Imperial Brands' venture arm invested in Oxford Cannabinoid Technologies, a UK-based biotech company, along with Casa Verde Capital.

Oxford Cannabinoid Technologies is researching and developing compounds in the cannabis plant that can be used for drugs.

It's one of the first concrete signs the tobacco industry is embracing cannabis.

One of the world's largest tobacco companies is getting into cannabis.

Imperial Brands participated through its venture arm in a Series A fundraising round for Oxford Cannabinoid Technologies (OCT). Snoop Dogg's cannabis-focused venture firm, Casa Verde Capital, also participated in the round.

While OCT did not publicly disclose the size of the round, sources close to the deal confirmed to Business Insider that nearly $10 million was raised.

It's one of the first concrete signs that the tobacco industry is embracing cannabis, and positioning itself for a future with less demand for cigarettes.

"We are pleased to be partnering with OCT," Matthew Phillips, the chief development officer of Imperial Ventures, said in a statement. "Cannabinoid products have significant potential and our investment enables Imperial to support OCT’s important research while building a deeper understanding of the medical cannabis market."

The move is a sign of a larger shift within Imperial, which is behind popular cigarette brands like Kool, Salem, and Winston. Imperial added a Canadian cannabis executive, Simon Langelier, to its board last year. The company has also started moving beyond cigarettes to focus more on pharmaceuticals, vaporizers, and other consumer products.

The UK-based OCT is researching cannabinoid compounds to test which can be turned into effective drugs or treatments. Like other research-stage biotech companies, it's working on developing intellectual property around these compounds.

"Funding research into cannabinoids can be challenging," Karan Wadhera, the managing partner of Casa Verde, told Business Insider over the phone. "It's a fantastic opportunity to support the growth of the medicinal side of the cannabis industry."

Wadhera compared OCT to the more well-known GW Pharmaceuticals, which recently got its marijuana-based epilepsy drug, Epidiolex, approved by the Food and Drug Administration.

The drug uses CBD, a compound found in the cannabis plant that doesn't get you high. Wadhera said the FDA's approval of Epidiolex will "open the doors" to cutting-edge research on cannabinoids — active compounds within the marijuana plant — presenting a huge opportunity for biotech and pharmaceutical companies.

Neil Mahapatra, the managing partner of Kingsley Capital Partners, a London-based firm that owns the largest chunk of OCT, told Business Insider in an email that the market for cannabis-based drugs is "opening up across the world."

"In the past two years alone, very significant countries have created new cannabis markets: Germany, Australia, and Poland to name a few," Mahapatra said. "And the growth is almost just beginning: if you look at the size of the alcohol and pharmaceutical industries now, that’s what the size of the cannabis market could reach."

Momentum around medical marijuana is sweeping the US: Oklahoma, one of the most conservative states, recently legalized medical marijuana for patients over the age of 18.

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