LONDON, March 31, 2026, 17:08 BST
British American Tobacco p.l.c. plans to boost its stake in Charlotte’s Web, a U.S. hemp-derived CBD company, to around 40%. According to U.S. filings, BAT aims to convert a C$75.3 million convertible debenture—plus accrued interest—into equity, and kick in an extra $10 million in cash. If the deal goes through, that’s about 110 million Charlotte’s Web shares for BAT.
The move deepens the group’s shift away from tobacco and nicotine, coming as BAT signals 2026 results will likely hit the low end of its medium-term range. Back in 2022, BAT called its investment in Charlotte’s Web just another piece of that pivot.
Back in February, BAT reported that revenue from its newer offerings—vapes, heated tobacco, and nicotine pouches—came in at £3.62 billion for 2025, making up 18.2% of total group revenue. Chief Executive Tadeu Marroco said Velo is now the No. 2 brand in both volume and value share among U.S. pouches.
Charlotte’s Web faces a tighter timeline. The company says this agreement would erase roughly $65 million in debt, halt further interest accrual on the debenture, and shore up liquidity. Cash at the end of 2025 stood at $8 million, with $68.7 million in long-term liabilities.
Chief Executive Bill Morachnick called BAT’s action a way to “remove our largest remaining liability” and back the company’s broader strategy. Finance chief Erika Lind noted the step sidesteps “approximately $12 million in future interest.” SEC
BAT’s earlier investment in 2022 gave it a debenture, convertible into a 19.9% stake. Now, with the revised deal, BAT’s share climbs to roughly 40.8% of Charlotte’s Web, calculated on a non-diluted basis. The updated investor-rights agreement hands BAT board nomination privileges reflecting its stake, guaranteeing at least two seats as long as its ownership stays at 10% or higher. According to the filing, BAT doesn’t get a say in Charlotte’s Web’s day-to-day business.
Competition is heating up. Philip Morris International is busy fending off rivals to protect its top-selling Zyn nicotine pouch brand, as BAT claims its Velo is picking up share in the U.S. as well. Through Charlotte’s Web, BAT gets a foothold in another slice of the alternatives sector.
Charlotte’s Web released its 2025 results, reporting a slight revenue gain of 0.5% to $49.9 million—the first year-over-year growth since 2021. Still, the company logged a pre-tax net loss of $29.8 million. Executives said the fresh capital injection would support their entry into what they called a coming Medicare innovation program for qualifying hemp-derived products.
The agreement hasn’t closed yet. It’s still waiting on Toronto Stock Exchange clearance and a shareholder vote, slated for around May 28. Without those, neither the debt conversion nor new funding gets through. BAT is also contending with issues tied to illegal vapes, taxes, and regulatory hurdles in its much bigger nicotine business. BAT’s U.S. shares slipped about 0.8% as of 15:54 UTC.
