Why you missed the train on the Canopy Growth stock

Canopy Growth Corp is a Canadian cannabis producer, the biggest one in fact, which has been on a rampage of acquiring other Canadian licensed producers and cannabis businesses over the course of this year.

Their stock has went crazy this year, and there are solid reasons for that type of behavior.

The Canopy Growth stock was $9.14 CAD on December 30th 2016, and in 11 months it more than doubled at currently sits just under $18.50 CAD.

And that is exactly when you should have bought it. A year ago. Or better yet, two years ago when it was barely under $3 CAD.

So in simple terms, if you bought this stock two years ago on New Years Eve, you would have had 6x what you invested at that time.

However, much of their shares went to many companies which Canopy Growth acquired.

Canopy Growth stock (TSE:WEED) yearly review

January

Canopy Growth started their year by solidifying their position in Canada. They did so by acquiring 1 Hershey Drive which currently houses Canopy Growth’s headquarters and the Tweed Inc.

  • The building, property and chattels were acquired for $6.6 million
  • The entire 472,000 sq. ft. facility could almost triple current production and processing capacity

The first company acquired by Canopy Growth in 2017 was Mettrum. Little did their owners know that their shares are about to become way more valuable.

  • As a result of the closing of the Transaction, Mettrum has become a wholly-owned subsidiary of Canopy Growth Corp.
  • Mettrum shareholders will receive 0.7132 common shares of Canopy Growth for each Mettrum common share

Right after acquiring Mettrum, the company management has contacted the Toronto Stock Exchange and agreed upon its share ticker which has changed to TSX:WEED.

February

In February, the company announced a memorandum of understanding with Namaste Technologies Inc, an emerging leader in the vaporizer and accessories space with 26 ecommerce
retail stores in 20 countries.

February was perhaps the slowest month.

March

Soon after in March, the first major purchase of Canopy Growth stock in 2017 arrived.

  • The Company issued 2,500,000 Shares at a net price of $9.70 per Share
  • The investor paid a modest $24,250,000 for his 2.5 million shares

The next day Tweed Inc, a wholly-owned subsidiary of Canopy Growth Corporation, announced that they will be expanding their Smiths Falls facility, adding new grow rooms that will increase flowering space by 50 percent.

At this point, the upper management noticed the extreme grow happening over the first 3 months of the year. So much so that Canopy granted an aggregate of 275,000 options to purchase common stock to two Officers of the Corporation.

The options had an exercise price equal to $9.88 per share.

April

April seems to have been the month in which Tweed management decided to step up and make some big moves.

At the beginning of April, Tweed and Canopy Growth management announced the addition of rTrees Producers Limited to the Canopy Umbrella.

Even though rTrees was a late-stage ACMPR applicant, Canopy Growth sniffed out the opportunity and acted on it by acquiring the company in an attempt to expand to the West.

  • rTrees contributed with a 90,000 sq. ft state-of-the-art indoor growing facility
  • Estimated that the Tweed Grasslands facility can expand to over 300,000 sq. ft.
  • Canopy Growth  issue 698,901 common shares to rTrees owners
  • 2,795,604 common shares will be held in escrow and issued if, and when, specific licensing and capacity expansion related milestones are achieved
  • The two companies are to be jointly named Tweed Grasslands

May

After that three licensed producers agreed with Canopy upon selling their Craftgrow products on Tweed Main Street. AB Laboratories Inc,  JWC Ltd. and Canada’s Island Garden brought a variety of new product to the 50,000 registered patients.

Craft Grow program opens up access to genetics, knowledge and retail infrastructure to strategic partners. So far it has raised $20 million in seed funding.

This opened up room for Canopy Growth to collaborate with new partners on a higher level. Since the launch of Tweed’s Craft Grow platform earlier this month, the level of interest in these types of agreements has increased considerably.

June

Quickly after Canopy added another member to the Craft Grow family on June 1st – PUF Ventures, in an effort to create a more diverse marketplace.

