Goodrich Tobacco Co., a subsidiary of 22nd Century Group, has signed a letter of intent with Orion, a cigarette manufacturer in Poland, to contract manufacture the company’s proprietary tobacco products to be distributed in the European Union.
Goodrich produces tobacco with very low nicotine levels. The firm will export its proprietary leaf from the United States to Orion. Orion will manufacture the finished cigarettes under the brands owned by Goodrich Tobacco, including Gold Magic, which yields only 0.037 mg of nicotine per cigarette, according to independent laboratory tests.
Previously, Goodrich entered into an exclusive distribution agreement with Wilshire Marketing for the Gold Magic brand in Belgium, the Netherlands and Luxembourg.
22nd Century Group has purchased the cigarette production equipment used by the defunct Renegade Tobacco in Mocksville, North Carolina, USA. The Clarence, New York-based biotechnology firm intends to manufacture experimental and high-end cigarettes at the plant.
22nd Century paid $3.22 million for the equipment owned by GE Capital during a bankruptcy proceeding. In October, the company had already signed a lease agreement for Renegade’s 61,500-square-foot facility.
22nd Century plans to first manufacture Spectrum research cigarettes and shortly thereafter begin production of its Red Sun and Magic super-premium brands. The company also expects to enter into a manufacturing agreement with a strategic partner and to begin exporting its products in 2014.
22nd Century believes that having its own factory will create shareholder value as control and production of its differentiated tobacco products will be greatly facilitated and costs will be reduced. Until now, 22nd Century Group’s subsidiary, Goodrich Tobacco Co., had produced all of its products through contract manufacturers.
The company makes the Spectrum cigarette for the U.S. government, which is distributed under the direction of the National Institute on Drug Abuse, part of the National Institutes of Health. The Spectrum line includes a series of cigarette styles that have a similar tar yield, but varying nicotine yields.
Approximately one-third of the manufacturing equipment purchased will not be needed and is expected to be sold to other parties that have already expressed interest.