Canopy Growth Corporation has announced plans to accelerate its entry into the U.S. cannabis industry through the creation of a new U.S. holding company, Canopy USA, LLC.
Canopy USA will hold the company's U.S. cannabis investments, which will allow it to exercise rights to acquire Acreage, Wana Brands and Jetty upon federal permissibility of THC in the U.S.
"As the growth of the U.S. 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 David Klein, chief executive officer of Canopy Growth Corporation. "We expect to unleash the full power of Canopy's scalable and ideally-positioned U.S. 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 U.S. federal permissibility."
With a protective layer in place for Canopy's core businesses, including its Canadian and international cannabis operations STORZ & BICKEL, BioSteel, and This Works, Canopy is expected to consolidate the financial performance of Canopy USA in accordance with U.S. GAAP, with the goal of highlighting the value of its U.S. THC assets to investors. The consolidation of U.S. cannabis assets is expected to generate revenue and cost synergies by leveraging the brands, routes to market, and operations of the full U.S. cannabis ecosystem.
Canopy's U.S. cannabis ecosystem has an established presence across adult-use markets. Collectively, this footprint currently spans 21 states: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Illinois, Maine, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Ohio, Oklahoma, and Oregon.
Canopy Growth announced plans to acquire vertically-integrated multi-state operator Acreage Holdings in April 2019. The company will acquire 70% of the total shares of Acreage at a fixed share exchange ratio, as well as an option to purchase the remaining approximately 30% on a floating basis in order to own 100% of Acreage. Acreage has its main operations across the Northeast including New Jersey and New York. Acreage delivers a range of products through brands such as The Botanist, Superflux, the Prime medical brand in Pennsylvania, and the Innocent brand in Illinois, among others.
Canopy Growth revealed its intent to acquire 100% of the membership interests of Mountain High Products, LLC, Wana Wellness, LLC and The Cima Group in October 2021. Wana is vertically integrated in Colorado and has a growing licensing division across 13 additional states while also holding the No. 1 market share position in Canada. With a scalable business model, Wana has built a dominant position in the gummies category. Backed by a pipeline of consumer-focused products, Wana is entering new markets.
In May, Canopy Growth announced plans to acquire 100% of the shares of California extracts and vape producer Lemurian, Inc., also known as Jetty. Jetty pioneers the latest technology to create solventless vapes, live resin vapes, and other products. Supported by nine years of operations, Jetty represents a critical foothold in the largest THC market in the U.S.
In addition, Canopy USA controls a conditional ownership position of approximately 13.7% in TerrAscend Corp., a North American cannabis operator with vertically-integrated operations and a presence in Pennsylvania, New Jersey, Michigan, and California, as well as licensed cultivation and processing operations in Maryland. Canopy USA's direct and indirect interests in TerrAscend includes control over all exchangeable shares, options, and warrants previously held by Canopy in TerrAscend, as well as the debentures and loan agreement outstanding between Canopy and certain TerrAscend subsidiaries.
The shares and interests in Acreage, Wana, Jetty, and TerrAscend will be held, directly or indirectly, by Canopy USA, and Canopy will not hold a direct interest in any shares or interests in Acreage, Wana, Jetty, or TerrAscend. Canopy holds non-voting and non-participating shares in the capital of Canopy USA.