Canadian licensed producer Canopy Growth announced this week its intent to acquire U.S.-based Acreage Holdings in a $3.4 billion deal once cannabis becomes federally legal in the U.S.
According to a MarketWatch report, an insider source said the deal was “98% done.” Part of the deal includes an immediate $300 million payment from Canopy Growth to Acreage Holdings.
The acquisition must be delayed because of Toronto Stock Exchange rules that say publicly listed companies (like Canopy Growth) cannot possess any illegal holdings at the risk of being de-listed, and cannabis remains a federally prohibited business in the U.S.
Acreage Holdings is one of the leading multi-state cannabis operators in the U.S. with its footprint (including pending acquisitions) having recently stretched to 20 different state markets. The company also boasts several high-profile board members, including former Republican Speaker of the House John Boehner and former Massachusetts Gov. Bill Weld.
“Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists. By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.” — Bruce Linton, chairman and co-CEO of Canopy Growth, in a press release
“From the first day we created our company, providing exceptional customer care and delivering shareholder value have been our top priorities. This transaction will help accomplish both,” Kevin Murphy — Acreage Holdings’ chairman, CEO, and president — said in the release.
Until cannabis is federally legalized in the U.S. and the deal carried out, the companies will continue to operate independently.