Canadian giant Canopy Growth in October signaled its belief in American legalization and its intentions to get into the market with the announcement that it was spending nearly $300 million for the rights to acquire Wana Brands, the No. 1 edibles brand in North America, “upon federal permissibility of THC in the U.S.”
The definitive agreements are structured as three separate option agreements giving Canopy Growth a call option to acquire 100% of the membership interests in each Wana entity. As consideration for entering into the agreements, Canopy Growth will make an upfront cash payment of $297.5 million.
“As we establish Canopy Growth as the world’s leading cannabis company, acquiring the No. 1 cannabis edibles brand in North America will serve to strengthen our market position in both Canada and the United States,” Canopy Growth CEO David Klein said in a press release. “The right to acquire Wana secures another major, direct pathway into the U.S. THC market upon federal permissibility, and in Canada we’ll be adding the top-ranked cannabinoid gummies to our industry-leading house of brands.”
Wana manufactures and sells gummies in Colorado and licenses its intellectual property to partners that manufacture, distribute and sell Wana-branded gummies across 12 U.S. states and nine Canadian provinces. Wana expects to have license agreements in place in more than 20 U.S. states, including in future adult-use markets in New York and New Jersey, by the end of next year.
Upon exercising its right to acquire Wana, Canopy Growth will own and operate Wana’s vertically integrated facility in Colorado as well as the licensing division.
This expands Canopy’s reach into the American market, which also includes an existing right to acquire multi-state operator Acreage Holdings and its conditional ownership interest in TerrAscend Corp.
Wana will continue to operate as an independent company, with no economic or voting interest from Canopy until Canopy exercises its right to acquire Wana.
“We have long considered what the next phase of our growth might look like, and this deal is not only a great testament to our focus on bottom line growth and fiscal diligence, but also to the value we believe Wana can bring to Canopy and its shareholders now and in the future,” Wana Brands CEO Nancy Whiteman said in a release.
Earlier this year Wana Brands was named to its impressive fourth-straight appearance on the Inc. 5000. The company clocked in at No. 2,675 on the annual list of the fastest growing private companies in the U.S., with a three-year growth of 152%.
— Brian Beckley