Canopy Growth Corporation (NASDAQ:CGC) (TSX:WEED) and Lemurian, Inc. (“Jetty”), a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology, have entered into definitive agreements providing Canopy Growth, by way of a wholly-owned subsidiary (“Canopy Sub”), the right to acquire, upon federal permissibility of THC in the U.S. or earlier at Canopy Growth’s election, up to 100% of the outstanding capital stock of Jetty.
These Agreements present Jetty with potential opportunities to collaborate across Canopy’s robust U.S. THC ecosystem, which already includes the right to acquire both Acreage Holdings, Inc. (OTCQX:ACRHF) and Wana Brands, as well as a significant conditional ownership interest in TerrAscend Corp. (OTCQX:TRSSF) The two companies are also exploring avenues through which Jetty could bring the brand and its innovative product line up to the Canadian recreational market to fully realize the North American, cross-border potential of Jetty’s industry leading IP.
Strategic Benefits
-
Further accelerates the growth of the company’s U.S. THC ecosystem: Through these agreements, Canopy Growth continues to develop its robust U.S. ecosystem by adding an established cannabis brand that is the market share leader in solventless vapes.
-
Extraction technology: Jetty has developed industry-leading capabilities in extraction and clean vape technology. As one of the first brands to bring to market a vape free of fillers and cutting agents, Jetty has built on that legacy with the 2021 launch of its solventless vape and concentrate collection, made from just ice, water, heat, and pressure.
“Canopy Growth is building a house of premium cannabis brands with a focus on the core growth categories that will power the market’s path forward, now including Jetty – a pioneer of solventless vapes,” stated David Klein, CEO, Canopy Growth. “There are significant opportunities for Jetty to scale at the state-level across the U.S. by leveraging Canopy’s U.S. ecosystem, and we’re actively working on plans to bring the brand to the Canadian recreational market.”
The agreements are structured as two separate option agreements whereby Canopy Growth has a call option to acquire up to 100% of the equity interests in Jetty.
Under the agreements, Canopy Growth will make aggregate upfront payments in the amount of approximately $69 million payable through a combination of cash and Canopy Growth common shares, a majority of which will be Canopy Growth common shares, in exchange for approximately 75% of the equity interests in Jetty, subject to certain adjustments.
Upon exercise of the rights to acquire up to 100% of the equity interests in Jetty covered by the first option agreement, Canopy Growth will make an additional payment pursuant to the terms of the agreements, also to be satisfied through a combination of cash and Canopy Growth common shares.
Until such time as Canopy Sub elects to exercise its rights to acquire Jetty, Canopy Growth and Canopy Sub will have no direct or indirect economic or voting interests in Jetty, Canopy Growth and Canopy Sub will not directly or indirectly control Jetty, and Canopy Growth and Canopy Sub, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another.
Photo: Courtesy of Richard T on Unsplash
Related News
