Tobacco companies have been interested in marijuana for decades, but only recently have cigarette producers made serious investments in the industry.

While that's due to a combination of declining cigarette consumption, the prevalence of decriminalization and legalization, and greater public acceptance, it represents a new opportunity for tobacco companies to profit. The latest cigarette giant to stick its toe in the water is British American Tobacco (BTI 0.71%), which is testing out a cannabidiol (CBD) vape product in the U.K. 

While the owner of Lucky Strike, Camel, Kent, and Pall Mall is several years behind its peers in investing in the marijuana market, the results of those earlier investments indicate British American did itself no harm by taking a wait and see approach. It may be better off because of it.

Vaping device next to marijuana buds

Image source: Getty Images.

Diving head first

Three years ago, it became trendy for consumer product giants to partner up with marijuana growers. 

Yet despite analyst projections of sky-high growth potential for the industry, the legal weed industry has thus far failed to live up to those expectations. While that's more because of regulatory failures, rather than business model flaws, it's resulted in many of the valuations of those early deals being written down. 

The carrying value of Constellation's investment in Canopy Growth, for example, has declined by about $1 billion, while Altria's carrying value of Cronos is down to $1 billion (though based on Cronos' stock price, the fair value is $1.1 billion).

Philip Morris International (PM 2.84%) may have been the first to make an investment in the space, putting $20 million in 2016 into Syqe Medical, an Israeli company developing a medical cannabis inhaler, but has not mentioned the partnership since.

Look before you leap

While it's not clear who, if anyone, British American partnered with to obtain its CBD to trial, the development of a vaping product is a smarter move than many other companies have made, as it remains within the tobacco company's wheelhouse.

On the company's website, it says it's the first global vaping company to launch a CBD vaping product, the Vuse CBD Zone, which is available in Manchester, U.K. It plans to roll out to new markets as the year progresses.

In an interview with CNBC's Squawk Box, British American's chief marketing officer Kingsley Wheaton said, "We draw a very big distinction between CBD and other forms of cannabis. We're interested in CBD."

British American acquired the Vuse brand when it bought Reynolds American in 2017 and it has become the fastest growing vapor brand, with a 26% share of the global market. It reportedly has more than a 50% share in five top markets and a better than 19% share in the U.S. (Juul, in which Altria owns a 35% stake, remains No. 1 despite its many troubles).

Hit the ground running

The sustained popularity of vaping, along with the growing use of CBD, could allow British American Tobacco to hit the ground running if its use is legalized at the federal level. It represents a portfolio innovation that could elevate the Vuse product above the competition and would give it true first-mover status beyond simply dumping money into a pot stock. 

While legalization would probably spur Altria and other tobacco companies to action, it's noteworthy Altria has slow-walked the rollout of the Philip Morris IQOS heated tobacco device despite getting approval to market it two years ago and put a modified-risk label on it last year. Altria might be better off putting more money into marijuana than IQOS.

Of its U.K. trials, British American Tobacco says, "CBD vaping is a new category for us, and we will be using this pilot launch to gain key learnings about consumer and retailer experiences...to help inform plans for a potential nationwide roll-out of Vuse CBD Zone later in the year."

It could be a game-changer for the tobacco giant and the industry, showing that slow and steady, not just who's first to enter, can win the race.