• 🌎 Worldwide
    • 🇺🇸 U.S.
    • 🇨🇦 Canada
    • 🇬🇧 United Kingdom
    • 🌏 Asia
    • 🌍 Europe
    • 🌎 Latin America
    • 🌏 Oceania and Australasia
The Daily Marijuana Observer
SUBSCRIBE
  • Home
  • Latest
  • Business
  • Investments
  • Law
  • People
  • Health
  • Databases
No Result
View All Result
The Daily Marijuana Observer
  • Home
  • Latest
  • Business
  • Investments
  • Law
  • People
  • Health
  • Databases
No Result
View All Result
The Daily Marijuana Observer
No Result
View All Result
Home Investments

Made in the USA: Canopy Growths Deal with Acreage – what’s next?

Rebecca Albright, CFA by Rebecca Albright, CFA
April 24, 2019
in Investments, Marijuana Stocks
Made in the USA: Canopy Growths Deal with Acreage - what’s next?
137
SHARES
ShareShare

Canadian giant Canopy Growth Corp. (NYSE:CGC) (TSX:WEED) is poised to take another leap forward in its ongoing expansion into global cannabis markets. As of Thursday, April 18, 2019, the mega company secured the right to acquire Acreage Holdings, Inc. (CSE:ACRG.U) (OTC:ACRGF) for $3.4 billion – contingent upon cannabis legalization in the United States. Acreage is a multi-state operator that includes a diverse portfolio of cannabis cultivation, processing, and dispensing operations across the U.S. Its contribution to Canopy’s already extensive production facilities, well-known brands, and strategic assets will provide significant opportunity for new value creation. Naturally, this was not lost on the markets as both companies saw shares jump at news of the transaction.

In the meantime, Canopy can also continue to list its shares on both the Toronto Stock Exchange (TSX) and more importantly, the New York Stock Exchange (NYSE). (Neither exchange allows companies that own shares in businesses that run illegal operations, currently including marijuana in the U.S.) Listing requirements can be demanding, but come with significant perks for growing players like Canopy. Trading on major indices alongside established blue chips adds legitimacy to the once infamous cannabis business, and also enhances analyst coverage, investor interest, and trading liquidity.

The Opportunity

Canopy’s move is considered a good one. The deal locks up a solid investment by allowing the company instant access to established cannabis brands and distribution across the U.S. (The transaction also takes Acreage out of play for Canopy’s competitors, a tactical win for Canopy in itself.) As strides in American legislation and cultural acceptance of cannabis use grow, the opportunity in cannabis is widely viewed to be in the U.S. space.

As such, other Canadian LPs may follow suit. Big players like Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) – flush with a $2 billion cash injection from Altria Group Inc. (NYSE:MO) –  Hexo Corp (NYSE:HEXO), and Tilray Inc. (NASDAQ:TLRY), are likely making similar bets on the U.S. market, and want to be ready to launch stateside when the time comes. Smart multi-state licensed operators with deep vertical integration, like iAnthus Capital Holdings, Inc. (CSE:IAN) (OTC:ITHUF) and Green Thumb Industries (CSE:GTII) (OTC:GTBIF), are considered attractive targets, especially at potentially undervalued price levels.

Big and Bigger

At a $15 billion or so market cap, Canopy is currently the largest legal cannabis company in the world. It grows, processes, and sells medical and recreational cannabis in Canada, with extensive medical marijuana operations in other countries, including in Europe, South America, and Australia. Canopy’s brands include Tweed (a widely recognized brand of marijuana) and Spectrum Cannabis (its international medical brand), among others.

Since debuting on the NYSE last year, Canopy has seen big gains and significant investor interest. The company turned in a 13.6% return for 2018, despite negative returns for major U.S. indices over the same period.

The Acreage deal is not the first time Canopy has purchased warrants in companies with U.S. operations. In November, Canopy (through its investment subsidiary, Canopy Rivers Inc., RIV), obtained warrants worth 20% of Slang Worldwide (CSE:SLNG) (OTC:SLGWF), a Toronto-based cannabis CPG company with several U.S.-based assets, including Denver-based Organa Brands, owner of several popular vaporizer, edible, and concentrate brands.

