Organigram Holdings Inc., one of Canada’s largest cannabis producers, announced a $124.6 million investment from British American Tabacco (BAT) on Monday. 

The cannabis company said a large chunk of the money would be used to set up a new strategic investment pool.

Organigram shares rose 30 per cent on the news. The stock was up 25 per cent as of 11:20 a.m. on Monday.

BAT already owns an 18.8 per cent stake in Organigram, and the proposed deal will see it increase its voting common share ownership stake to 30 per cent and raise its overall equity interest to 45 per cent.

Organigram said it plans to use $83.1 million of BAT’s investment to create a strategic investment pool known as "Jupiter" to help grow its geographic footprint and invest in emerging growth opportunities, with the rest being used for general corporate purposes.

“We are excited to bring this transformative transaction to Organigram’s shareholders, reinforcing our commitment to delivering shareholder value,” Organigram CEO Beena Goldenberg said in a Monday press release.

“This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company.”

In its own press release on Monday, BAT said it has been “pleased with Organigram’s performance and continues to be impressed by the careful financial governance of the company.”

Organigram shares were up 48 cents at $2.07 in early trading on the Toronto Stock Exchange.

With files from the Canadian Press