Canadian cannabis producer Canopy Growth Corp saw its shares soar 26.7% after announcing plans to create a holding company, Canopy USA LLC, aimed at speeding up its entry to the US, the world's largest and fastest growing cannabis market.
Under the plans the company will buy partners Acreage Holdings Inc, Wana Brands and Jetty Extracts, deals that are expected to make Canopy profitable and give it a leading market share in the US.
Canopy will own the new holding company indirectly with the new entity taking over Acreage in return for shares of Canopy Growth, fulfilling a $3.4 billion option that the Canadian company had taken in 2019.
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It will also take over Wana and Jetty, consolidating the three firms under a single ownership.
The company said the deal would establish an industry-leading, premium-focused brand powerhouse with Canopy USA's portfolio including some of the most recognized, iconic cannabis brands in the US which Canopy believes are ideally positioned in the fastest growing categories, such as edibles, vapes, and flower.
Canopy and Canopy USA, collectively, are expected to rank among the top cannabis companies in North America by revenue, it said, with financial benefits expected via revenue and cost synergies.
David Klein, chief executive officer said: “"As the growth of the US 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."
“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 US federal permissibility" he added.
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