Constellation Gets In

Canopy’s outsized growth has come thanks in large part to massive capital infusions from Constellation Brands, Inc. (NYSE:STZ), the Fortune 500 beverage giant that owns Corona and Modelo beers, among others. Constellation closed out 2018 with a $4 billion investment in Canopy to access the burgeoning cannabis market via funding strategic acquisition and building synergies with its existing beverage operations.

With the Acreage deal, Constellation is doubling down on the sector and eventual U.S. acceptance. By allowing Canopy to move forward on Acreage (Constellation gave up its veto power on the acquisition in exchange for a longer exercise period on additional Canopy warrants), Constellation is signaling that it’s committed to pot and that the U.S. market, in particular, will be key to building long-term enterprise value.

A Foothold in the U.S.

Acreage is one of the largest cannabis operators in the U.S. with a broad footprint across 20 states. In addition to its many licenses, strong management team and other assets, Acreage has strong U.S. political connections, including to John Boehner, the former Speaker of the U.S. House of Representatives who sits on the Acreage Board. These connections will no doubt better direct cross-border efforts to enact cannabis-friendly U.S. legislation, such as the STATES Act, allowing cannabis businesses to access banking services and U.S exchange listings, as well as to push for federal legalization more generally.

It’s Only The Beginning

The Canopy deal signals the beginning of what is sure to be a tsunami of mergers and acquisition activity involving Canadian licensed producers and U.S. based operators, as U.S. regulation loosens and markets open. To be sure, this will not be lost on the U.S. capital markets, including banks, tax specialists and other ancillary industries, and in an effort to participate, they may step up pressure on lawmakers to legalize. In short, no one will want to be left out, and more deals are sure to come.

Share this:

  • Click to email this to a friend (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Telegram (Opens in new window)
  • Click to share on WhatsApp (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on Tumblr (Opens in new window)
  • Click to share on Pocket (Opens in new window)
Tags: Acreage Holdings Inc.Altria Group Inc.Aurora Cannabis Inc.Canopy Growth Corp.Canopy Rivers Inc.Constellation Brands Inc.Cronos Group Inc.CSE:ACRGCSE:IANCSE:SLNGGreen Thumb Industries Inc.HEXO Corp.iAnthus Capital Holdingslicensed producerNASDAQ:CRONNASDAQ:TLRYNYSE:ACBNYSE:CGCNYSE:HEXONYSE:MONYSE:STZOTC:ACRGFOTC:GTBIFOTC:ITHUFOTC:SLGWFSLANG Worldwide Inc.Tilray Inc.TSX:ACBTSX:CRONTSX:WEEDTSXV:RIV

Get Real-Time Updates from MJobserver.com

Unsubscribe
Rebecca Albright, CFA

Rebecca Albright, CFA

Rebecca Albright, CFA is an investment expert with years of Wall Street experience at firms ranging Merrill Lynch, Cambridge Associates, and more. Rebecca Albright is a Chartered Financial Analyst, and holds an MBA from the University of Virginia's Darden Graduate School of Business.

Related Posts

INDIVA Ltd. (TSXV: NDVA) (OTC: NDVAF) Cannabis Stock News
Ontario

Indiva Reports Record Market Share for January 2021

February 9, 2021
Green Thumb Industries Inc. Stock News
Investments

Green Thumb Industries Announces Initial Public Offering in the U.S. to Raise US$100,000,000

February 9, 2021
Cannabis News - Marijuana Becomes Legal in Michigan Starting December 6th
Investments

Acreage Announces Fourth Quarter And Full Year 2020 Earnings Date

February 8, 2021
HEXO Corp. Marijuana Stock
Press Releases

HEXO Corp Appoints General Manager of US Operations

February 8, 2021
Piper Jaffray - Marijuana Stocks News
Investments

Piper Sandler Downgrades Canopy Growth Corp.

