LONDON, March 31, 2026, 17:08 BST
British American Tobacco p.l.c. is moving to lift its stake in U.S. hemp-derived CBD, or cannabidiol, company Charlotte’s Web to about 40% by converting a C$75.3 million convertible debenture — debt that can be turned into shares — plus accrued interest into equity and adding $10 million in fresh cash, U.S. filings showed. The transaction would hand BAT roughly 110 million Charlotte’s Web shares if approved. 1
The deal pushes the group further into businesses beyond tobacco and nicotine at a time when it has said 2026 performance is likely to land at the lower end of its medium-term targets. When BAT first backed Charlotte’s Web in 2022, it described the investment as another step in that expansion. 2
BAT said in February that revenue from newer products such as vapes, heated tobacco and nicotine pouches reached £3.62 billion in 2025, or 18.2% of group revenue. Chief Executive Tadeu Marroco also said Velo had reached No. 2 in U.S. pouch volume and value share. 3
For Charlotte’s Web, the need is more immediate. The company said the deal would wipe out about $65 million of debt, stop interest from building on the debenture and bolster liquidity; it ended 2025 with $8 million of cash and $68.7 million of long-term liabilities. 1
Chief Executive Bill Morachnick said BAT’s move “removes our largest remaining liability” and supports the company’s strategy. Finance chief Erika Lind said it would also avoid “approximately $12 million in future interest.” 1
BAT already held a debenture from its 2022 investment that could be converted into a 19.9% stake. Under the new terms, BAT would own about 40.8% of Charlotte’s Web on a non-diluted basis, and an amended investor-rights agreement would give it board nomination rights in line with its holding, with at least two seats while it owns 10% or more. The filing said BAT would have no right to direct day-to-day operations. 2
The competitive backdrop is moving fast. Philip Morris International is defending its market-leading Zyn nicotine pouch brand against challengers, while BAT says Velo is gaining share in the same U.S. market; Charlotte’s Web gives BAT exposure to a different corner of the broader alternatives business. 4
The announcement came alongside Charlotte’s Web’s 2025 results. Revenue edged up 0.5% to $49.9 million, its first annual increase since 2021, but the company still posted a net loss before tax of $29.8 million and said the new cash would help fund participation in what it described as an anticipated Medicare innovation program for eligible hemp-derived products. 5
But the deal is not done. It still needs Toronto Stock Exchange and shareholder approval, with a vote expected around May 28, and without that sign-off the debt conversion and fresh cash do not arrive; BAT also faces separate pressure from illicit vapes, taxation and regulation in its far larger nicotine business. BAT’s U.S.-listed shares were down about 0.8% at 15:54 UTC. 1
