SMITHS FALLS, Ontario, and NEW YORK – Canopy USA LLC, a subsidiary of Canopy Growth Corporation, has completed its acquisition of Acreage Holdings Inc. 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”), and approximately 77% of the shares of Lemurian Inc. (“Jetty”), Canopy USA is represented among the leading brands in the United States.
“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 anticipate 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 2026, 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 accordance with the Floating Share Acquisition, registered holders of Acreage Floating Shares received 0.045 of a common share of Canopy Growth 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. 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 to an eligible participant pursuant to the existing tax receivable bonus plans of a subsidiary of Acreage. 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 to certain securityholders of Acreage 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.
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 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.
