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canopy growth acquisition of acreage is a new era of deals in cannabis
April 18, 2019

Canopy Growth and Acreage Deal Has Monumental Implications for Cannabis Industry

Canopy Growth and Acreage have finalized a $3.4 billion acquisition deal. It’s a complex arrangement that will have ripple effects across the industry. Take a seat and let’s break it down for you so you can sound smart at your 4/20 party this weekend.

Canopy Growth and Acreage cement leadership in U.S. and Canadian markets

What a coup by Canopy Growth. You don’t normally say that after dropping the equivalent of a (small) country’s annual GDP, but Canopy Growth got a bargain in this deal. Here’s why:

  • Canopy Growth between their partnership with Martha Stewart, CBD facility in New York state, and now the acquisition of Acreage, have a stranglehold on the still underdeveloped U.S. market.
  • Acreage’s footprint in 20 states? That’s a population of ~180 million and it’s all Canopy Growth-owned after this transaction is finalized. Between Martha’s CBD goods and Acreage properties, Canopy is now going to be reaching arguably more consumers in the U.S. than any other single cannabis entity.
  • This dominant U.S. marketshare comes in addition to Canopy Growth’s massive presence in the Canadian market. A presence that was further strengthened by their partnership with actor/cannabis-vanity-project savant, Seth Rogen.

And the #Wins don’t stop with Acreage. No, the MMLG blogger’s favorite John Boehner-chaired, would-be-Super-Bowl-advertising cannabis firm is in a tremendous position to boot. [Uhh, they just got 3.4 billion dollars, they should be! –Ed.]

  • Acreage, who has been extremely strategic from a growth and expansion standpoint, contributes so much to Canopy Growth from a vertical integration standpoint.
  • Acreage, who finalized their own acquisition of Form Factory earlier this week, brings Form Factory’s rendering and manufacturing capacities to the table [Not kidding, we had a blog post on this development scheduled until Canopy bought Acreage. –Ed.] This move makes Acreage inarguably the first commercial-scale cannabis CPG company in the United States, which, yeah, Canopy Growth is going to leverage the hell out of to produce and render Martha-brand stuff and Acreage-brand stuff from for distribution eventually.

Canopy Growth and Acreage just put the entire U.S. cannabis industry on notice

Today’s a rough day for [insert your favorite U.S.-based cannabis MSO that’s not Acreage]. We wholly anticipate that this news will spur a round of “mega-acquistions” between the MedMens and CrescoLabs of the world. Or, maybe more realistically, we anticipate a different Canadian company swooping in to buy one of those still very large U.S. cannabis companies.

These are the land grab days of the cannabis industry, people. Consolidation was anticipated and until further notice is the name of the game.

Complexity of deal signals Canopy Growth’s commitment to long haul

Canopy Growth, no surprise for a company that just splurged on a multi-million-dollar company, is committed to the long game in cannabis. Their willingness to outlast the U.S. federal government and wait for legalization before the acquisition takes effect is a bold gambit that should pay off handsomely, it’s just a question of when.

This deal, after the supernova-bright initial glow, will also test the patience of shareholders to an extent. If it’s a one-year wait for legalization? Great. If it is five years? Some investors are going to get antsy. But rest assured, those that bide their time with Acreage and Canopy will get a very solid ROI.