February 5, 2021
Delta 9 Announces Two Locations for Cannabis Retail Stores in Manitoba
Manitoba

Delta 9 to Open Tenth Cannabis Retail Store

February 5, 2021
Load More
Next Post
Elixinol to Acquire 25 Percent Stake in US-Based CBD Pet Products Brand Pet Releaf

Elixinol to Acquire 25 Percent Stake in US-Based CBD Pet Products Brand Pet Releaf

Comments 1

  1. Pingback: Canopy Growth is waarschijnlijk slechts de eerste grote speler die op Amerikaans verbod op het einde van de weddenschap wedt

Leave a Comment! Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

🚨 Subscribe to Stock Alerts

Get Live Updates on Breaking News

Subscribe Now

✉️ Subscribe to Our Newsletter!

* indicates required

🔎 Search Marijuana Stocks

📰 Recent News

  • Verano Holdings Enters into Agreement to Expand Arizona Footprint
  • Green Thumb Industries Announces Initial Public Offering in the U.S. to Raise US$100,000,000
  • Greenlane Announces Dismissal of Remaining Securities Class Action
  • Indiva Reports Record Market Share for January 2021
  • Acreage Announces Fourth Quarter And Full Year 2020 Earnings Date
Facebook Twitter Instagram LinkedIn Youtube

Cannabis News by Region

  • 🇺🇸 United States
  • 🇨🇦 Canada
  • 🇬🇧 United Kingdom
  • 🌏 Asia
  • 🌍 Europe
  • 🌎 Latin America
  • 🌏 Oceania and Australasia

Cannabis Tools & Resources

  • 📅 Calendar
  • 📊 Databases
  • 📇 Directories
  • 🔔 RSS Feeds
  • 📺 Videos

Find Cannabis Business Services

  • ⚖️ Attorneys & Law Firms
  • 📊 Accountants & Accounting Firms
  • 💡 Consultants & Consulting Firms
  • 📲 Marketing Agencies & Firms

The Daily Marijuana Observer

  • Subscribe
  • About MJobserver.com
  • Affiliate Marketing Disclosure
  • Legal Disclaimer
  • Privacy Policy
  • Contact Us

Advertise with Us

  • 👀 Advertise
  • 📣 DMO Newswire
  • 📇 List in Our Databases

© 2018 - 2021 D.M.O. Holdings Corp.
DISCLAIMER: DMO Holdings Corp., which owns The Daily Marijuana Observer™ (MJobserver.com), is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. DMO Holdings Corp., which owns MJobserver.com, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. Before making specific investment decisions, readers should seek their own professional advice and that of their own professional financial adviser. DMO Holdings Corp. or its affiliates, which owns MJobserver.com, may be compensated for its services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two.

No Result
View All Result
  • Home
  • Latest
  • 🔒 PRO
    • 🔒 A.M. Watchlist
    • 🔒 Analyst Action
  • 💼 Business
  • 📈 Investments
    • 📈 Stocks
    • 💰 ETFs and Funds
    • 💭 Market Commentary
    • 📰 Press Releases
    • 📅 Earnings Calendar
  • ⚖️ Law
    • Laws
    • Politics
    • Intellectual Property
    • Attorneys & Law Firms Database
  • 👥 People
    • ⚽ Athletes
    • 💼 Executives
    • 🌟 Celebrities
    • 🛒 Consumers
    • ⚕️ Doctors
    • 💊 Patients
  • 💊 Health
  • 📇 Databases
    • 📈 Stock Databases
    • 💰 Fund Databases
    • 💼 Service Providers Databases
    • 🏦 Marijuana Stock Brokers
    • 💲 Marijuana Cryptocurrencies

© 2018 - 2021 D.M.O. Holdings Corp.
DISCLAIMER: DMO Holdings Corp., which owns The Daily Marijuana Observer™ (MJobserver.com), is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. DMO Holdings Corp., which owns MJobserver.com, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. Before making specific investment decisions, readers should seek their own professional advice and that of their own professional financial adviser. DMO Holdings Corp. or its affiliates, which owns MJobserver.com, may be compensated for its services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two.

Login to your account below

Forgotten Password? Sign Up

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.