Canopy USA is
now positioned to consolidate operations across its three business
units – Wana, Jetty, and Acreage – realizing synergies, cost
savings, and supporting growth in state-legal markets across the
U.S.
Through coverage of key market segments
including flower via Superflux, vape and concentrates via Jetty,
edibles and beverages via Wana, and retail through The Botanist,
Canopy USA is well positioned to
accelerate growth with an emphasis on the Midwestern and
Northeastern U.S. markets
SMITHS
FALLS, ON and NEW
YORK, Dec. 9, 2024 /PRNewswire/ - Canopy
Growth Corporation ("Canopy Growth") (TSX: WEED) (NASDAQ:
CGC) and Acreage Holdings, Inc. ("Acreage") (CSE: ACRG.A.U,
ACRG.B.U) (OTCQX: ACRHF, ACRDF) today confirmed that Canopy
USA, LLC ("Canopy USA") has completed its acquisition (the
"Acreage Acquisition") of Acreage. Canopy USA now owns 100% of the issued and
outstanding shares of Acreage.
Together with the completed acquisition of 100% of Wana
Wellness, LLC, The CIMA Group, LLC and Mountain High Products, LLC
(collectively, "Wana"), as announced on October 9, 2024, and approximately 77% of the
shares of Lemurian, Inc. ("Jetty") as announced on
June 4, 2024, Canopy USA is fulfilling its ambition of establishing
a leading brand-focused cannabis company in the U.S.
"Completing the acquisition of Acreage marks the final step in
establishing Canopy USA as a
unified platform which we believe offers significant upside as the
Canopy USA portfolio of brands can
now capitalize on the rapidly expanding U.S. cannabis market,
independent of the need for federal legalization," said
David Klein, CEO, Canopy Growth and
member of the Board of Managers of Canopy USA. "With a vertically integrated presence
across key U.S. states in the Midwest and Northeast, as well as
licensing agreements which support asset-light operations in
state-legal markets nationally, Canopy USA is well positioned to demonstrate
efficient growth ahead."
"Together with Wana and Jetty, two highly respected cannabis
brands in the U.S., Acreage has an incredible opportunity to drive
combined growth and innovation under Canopy USA," said Dennis
Curran, CEO, Acreage. "With Acreage's product portfolio,
established retail presence, and production capabilities across the
Midwest and Northeast, this integration positions Acreage to expand
its reach, better serve its customers, and deliver meaningful value
to the market. It is exciting to see the opportunities ahead and
the shared vision under Canopy USA."
The completed acquisitions of Acreage and Wana, and
approximately 77% of the shares of Jetty, are expected to enable
Canopy USA to realize anticipated
financial benefits, including revenue growth and cost synergies,
marketing efficiencies, and joint sales advantages across key
cannabis product categories such as vapes, edibles, and flower.
Overview of Canopy USA Strategy
- Fast Tracks Entry into the World's Largest and Fastest
Growing Cannabis Market: The U.S. retail cannabis market is
projected to be as high as approximately US$50 billion in 20261, and this
strategy aims to unlock the ability to capture share and return on
investments made to date.
- Establishes a Leading, Brand Focused
Powerhouse: Canopy USA's portfolio includes some
of the most recognized, iconic cannabis brands in the
U.S. that we believe are ideally positioned in the fastest
growing categories, such as edibles, vapes, and flower.
Canopy USA is expected to leverage the best of each
brand's offerings to accelerate growth and market expansion across
key U.S. states.
- Financial Benefit via Revenue and Cost Synergies within
Canopy USA: The combination of U.S. cannabis assets
is expected to generate revenue and cost synergies within Canopy
USA by leveraging the brands,
routes to market and operations of the full U.S. cannabis ecosystem
while eliminating redundancies across certain of the U.S. THC
portfolio of assets and the public company reporting costs of
Acreage.
- Highlights the Value of Canopy USA's U.S. THC Assets: While Canopy
Growth will not consolidate the financial results of
Canopy USA, Canopy Growth expects to begin to highlight the
value of Canopy USA's U.S. THC assets to investors now
that the Acreage Acquisition is complete. Canopy Growth now holds
all of the issued and outstanding non-voting shares in the capital
of Canopy USA, representing
approximately 84.4% of the issued and outstanding shares in
Canopy USA on an as-converted
basis.
