Canopy makes a play to fast-track its entry into the US

Published on October 28, 2022 by oz. staff

Cellphone with Canopy Growth logo Photo: Adobe Stock/the oz.

Canopy Growth has a new strategy to enter the US sooner rather than later.

The licensed producer plans to establish a US holding company—called Canopy USA—and also intends to create an exchangeable share structure designed to allow the Ontario-based company to “trigger” full ownership of its US cannabis investments, specifically Acreage, Wana, and Jetty.

To this point, Canopy’s entry into south of the border has hinged on federal legalization in the US.

“As the growth of the US cannabis market continues rapidly at the state level, this strategy enables us to take control of our own destiny and capitalize on the once-in-a-generation opportunity in the largest cannabis market in the world,” said Canopy CEO David Klein.

“We expect to unleash the full power of Canopy’s scalable and ideally-positioned US cannabis ecosystem to unlock potential expansion opportunities. This strategy and positioning are true differentiators, which we expect to enable our investors and brands to realize value in the near term while positioning Canopy for profitable growth and a fast start upon US federal permissibility.”

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The US market is projected to be a $50-billion-plus opportunity for cannabis businesses.

Still, Canopy’s plan faces some challenges, including the NASDAQ stock exchange’s objection to consolidation. Also, Canopy shareholders have to agree to the changes to the share structure through a vote, expected in January 2023.

“An exciting evolution is now taking place in the U.S. cannabis industry, and the time is now to accelerate our union with Canopy and leverage the solid foundation we have built to fully participate in an unmatched U.S. ecosystem alongside other market leaders,” says Acreage CEO Peter Caldini.

“Acreage is a valuable addition to what Canopy is building, and we are excited about the opportunities to collaborate more directly with Jetty and Wana on product innovation and market expansion, creating an even stronger position ahead of federal permissibility as part of a leading North American brand powerhouse.”