A new strategic deal is making waves in the cannabis sector Thursday morning, sharply moving the stock of Organigram Holdings(NASDAQ:OGI). As of 10 a.m. EST, Organigram shares were up slightly more than 30%.  

The big news is a strategic investment British American Tobacco (BAT) (NYSE:BTI) is making in the Canadian pot grower. BAT will take a 19.9% stake in Organigram for an investment the equivalent of about $175 million. The investment was made at an Organigram stock price of about $3 per share. Shares are currently trading at about $3.80. 

This isn't a huge investment for BAT relative to its size. The tobacco company currently has a market capitalization of about $85 billion. But it marks an important shift away from tobacco and nicotine products. In a statement, the company said the agreement supports "ongoing BAT activities to expand its portfolio 'beyond nicotine' and follows the pilot launch of Vuse CBD Zone in Manchester, UK earlier this year." 

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