Acreage Acquisition
In connection with the (i) arrangement agreement dated
April 18, 2019, as amended between
Canopy Growth and Acreage and the amended and restated plan of
arrangement in connection therewith (the "Fixed Share
Arrangement"); and (ii) arrangement agreement dated
October 24, 2022, as amended, among
Canopy Growth, Acreage and Canopy USA, Canopy USA acquired all of the issued and outstanding
Class D subordinate voting shares of Acreage (the "Acreage
Floating Shares") on the terms and conditions set forth in the
plan of arrangement in connection therewith (the "Floating Share
Acquisition"). Immediately following the completion of the
Floating Share Acquisition, Canopy USA acquired (the "Fixed Share
Acquisition") all of the issued and outstanding Class E
subordinate voting shares of Acreage (the "Acreage Fixed
Shares"). As a result of these transactions Canopy USA acquired 100% of the issued and
outstanding shares of Acreage. Immediately prior to the completion
of the Acreage Acquisition, Canopy USA did not own any shares of Acreage.
In accordance with the Floating Share Acquisition, registered
holders of Acreage Floating Shares received 0.045 of a common share
of Canopy Growth (each whole share, a "Canopy Share") for
each Acreage Floating Share held by such holder of Acreage Floating
Shares. In connection with the Fixed Share Acquisition, each of the
outstanding Acreage Fixed Shares was exchanged for a fraction of a
Canopy Share per Acreage Fixed Share, as adjusted pursuant to the
terms and conditions set forth in the Fixed Share Arrangement. In
aggregate, Canopy Growth issued approximately 5.89 million Canopy
Shares (with a value equal to approximately US$21.2 million) to former Acreage shareholders,
as well as approximately 306,000 Canopy Shares issuable in
connection with Canopy USA's
acquisition of the minority interests of certain subsidiaries of
Acreage.
As previously disclosed, Canopy Growth agreed to make a payment
with a value of approximately US$19.5
million in Canopy Shares (the "Bonus Payment Canopy
Shares") to an eligible participant pursuant to the existing
tax receivable bonus plans of a subsidiary of Acreage (as amended,
the "Bonus Plans"). Immediately prior to closing the
Floating Share Acquisition, Canopy Growth satisfied this payment by
issuing the Bonus Payment Canopy Shares at a deemed price of
US$3.82 per Bonus Payment Canopy
Share (being the volume weighted average trading price of the
Canopy Shares on the Nasdaq during the 10 consecutive trading
days ending on the second trading day prior to the closing date of
the Acreage Acquisition) to a participant under the Bonus Plans.
Canopy Growth has also agreed to register the resale of the Bonus
Payment Canopy Shares under the Securities Act of 1933, as
amended.
Immediately following the closing of the Acreage Acquisition,
Canopy Growth issued 1,315,553 Canopy Shares (at a price equal to
the closing price of the Canopy Shares on the Nasdaq
immediately prior to the closing date of the Acreage Acquisition
less a 7.5% discount) and 1,197,658 common share purchase warrants
(each, a "Warrant") to certain securityholders of Acreage
(the "Holders") in order to satisfy an outstanding put
liability. Each Warrant entitles the holder to acquire one Canopy
Share at an exercise price equal to the volume weighted average
trading price of the Canopy Shares on the Nasdaq during the
five consecutive trading days immediately prior to the closing date
of the Acreage Acquisition until June 6,
2029. Canopy Growth has agreed to provide the Holders with
customary registration rights.
Acreage will apply to cease to be a reporting issuer in
Canada and the Acreage shares are
expected to be delisted from the Canadian Securities Exchange on or
around December 9, 2024, which is
expected to generate significant savings to Acreage and Canopy
USA in respect of public company
reporting costs.