By the end of June, Canopy Growth issued options again. The company has granted an option to a whopping 1.6 million shares to 5 of the company officers to be vested.

If June was a quiet month, July and August were as loud as they can be.

July

First, Canopy Growth reported that they will be funding an AIDS-related cannabis research program,

They quickly followed it up with another huge private placement, this time $25 million heavy.

  • The company issued 3,105,590 Shares at a net price of $8.05 per Share

“Investing in production capacity expansion is vital to maintain our existing leadership position in the global cannabis industry,” said Bruce Linton.

August

In early August the Craft Grow program got another partner by adding PheinMed Inc to the Tweed Main Street cannabis ecosystem.

Just 20 days later Canopy Growth solidified its position in New Brunswick by acquiring Spot Therapeutics Inc.

  • The existing building and infrastructure is in excellent condition, includes almost 40,000 sq. ft. of dedicated production space
  • Anticipated to produce over 4,000 kg of dried cannabis annually
  • Property appropriately zoned and suited for expansion to over 100,000 sq. ft
  • n satisfaction of the first tranche payment of $1,000,000, Canopy issued 111,669 common shares to the shareholders of Spot Therapeutics Inc.

August and September were great months for expansion, as the federal government announced it’s plan for legalization, and the provinces followed in the next couple months.

Ontario was the first to announce that the provincial government will be the one controlling all sales of recreational cannabis. Other provinces followed quickly.

September

The first order for September was to expand the growing spaces, and they did so by purchasing a parcel of land adjacent to its current facility in Niagara-on-the-Lake, ON including an operational 458,000 sq. ft. greenhouse.

In addition to the newly acquired asset, construction has commenced on an additional 212,000 sq. ft. greenhouse to be located on the current Tweed Farms property, which is to be completed by April 2018.

Tweed also announced they are aspiring towards having more than 1 million sq. ft. of growing space.

Three days later a supply license agreement with Alcaliber, a leading player in the international pharmaceutical industry based in Spain, which was the first deal between Canopy Growth and a major foreign cannabis company.

Soon after the Canadian giant contacted Australian AusCann Group Holdings Ltd. in order to sign a supply agreement.

  • Canopy Growth will act as AusCann’s exclusive supplier of medical cannabis for the Australian market
  • The Australian market continues to present attractive growth opportunities to Canopy investors

As we previously mentioned, the company solidified its spot in New Brunswick by purchasing Spot. On September 15th Canopy Growth made a MOU  (Memorandum of
Understanding) with the provincial government of New Brunswick.

According to the MOU, Canopy Growth will “guarantee a reliable and high-quality supply of cannabis products into New Brunswick’s retail stores that will flow from a crown corporation newly formed by the province of New Brunswick.

  • The two-year supply agreement includes 4,000,000 grams of cannabis and cannabis derivative products for the first year
  • This deal is expected to have an estimated retail value of $40 million in its first year

As Danish parliament recently passed legislation that paves the way for legal medicinal cannabis sales to begin January 1, 2018, Canopy Growth finally expanded to the European market by establishing a binding strategic partnership in the emerging Danish market.

As part of the arrangement, Canopy Growth will provide an initial capital commitment of $10 million to be released in tranches. In addition, the Company will also issue up to 1,906,214 common shares in the corporation subject to meeting defined milestones.

“International market opportunities are emerging quickly and Canopy has the experience and expertise to turn these opportunities into greater shareholder value,” said Bruce Linton, Chairman & CEO of Canopy Growth.

In the last days of September Canopy Growth announced they registered 9 provisional patents pertaining to the applications of cannabis and cannabinoid-based therapeutics in sleep and related nervous system disorders.

In the same announcement they confirmed additional funding through sales of common shares bringing total funds raised to date for Canopy Health to over CDN $15.8 million.

October

In early October the Craft Grow program got another partner by bringing Valens GroWorks to the table.

