The U.S.-listed shares of Canadian cannabis producer Canopy Growth (CGC) rose 27% on
news that the company is acquiring three American companies.
Smiths Falls, Ontario-based Canopy Growth is creating a new entity called “Canopy USA LLC”
that will be used to buy the three U.S. cannabis companies -- Acreage Holdings (ACRG), Jetty
Extracts and Wana Brands.
Specifically, Canopy Growth is taking out options to take control of the three companies if
cannabis is legalized at the federal level in America.
The deal, which is subject to a shareholder vote, will finally make Canopy Growth profitable and
allow it to expand across the U.S. and use each of the three companies’ intellectual property
even without federal legalization south of the border.
In a news release, Canopy Growth said it plans to leverage Acreage Holdings’ distribution
assets in the Northeast, Jetty’s cannabinoids, and Wana’s edibles cannabis products to improve
its product offerings in both Canada and the U.S.
The deal has special provisions that Canopy Growth says will let it avoid breaking the law
related to the federal prohibition of cannabis in the U.S.
These include Canopy USA having its own management team, and exchangeable shares that
will create a protective layer between its U.S. and Canadian operations.
While cannabis legalization continues to be debated in Washington, D.C., the recreational drug
remains illegal at the federal level in the U.S. Several states have legalized cannabis use.
U.S.-listed shares of Canopy Growth jumped 27% to $2.91 U.S. per share on this latest
development. It was the biggest jump in the company’s stock since August 2018. Year-to-date,
Canopy Growth’s share price remains down 69%.