Full details of the Acreage Acquisition are set out in the proxy
statement and management information circular of Acreage dated
August 17, 2020 and the proxy
statement and management information circular of Acreage dated
February 14, 2023 (the "Proxy
Statement"), copies of which can be found under Acreage's
profile on SEDAR+ at www.sedarplus.ca. A copy of the early warning
report of Canopy USA in connection
with the Acreage Acquisition will be filed under Acreage's profile
on SEDAR+ and can be obtained by contacting Corey Sheahan, Executive Vice President, General
Counsel and Secretary at (646) 600-9181 or at Canopy
USA's head office located at 501
South Cherry St., Denver, CO
80246.
A letter of transmittal with respect to the Fixed Share
Acquisition and the Floating Share Acquisition has been mailed to
registered Acreage shareholders. The letters of transmittal have
been filed by Acreage under Acreage's profile on SEDAR+
at www.sedarplus.ca and with the U.S. Securities and
Exchange Commission through EDGAR at www.sec.gov/edgar.
All registered Acreage shareholders with physical certificate(s)
are required to send their certificate(s) representing their
Acreage Fixed Shares and/or Acreage Floating Shares with a
completed letter of transmittal to Canopy Growth's transfer agent,
Odyssey Trust Company ("Odyssey"), in accordance with the
instructions provided in the applicable letter of transmittal.
Acreage shareholders who hold their Acreage Fixed Shares and/or
Acreage Floating Shares through a broker or other intermediary and
do not have Acreage shares registered in their name do not need to
complete the applicable letter(s) of transmittal. Such shareholders
of Acreage should contact their broker or other intermediary. All
registered Acreage shareholders with DRS statement(s) representing
their Acreage Floating Shares will automatically be sent DRS
statement(s) representing their Canopy Shares by Odyssey without
needing to complete a letter of transmittal.
As a result of the labour dispute at Canada Post, registered
Acreage shareholders are encouraged to contact Odyssey with any
questions by email at shareholders@odysseytrust.com in the
event that registered Acreage shareholders have not received copies
of their DRS statement(s) or certificate(s) representing their
Canopy Shares following the closing of the Acreage Acquisition and
completion and delivery of their letter of transmittal to
Odyssey.
Advisors and Counsel
Cassels Brock & Blackwell LLP
and Paul Hastings LLP acted as Canadian and U.S. legal counsel,
respectively, to Canopy Growth. Greenhill & Co. Canada Ltd.
acted as financial advisors to Canopy Growth.
DLA Piper (Canada) LLP and
Cozen O'Connor acted as Canadian and U.S. legal counsel,
respectively, to Acreage. Canaccord Genuity Corp. and Eight Capital
acted as financial advisors to Acreage.
About Canopy Growth
Canopy Growth is a world leading cannabis company dedicated to
unleashing the power of cannabis to improve lives.
Through an unwavering commitment to our consumers, Canopy Growth
delivers innovative products with a focus on premium and mainstream
cannabis brands including Doja, 7ACRES, Tweed, and Deep Space, in
addition to category defining vaporizer technology made in
Germany by Storz & Bickel.
Canopy Growth has also established a comprehensive ecosystem to
realize the opportunities presented by the U.S. THC market through
an unconsolidated, non-controlling interest in Canopy USA. Canopy USA has closed the acquisitions of
approximately 77% of the shares of Jetty, 100% of Wana and 100% of
Acreage, a vertically integrated multi-state cannabis operator with
principal operations in densely populated states across the
Northeast and Midwest. Jetty owns and operates Jetty Extracts, a
California-based producer of
high-quality cannabis extracts and pioneer of clean vape
technology, and Wana is a leading North American edibles brand.
Beyond its world-class products, Canopy Growth is leading the
industry forward through a commitment to social equity, responsible
use, and community reinvestment – pioneering a future where
cannabis is understood and welcomed for its potential to help
achieve greater well-being and life enhancement.
For more information visit www.canopygrowth.com.
About Acreage
Acreage is a multi-state operator of cannabis cultivation and
retailing facilities in the U.S., including its national retail
store brand, The Botanist. With its principal address in
New York City, Acreage's wide
range of national and regionally available cannabis products
include the award-winning brands The
Botanist and Superflux,
the Prime medical brand in Pennsylvania, and others. Acreage has focused
on building and scaling operations to create a seamless,
consumer-focused, branded experience. Learn more
at www.acreageholdings.com.