A week later Canopy Growth announced a big addition to their growing facilities. The company has entered into a definitive joint venture agreement to form a new company, BC Tweed Joint  Venture Inc.

The deal included teaming up with an undisclosed greenhouse operator in order to develop 1.3 million sq. ft. of greenhouse growing capacity in British Columbia with an exclusive option to develop a further 1.7 million sq. ft. of existing greenhouse infrastructure at a second BC location.

This Joint Venture increased the total pro-forma greenhouse production footprint at Canopy Growth operation to approximately 2.3 million sq. ft., with an exclusive option to bring that footprint to 4.0 million sq. ft.

  • To fund the development of the Joint Venture, Canopy Growth will contribute $20 million in cash
  • Canopy Growth owns 66.6% of the Joint Venture
  • They will also issue the Partner 310,316 common shares of Canopy Growth over two tranches

Canopy Growth has also announced indoor capacity expansion plans that will bring its total indoor production capacity to approximately 900,000 sq. ft.

In October Tweed announced that it has launched a strategic partnership in the Jamaican cannabis market with Grow House JA Limited.

Tweed Limited JA  will serve the needs of the Jamaican medical cannabis market with Tweed’scultivation processing and standards, matched with the local know-how of its Jamaican partners
and the renowned sun, soil and water of Jamaica.

However, perhaps the biggest deal in this year included Constellation Brands, a leading beverage alcohol supplier in the United States.

  • As part of the strategic relationship, an affiliate of Constellation will invest approximately C$245 million
  • Canopy Growth is to give a 9.9% equity share to the affiliate
  • An equal number of common share purchase warrants will also be made available to Constellation

November

At the beginning of November Canopy Growth signed a distribution agreement with Farm to Farma Inc. a well known manufacturer of Trokie® lozenges.

The next big thing on the list was acquiring TerrAscend, a company working on cannabis devices and delivery systems, and similar tech.

  • Canopy growth is to acquire 47,727,273 units of TerrAscend at a price per Unit of CAD$1.10
  • Aggregate gross proceeds of the deal is near CAD$52,500,000

What follows is perhaps the most confusing deal of all times to those not in the world of trading.

Canopy Growth, Organa Brands and Green House reached a three-end deal. In order to establish a Joint Venture, these three cannabis giants split a company in three.

  • Canopy Growth will allocate a portion of ownership in ACMPRlicensed Agripharm Corp to its new partners
  • Canopy Growth will retain 40% ownership of Agripharm
  • Green House and Organa Brands will own 40% and 20%, respectively

In exchange for the issuance of shares, Green House and Organa Brands have granted an exclusive, royalty-free license in Canada to certain proprietary technology,
trademarks, genetics, know-how and other intellectual property to Agripharm.

Two days later, Canopy Growth has acquired Green Hemp Industries Ltd, a farm operator based in Saskatchewan in order to scale up their hemp production.

  • Canopy Growth is to reimburse Green for crop input expenses and will issue 24,576 common shares

Finally, the latest and perhaps most significant addition to the Craft Grow program was the one of Delta 9, a Manitoba-based cannabis producer.

December

Delta 9 will offer their well-established cannabis products through Canopy Growth’s curated CraftGrow line via Tweed Main Street’s online store, alongside other high-quality cannabis varieties grown by a diverse set of producers.

More details on Canopy Growth.

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2 thoughts on “Why you missed the train on the Canopy Growth stock

  1. How is this missing the train???
    it’s consolidation fueled by securing the #1 position. Had they not diluted shares, they would have reported a higher loss and all companies bought out “sold out” in anticipation of growth. Once marijuana is legal in Canada – which even if it’s not in July, it will be this decade – you will see the market flourish. Public opinion on marijuana is not what it was decades ago and legalization is inevitable. With international companies like Constellation brands cosigning their efforts, this is still the early phases of a market that has not been exploited yet.

  2. Canopy Growth is a run away train to nowhere that’s doomed to fail.

    They are 20 years too late.

    Market is taken allready from seeds to sales.

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