They say if you dig three layers deep you might find surprises in just about any situation. This couldn’t be truer about recent news released regarding Canopy Growth, Constellation Brands and Acreage Holdings. An acquisition of Acreage Holdings by Canopy Growth has a lot of people asking questions. In a recent press release, it was made public knowledge that Canopy Growth signed into an agreement to acquire the US-based medical marijuana firm by the name of Acreage Holdings. They are doing so in an agreement that is valued at $3.4 billion dollars.
The Hurdles And Questions Left To Address
This acquisition still has a few hurdles to endure. However, both companies seem to be very confident that it will be a success. Aside from receiving a stockholder agreement Canopy Growth and Acreage Holdings will also have to receive the proper regulatory approval from Canada and the US. Bruce Linton of Canopy Growth stated that “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.”
The agreement leaves many people wondering if the prohibition of cannabis in the United States may be closer than we think. Linton also stated that “our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally permissible pathway exists.”
Digging Three Layers Deep
Could one of the biggest cannabis companies and producers in Canada know something that we don’t? One thing is for sure it will be interesting to see how it plays out. So where does the third layer play in? Canopy Growth is acquiring Acreage Holdings and will assume the properties. This, of course, can only happen once the federal prohibition of cannabis in the United States ends. The next layer, some may be very well aware while others are simply clueless.
In recent times an entity known as Constellation Brands known for their famous Modelo and Corona brews entered into an agreement. An agreement that gives them a 37% equity stake in Canopy Growth. If you put two and one together here you can clearly see what this means. It is likely that this could mean not only an entryway for Canopy to get into the cannabis sector in the United States as soon as it is federally permissible but it could signal a collaboration between the cannabis market and an industry that was for many years one of its biggest opponents.
Could this be a bad thing? Absolutely. Could it be a great thing? Absolutely. It all depends on how it plays out in the coming months. Stay tuned here at Roottie as we will be diligent to keep you updated on this agreement as is it continues to unfold.