Canopy Growth, the world’s largest cannabis company, announced a $4 billion deal to buy the edibles and beverages business of The Green Organic Dutchman.
Canopy Growth Corporation, the largest cannabis producer in Canada, has announced that it will acquire the #1 edibles brand in North America. The company is also expected to buy a cannabis production facility in California. Read more in detail here: canopy growth stock.
With its newest option-based agreement predicated on marijuana being federally legal in the United States, Canopy Growth (WEED.TO)(CGC) is aiming to dominate the cannabis candy industry.
On Thursday, the Smiths Falls, Ont.-based business announced an agreement to buy Wana Brands, a Colorado-based cannabis edibles company that claims to have the largest market share in North America.
Canopy said the deal is structured similarly to its planned acquisition of New York-based multi-state operator Acreage Holdings (ACRHF), which was a historic deal when it was announced in 2019 and needed legally authorized marijuana sales to be completed.
Canopy has separate call option agreements with three Wana owner entities to purchase 100% of the business under the terms of the transaction. Canopy said it will pay a cash payment of US$297.5 million up front. Canopy states that if the rights to purchase any Wana business are exercised, it will pay 15 percent of the fair market value in cash, shares, or a mix of the two, at its discretion. The entire anticipated value of the transaction was not disclosed by the business.
“There are certain companies that are very valuable, and there are many others that are struggling to make a profit. Then there are some who fall within the sweet spot. Wana, we believe, is in that sweet place “In a virtual interview with Yahoo Finance Canada on Thursday, Klien said.
Canopy’s stock rose 4.23 percent to $17.21 at 9:49 a.m. ET on the Toronto Stock Exchange. Year to date, the stock has down more than 47%.
Companies listed on major North American markets, such as Canopy Growth, are prohibited from directly holding plant-touching cannabis assets in the United States as long as the substance is still illegal. TerrAscend (TER.CN), which operates in several US states, also holds a conditional ownership stake in the business.
Wana claims to be North America’s leading cannabis-infused edibles company, with gummies and other goods accessible in 12 states and nine Canadian provinces. Before the end of 2022, the business plans to expand to 20 states. Gummies account for 71% of all edibles purchases in monitored U.S. states, according to industry data firm Headset. Infused drinks, chocolates, and other items are included in this category.
Wana has a licensing arrangement with Indiva, an edibles company headquartered in London, Ontario (NDVA.V). In February, those businesses announced a five-year renewal of the agreement, which may be extended for three more five-year periods. Raymond James analyst Rahul Sarugaser lauded Indiva’s nearly 50% share of legal cannabis edibles marketed in Canada in a Sept. 7 note to clients, calling the firm “an M&A target if we’ve ever seen one.”
Klien claims that purchasing Indiva will contradict the company’s attempts to reduce its manufacturing footprint in Canada.
“We hope that this serves as a solid foundation for a long-term partnership with Indiva. Indiva’s work has grown on us over time. Canopy and Indiva are heading to the provincial boards this morning to inform them that business would continue as normal till further notice “Klein said.
Canopy and Wana’s staff connected right away, according to Klein, during their initial encounter around six months ago. Nancy Whiteman, Wana’s creator, has been dubbed the “Martha Stewart of edibles,” and he says she has left an impression on him.
“Nancy’s attitude to business is refreshing. She actually began this in her home and has grown it into a lucrative company that covers several states “he said
In the United States, Canopy already has a line of non-intoxicating CBD gummies endorsed by the actual Martha Stewart. Due to Stewart’s reluctance to promote goods containing THC, the primary cannabis component responsible for getting consumers high, Klein claims the two companies will not compete.
“Martha has said unequivocally that she does not want her brand to include THC goods,” Klein added. “CBD doesn’t bother her. Other mild cannabinoids don’t bother her. But she has no plans to enter the THC market with her company.”
Canopy views Wana’s licensing strategy as a development opportunity ahead of possible cannabis legalization in the United States. According to Canopy, the private business is successful and has a “track record of producing significant sales growth and category-leading gross and EBITDA margins.”
Canopy is expected to miss its target of making a profit in the next three quarters, according to analysts. Since assuming the helm in January 2020, Klein has overseen a massive reorganization that included widespread plant closures and employee layoffs as the business faced stagnating sales and severe losses.
Canopy invested $435 million in Supreme Cannabis and Ace Valley, a vape company, earlier this year in order to provide more lucrative, higher-end goods.
Canopy Growth Corporation (TSX: WEED) announced Thursday that it will buy the #1 edibles brand in North America, Hiku Brands Company Ltd. Reference: canopy growth news.
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