Sunday, October 1, 2023

What Canopy Growth Buying Acreage Holdings Means For Marijuana Consumers

The cannabis industry is so convinced that federal legalization is on the verge of taking hold across the United States that it is already making significant deals to create a stoner superpower for when that happens. Earlier this week, Canadian marijuana producer Canopy Growth, the company working with Constellation Brands on a THC-infused beverage, signed a $3.4 billion deal to take over medical marijuana firm Acreage Holdings as soon as the federal government ends prohibition.

Although the deal was loosely secured in ink this week in New York, nothing is set to happen until Congress pushes a bill intended to legalize marijuana at the national level and that measure is signed into law by the sitting president. It is sort of a preliminary agreement that will really only take shape if shareholders from both camps agree on the transaction. It is also contingent on approval by both U.S. and Canadian regulators. However, the companies believe this is the first step to unleashing the world’s first true ganja giant  — and they are confident their shareholder will support it.

RELATED: Here’s What Canopy Growth Investors Need to Know About the Houseplant Deal

“Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” Bruce Linton, co-CEO for Canopy, saidin a press release. “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.”

But wait, didn’t we hear that Constellation Brands, makers of Heineken beer, was working on taking a controlling interest in Canopy Growth?

Well, Constellation Brands, which is working with Canopy on a THC brew that will be distributed in Canada, is part of this deal, according to reports. So, it appears that if Constellation decides to flex its stake in the company in the next several years, it could still end up taking a controlling interest. Technically, this would mean that one of the largest brewing companies in the world would become one of the largest cannabis producers as well. Either way it shakes out, Constellation gets to keep members on Canopy’s board of directors. The beer giant is going anywhere.

RELATED: NHL Alumni Association And Canopy Growth Partner On Marijuana Pain Relief Study

It is actually a smart move on the part of Canopy to move ahead with this deal now as opposed to waiting for the U.S. government to get its act together. It gets the wheels turning in preparation for federal legalization takes shape, ensuring that Canopy will be the first cannabis company to become a legitimate major player in the newly legal climate. Sure, we hear lots of discussions these days about the players in pot, like MedMen, but none of those will have the strength of Canopy. In a way, this deal almost guarantees that everyone else out there dabbling in marijuana commerce is destined to become mom and pop operations once weed goes fully legal.

Another way to look at this deal is someone knows something. Considering the cold feet the federal government has had over the years concerning the end of pot prohibition, it is difficult to predict when legalization will happen. But Canopy would not have forked over a $300 million down payment if they didn’t have some grip on the timeline. Therefore, it is conceivable that this deal means that federal legalization is right around the corner. Whether that happens this year or next, no one really has a clue. But considering that former House Speaker John Boehner not only sits on the board at Acreage as well as oversees a team of marijuana lobbyists in DC looking to drum up support for legalization bills, we’re going out on a limb and saying prohibition is on its last leg.

So, what does all of this mean for pot consumers? Try buying marijuana products in a manner similar to beer nationwide.


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