Canopy eyes U.S. expansion with weed gummies maker Wana Brands' acquisition
By Kathi on Oct 14, 2021 | 04:34 AM IST
Canada's Canopy Growth Corp said on Thursday it would buy
weed gummies maker Wana Brands for $297.5 million, as the world's biggest pot
producer looks to expand in the U.S. cannabis market.
Demand for pot edibles such as gummies has risen during the
pandemic, as people stuck at home turn to cannabis-related products for
relaxation and entertainment.
"The categories that resonate the most with consumers,
particularly in THC space are gummies and beverages, we continue to look at
other ways of consumption but these two seem to be the ones that are taking
off," Canopy Chief Executive Officer David Klein told Reuters.
Tetrahydrocannabinol or THC is the ingredient in marijuana
that gets you 'high'.
Wana sells gummies in the U.S. state of Colorado and
licenses its intellectual property to partners who manufacture, distribute, and
sell Wana-branded gummies in states including California, Arizona, Illinois,
Michigan and Florida.
Canadian pot producers are looking at cross-border
expansion, as the industry has garnered investor interest with some U.S. states
legalizing pot and on increased expectations for federal marijuana reform.
"We remain more bullish than others in the regulatory
front and feel that our ecosystem in the U.S. is strong enough to grow even
without federal permissibility happening in the short term," Klein added.
U.S.-listed shares of Canopy, which are down 46% so far
this year, rose nearly 2% to $13.55 in premarket trade.
The acquisition will provide Canopy access to Wana's
vertically integrated facility in Colorado and its licensing division, the
company said, adding that it would continue operating independently in the
state until the deal closes.
The transaction is structured as three separate option
agreements allowing Canopy Growth a call option to acquire 100% of the
membership interests in each Wana entity, the company said in its statement.