Cross-Border Cannabis Industry Deal Contingent on Legalization in US – LPC
Canopy Growth Corporation announced a blockbuster cannabis industry deal on April 18, 2019. Canopy will pay US$3.4 billion to buy New York-based Acreage Holdings – but only when cannabis is legalized federally there. However, most believe federal legalization is inevitable with so many states legalizing cannabis. Some believe US cannabis legalization may happen as early as 2019.
In the meantime, Canopy has paid Acreage US$300 million to secure the right to buy the company in the future. “Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists. There will be tremendous value creation for both companies’ shareholders,” announced Canopy co-CEO Bruce Linton in a press release.
Acreage is one of the largest companies in the US cannabis industry, operating in 20 states. Acreage was the company that tried to buy a SuperBowl ad, but was rejected by CBS. It bills itself as developing a consumer-centric branded cannabis product line.
Signs of US Legalization
The US federal government has shown signs that it may be willing to legalize cannabis. Over the Christmas holidays, the US legalized hemp. Not only was that a step in the cannabis direction, the cannabis industry also saw it as a loosening of banking rules. Previously, banks were very reluctant to process cannabis transactions.
Around the world, more and more countries are also moving towards full legalization as WHO and the UN are indicating a softer stance on cannabis. So far only Canada and Uruguay have full legalization, though many countries particularly in the EU have an active cannabis industry for medical cannabis.
Canopy itself is active in the European cannabis industry and also purchased Spanish cannabis company Cafina this week.
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