Canopy Growth Makes Changes To Fast Track U.S. Entry
May 23, 2023Canadian cannabis company Canopy Growth is breaking off its Canopy USA subsidiary in order to give that arm greater maneuvering room in the U.S. market. If the plan is approved by shareholders and finalized, Canopy USA is expected to exercise its rights to acquire Acreage Holdings, as well as Mountain High Products, leading edibles brand Wana Wellness, and Jetty, consolidating its brand portfolio.
In a revised proxy statement filed with the SEC, Canopy Growth outlined structural amendments to its interests in Canopy USA, which include reducing Canopy Growth’s economic interest in Canopy USA to no greater than 90%, along with adjustments to the composition and nomination rights of Canopy USA’s board, among other changes. These changes will notably make it so that Canopy Growth will not be required to consolidate the financial results of Canopy USA with its financial statements.
As a result of these moves, Canopy USA will become the entity capable of executing Canopy Growth’s deal to acquire Acreage, as well as several other acquisition deals that Canopy Growth has inked, all contingent on the federal legalization of cannabis in the U.S. Canopy USA will consolidate these brands and represent them across state-level markets, setting up Canopy Growth for full entry if and when federal legalization becomes a reality. The consolidation is also expected to deliver financial benefits to revenue and cost reduction.
“Canopy USA is a novel strategy designed to capitalize on a once-in-a-generation market opportunity,” said Canopy Growth CEO David Klein. “We are pleased to have found a path forward that enables us to stay within NASDAQ’s listing requirements, while preserving the meaningful value associated with this plan. We look forward to our continued collaboration with regulators and other stakeholders as we work to capture the attractive value in the U.S. market and position Canopy Growth for profitable growth and a fast start upon federal permissibility in the United States.”—Danny Sullivan
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