Canopy Growth exercises option to acquire US marijuana operator Acreage

Canadian cannabis company Canopy Growth Corp. exercised its option to acquire American marijuana multistate operator Acreage Holdings.

Canopy USA, Canopy Growth’s U.S.-domiciled holding company, will acquire all of Acreage’s fixed shares and floating shares in a deal expected to close in the first half of 2025, according to a Tuesday news release.

Smiths Falls, Ontario-headquartered Canopy Growth also exercised its option to acquire $99.8 million of Acreage’s outstanding debt in exchange for $69.8 million in cash and the discharge of roughly $30.1 million that was held in escrow, the release noted.

Acreage has defaulted on debt payments and has an accumulated deficit of $775 million, according to Green Market Report.

However, the MSO reported it had $7.3 million in cash and $365.2 million in total liabilities in its financial results for the period ending March 31.

Canopy’s other U.S. moves

The agreement to acquire New York-based Acreage was reached in April 2019.

At the time, the price tag was roughly $3.4 billion, but a 2020 amendment dropped the valuation to $900 million.

The Acreage deal is part of an expansion into the United States by Canopy, which earlier this month exercised its options to acquire Colorado-headquartered marijuana edibles company Wana Brands and California-based extracts business Jetty.

Canopy entered into agreements to acquire Wana for $297.5 million and Jetty for at least $69 million in 2021 and 2022, respectively. (Wana says that transaction is now valued at $350 million.)

The three acquisitions were contingent on the United States legalizing marijuana at the federal level, and inroads have been made with recent U.S. activity to reschedule the drug.

‘Excited about Acreage’s opportunities’

“The debt restructuring and option exercise to commence Canopy USA’s acquisition of the Company, combined with our operational restructuring and our focus on reduced costs, should enable us to reach our potential and we are especially excited about Acreage’s opportunities in Ohio, Pennsylvania, New York, and New Jersey,” Acreage CEO Dennis Curran said in a statement.

Ohio, New York and New Jersey have legalized recreational cannabis sales, and Pennsylvania’s governor is pushing the Legislature to legalize adult use to complement the state’s successful medical marijuana market.

“We’re excited to see this strategy advancing as more of Canopy USA’s priority markets come online for adult use across the Midwest and Northeast,” Canopy Growth CEO David Klein said in a statement.