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Canadian Cannabis Company Canopy Growth Expands into U.S. Market

Ed Knight

By Ed Knight

October 28, 2022

The Canadian marijuana company Canopy Growth has an eye on southward expansion,

on Tuesday that it is creating a new holding company as part of “a strategy to accelerate its entry into the U.S. cannabis industry and unleash the value of its full U.S. cannabis ecosystem.”

Canopy USA “will hold the Company’s U.S. cannabis investments, which will enable it to exercise rights to acquire Acreage, Wana and Jetty,” the company said in an announcement.

David Klein, the chief executive officer of Canopy Growth Corporation, said the move will put the company in a position to capitalize when the United States lifts the federal ban on cannabis. Recreational marijuana is legal in 19 states in the U.S.

Voters in five other states — Arkansas, Maryland, Missouri, North Dakota and South Dakota — will decide on their own recreational pot proposals next month. 

In its announcement on Tuesday, Canopy Growth said that the United States is “projected to be an over $50 billion market opportunity, and this strategy aims to unlock the ability to capture share and return on investments made to date.” Through what it described as “stepping stone transactions,” the company said it “will be strategically repositioned to capitalize on the benefits of complete ownership and control of its U.S. THC portfolio of assets upon U.S. federal permissibility.”

Canopy Growth is Motivated By Promise of Federal Legalization

“As the growth of the U.S. cannabis market continues rapidly at the state level, this strategy enables us to take control of our own destiny and capitalize on the once-in-a-generation opportunity in the largest cannabis market in the world,” said Klein.

He continued, “We expect to unleash the full power of Canopy’s scalable and ideally-positioned U.S. cannabis ecosystem to unlock potential expansion opportunities. This strategy and positioning are true differentiators, which we expect to enable our investors and brands to realize value in the near term while positioning Canopy for profitable growth and a fast start upon U.S. federal permissibility.”

The newly created holding company will include “some of the most recognized, iconic cannabis brands in the U.S. that the Company believes are ideally positioned in the fastest growing categories, such as edibles, vapes, and flower,” the announcement on Tuesday said, adding that “Canopy USA is expected to leverage the best of each brand’s offerings to accelerate growth and market expansion as key states across the country continue to allow recreational cannabis usage, realizing value in the near term.”

Canopy USA will now have 70 percent of the total shares of Acreage Holdings, a “leading vertically integrated multi-state cannabis operator” with a foothold in the northeast; 100% of the membership interests of Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group, LLC (collectively, “Wana”), “a leading cannabis edibles brand in North America”; and 100% of the shares of Lemurian, Inc. (“Jetty”), æa California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.”

It appears the news of this expansion hasn’t gone unnoticed.

the shares of Canopy Growth were up 27 percent on Tuesday, following the announcement.

The company said that “Canopy and Canopy USA, collectively, are expected to rank among the top cannabis companies in North America by revenue.”

“With a protective layer in place for Canopy’s core businesses, including its Canadian and international cannabis operations, STORZ & BICKEL, BioSteel, and This Works, Canopy is expected to consolidate the financial performance of Canopy USA in accordance with U.S. GAAP, enabling Canopy to highlight the value of its U.S. THC assets to investors,” the announcement said.

“The consolidation of U.S. cannabis assets is expected to generate revenue and cost synergies by leveraging the brands, routes to market, and operations of the full U.S. cannabis ecosystem.”

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Ed Knight

About The Author

Ed Knight

HIGH THERE MISSION

WE’RE A CREATIVE COMMUNITY — EXPLORING THE SCIENCE, CRAFT, AND CULTURE OF CANNABIS.
WE BELIEVE THAT WE HAVE A COLLECTIVE RESPONSIBILITY TOWARDS ERADICATING THE STIGMA, MISINFORMATION, AND INEQUITIES SURROUNDING THIS PLANT, SO WE CAN UNLOCK ITS TRUE POTENTIAL FOR ALL.