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Cannabis Briefs for May 14, 2019

May 14, 2019

•A significant group of Acreage Holdings shareholders has vowed to oppose Canopy Growth’s acquisition of the company. Marcato Capital Management LP, a San Francisco-based investment firm that owns 575,000 shares—2.7%—of Acreage, called the proposed $3.4 billion transaction “value destroying” in a letter sent to Acreage’s board of directors. Marcato elaborated, “The headline transaction…is substantially lower than the fair value of Acreage based solely on the present value of Acreage’s future cash flows. Furthermore, we believe enterprise values of cannabis companies will skyrocket upon the relaxation of current Federal restrictions. Accordingly, Marcato believes it’s highly imprudent for Acreage to sell itself today at the proposed valuation.” Canopy CEO Bruce Linton expressed confidence that the deal will be approved when shareholders vote in June.

•Consumer cannabis product manufacturer and retailer Green Growth brands has partnered with clothing store Abercrombie & Fitch to sell CBD products in ten A&F stores in Massachusetts, California, Colorado, and Nevada. Green Growth’s products retail under the brand name Seventh Sense Botanical Therapy and include body scrubs, bath bombs, cleansing oils, lotions, and lip balms. Green Growth, a subsidiary of shoe company DSW, has similar arrangements in place with DSW stores and Authentic Brands Group outlets like Aéropostale and Juicy Couture.

•Toronto, Ontario-based cannabis company The Green Organic Dutchman (TGOD) is developing CBD beverages for eventual release in the U.S. market as a founding partner in Califormulations LLC, which will be based in Columbus, Georgia. TGOD has partnered with Symrise Inc., a “global supplier of fragrances, flavorings, cosmetic active ingredients, and raw materials, as well as functional ingredients.” Califormulations’ initial focus will be on producing non-infused beverage concentrates, for shipment to TGOD’s manufacturing facilities for cannabinoid infusion and distribution.

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