BAT), which have taken a more consumer-focused path. Altria has made a $1.8 billion investment in Cronos Group, while BAT has entered into a C$125 million partnership with Organigram for research and development in 2023. Unlike its competitors, PMI has focused on medical cannabis as the cornerstone of its diversification strategy.
“Most of the big tobacco companies have invested in marijuana in general,” explains Gray. “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 a research and development partnership. In these ways, Big Tobacco is exploring the cannabis space, and I see PMI’s partnership with Avicanna as part of this broader trend.”
By focusing its efforts on the well-regulated Canadian cannabis market, PMI not only gains a strategic testing ground, but is also positioned to gather insights into patient-centered treatment and market dynamics. Gray adds: “When Canada first legalized cannabis, we saw companies like Altria, Constellation Brands and Molson Coors invest heavily or form joint ventures with cannabis firms. Many of these early moves did not turn out as expected, but more recently we have seen more focused investments, such as BAT’s partnership with Organigram.”
Avicanna: a key player in the long-term PMI plan?
This collaboration adds to Avicanna’s history of renowned partnerships. In 2023, the company acquired Shoppers Drug Mart’s Medical Cannabis by Shoppers platform, integrating it into its MyMedi.ca ecosystem, which provides pharmacist-led support and handpicked medical cannabis products. Avicanna also operated for many years in Johnson & Johnson’s JLABS incubator, where it focused on cannabinoid-based research and development. In addition, its partnership with Daabon, one of the world’s largest organic agribusinesses, strengthens its supply chain with cannabinoids that are grown in environmentally friendly conditions.
PMI’s selection of Avicanna, despite its smaller market capitalization compared to other cannabis companies that have received investment from tobacco giants, underscores its clear focus on medical cannabis. Since its inception, the company has favored research and development (R&D) and clinical trials over consumer-facing recreational markets. It also maintains a long-term commitment to advancing cannabinoid-based therapeutics and developing evidence-based patient solutions.
Other companies in the cannabis industry have also invested heavily in medical cannabis. For example, GW Pharmaceuticals, now part of Jazz Pharmaceuticals, developed Epidiolex, the first FDA-approved cannabis-based drug to treat epilepsy. Tilray is collaborating with institutions such as New York University and Sydney University to research cannabis treatments for chemotherapy-induced anxiety and nausea, among other conditions. While these companies are succeeding in their targeted therapeutic areas, Avicanna’s research spans numerous diseases, including epilepsy, dermatological disorders, and pain management, through collaborations with institutions such as University Health Network and SickKids Hospital in Canada.
While companies such as Canopy Growth and Cronos Group have developed consumer-oriented products, including recreational cannabis, both have also made notable strides in medical cannabis and research and development. However, Avicanna stands out for 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 to advance cannabinoid-based therapeutics in a variety of medical applications.
What’s next for PMI and cannabis?
PMI’s partnership with Avicanna raises doubts about its long-term intentions. Some analysts see the collaboration as a potential precursor to an acquisition. Gray notes: “PMI’s investment in Syqe Medical in 2016 eventually turned into full ownership in 2023. This could follow a similar path, depending on how the partnership evolves and regulatory changes.”
Ahrens provides additional context: “It’s possible [that PMI will eventually acquire Avicanna], but it’s too early to say. Information about the cooperation is still quite limited.”
While Canada has been a stable testing ground, Ahrens believes PMI’s ambitions are likely to extend to the United States: “We’ve already seen [similar activities] on a limited basis in Canada. I feel that big tobacco (and big alcohol) are waiting to enter the US and MSO markets.”
Looking ahead, this collaboration positions Avicanna as a key partner for multinational companies. 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 has emerged. [This partnership, however, is] further proof that traditional CPG will eventually enter the market,” indicating that established industries are increasingly integrating cannabis into their portfolios.