The deal in which Canopy Growth will acquire Acreage Holdings once cannabis is legal in America implies that the legalization will happen sooner than we think.
Canopy Growth has struck a deal in which they are to acquire Acreage Holdings for $3.4 billion, once cannabis is legal in the United States.
In a move which will set the foundation for their operations in the United States, Canopy Growth also made the biggest investment in the cannabis industry since their Constellation Brands deal.
It’s important to note that Canopy won’t be taking hold of Acreage before the federal legalization since the two companies are trading on different stock exchanges—after all, NASDAQ isn’t too fond of companies with plants on the US grounds.
This deal was announced just a few hours ago, as the two sides came to a conclusion in their negotiations.
Acreage Holdings will immediately receive $300 million USD as compensation, and the rest will be paid once Canopy buys the remaining shares of the company.
By doing so, Canopy Growth basically leveraged the whole US cannabis market with just $300 million dollars.
Not to say that they don’t have more. The company received over $4 billion USD last summer, and surely some of that money is still safely stowed away.
However, this deal actually has much bigger implications than just financial ones — it is foreshadowing the legalization of cannabis in the US.
Canopy Growth wouldn’t just give out $300 million not knowing exactly when the legalization laws will pass. In fact, I believe they now know exactly when it’s going to happen.
Here’s how it all went down
In late July and early August 2018, Canopy Growth approaches multiple cannabis companies that could help them expand their business into United States.
Several days later, Acreage comes out on top as the best pick among all multi-state operators. Why? Well, because they just signed John Boehner to their leadership team.
In late August, Canopy Growth gets an infusion from Constellation worth $4 billion dollars. Constellation tells them not to spend it, so Canopy continues to dilute their stock with multiple all-stock trades worth millions on other minor deals.
Basically, by the time dust settled in regards to the Constellation investment – late November 2and December, Canopy had the whole strategy for the American market laid out.
In the following six months, Canopy’s and Acreage’s lawyers and bankers were most likely shaping the deal into what we now see. This is the first sign of a bright future in the American cannabis market.
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