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Declining Revenue Forces U.S. Tobacco Maker into Marijuana Industry

Tobacco Marijuana

U.S.-based tobacco grower, Alliance One International Inc., has kept a close eye on the U.S. and Canadian marijuana markets. And they’re now looking to add marijuana cultivation to their portfolio.

Alliance underwent a name change this month, becoming Pyxus International Inc., Bloomberg reports. As tobacco use continues to decline globally, the company is in need of a new source of revenue.

“Cannabis has been on our mind for some time,” said CEO Pieter Sikkel “We could see that consumer tastes are changing.”

Lately, to stay in business, the company has indulged in the tobacco vaporizer market, but despite their successful history, they’re currently $900 million in debt.

Pyxus stated that the “company is actively pursuing new business lines focused on agricultural products that are value-added or require some degree of processing, with higher margin and growth potential than its leaf tobacco business and that play well to its strengths. The company has previously announced several extensions into new business lines, namely e-liquids, industrial hemp under a federal pilot program and legal cannabis in Canada.”

The company is getting its feet wet in the marijuana industry in Canada as it recently made stakes in two marijuana companies, a $27 million investment.

Bloomberg Intelligence analyst Ken Shea said, “The opportunity was obvious 20 years ago — you roll up cannabis in a joint and smoke it. But smoking probably won’t be the main way people ingest cannabis. It’s declining for the same reason smokers are moving away from combustible devices.”


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