References to information included on, or accessible through,
the Canopy Growth or Acreage website do not constitute
incorporation by reference of the information contained at or
available through such websites, and you should not consider such
information to be part of this press release.
Forward-Looking Statements
This news release contains "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995 and "forward-looking information" within the
meaning of applicable Canadian securities legislation. Often, but
not always, forward-looking statements and information can be
identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "estimates", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved. Forward-looking statements or
information involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of Canopy Growth, Canopy USA, Acreage or their respective subsidiaries
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements
or information contained in this news release. Examples of such
statements and uncertainties include statements with respect to the
expected size of the U.S. cannabis market; statements with respect
to the Canopy Growth's ability to execute on its strategies,
including its strategy to accelerate entry into the U.S. cannabis
industry, capitalize on the opportunity for growth in the U.S.
cannabis sector and the anticipated benefits of such strategy,
including the ability to generate revenues and cost
synergies, marketing efficiencies, and joint sales advantages;
expectations regarding the potential success of, and the costs and
benefits associated with Canopy USA; the timing of, and Canopy Growth's
ability to, highlight the value of Canopy USA's U.S. THC assets; the anticipated date
the Acreage shares will be delisted from the Canadian Securities
Exchange; the filing of an early warning report by Canopy
USA on Acreage's SEDAR+ profile;
and expectations for other economic, business, and/or competitive
factors.
Risks, uncertainties and other factors involved with
forward-looking information or statements could cause actual
events, results, performance, prospects and opportunities to differ
materially from those expressed or implied by such forward-looking
information, including negative operating cash flow; uncertainty of
additional financing; use of proceeds; volatility in the price of
the Canopy Shares; expectations regarding future investment, growth
and expansion of operations; regulatory and licensing risks;
changes in general economic, business and political conditions,
including changes in the financial and stock markets and the
impacts of increased rates of inflation; legal and regulatory risks
inherent in the cannabis industry, including the global regulatory
landscape and enforcement related to cannabis; additional dilution;
political risks and risks relating to regulatory change; risks
relating to anti-money laundering laws; compliance with extensive
government regulation and the interpretation of various laws
regulations and policies; public opinion and perception of the
cannabis industry; and such other risks contained in the public
filings of Canopy Growth and Acreage filed with Canadian securities
regulators and available under each of Canopy Growth's and
Acreage's profiles on SEDAR+ at www.sedarplus.ca and with the
Securities and Exchange Commission through EDGAR at
www.sec.gov/edgar, including under the heading "Risk Factors" in
Canopy Growth's and Acreage's respective annual report on Form 10-K
for the year ended March 31, 2024 and
December 31, 2023, respectively, and
their subsequently filed quarterly reports on Form 10-Q and the
Proxy Statement.
In respect of the forward-looking statements and information,
Canopy Growth and Acreage have provided such statements and
information in reliance on certain assumptions that they believe
are reasonable at this time. Although Canopy Growth and Acreage
believe that the assumptions and factors used in preparing the
forward-looking information or forward-looking statements in this
news release are reasonable, undue reliance should not be placed on
such information or statements and no assurance can be given that
such events will occur in the disclosed time frames or at all.
Should one or more of the foregoing risks or uncertainties
materialize, or should assumptions underlying the forward-looking
information or statements prove incorrect, actual results may vary
materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although Canopy
Growth and Acreage have attempted to identify important risks,
uncertainties and factors which could cause actual results to
differ materially, there may be others that cause results not to be
as anticipated, estimated or intended. The forward-looking
information and forward-looking statements included in this news
release are made as of the date of this news release and neither
Canopy Growth nor Acreage undertake any obligation to publicly
update such forward-looking information or forward-looking
statements to reflect new information, subsequent events or
otherwise unless required by applicable securities laws.
____________________________
1 MJBiz market forecast of total US cannabis market
by 2026, in USD currency.
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SOURCE Canopy Growth Corporation