© Stocksak. FILEPHOTO: A sign with Canopy Growth Corporation logo is pictured at their Smiths Falls, Ontario facility on January 4, 2018. REUTERS/Chris Wattie
(Stocksak). Top Canadian cannabis producer Canopy Growth (NASDAQ:) Corp has created a holding company in order to accelerate its entry into the United States. It will also complete the purchase of Acreage It said that Holdings (OTC) Inc, Wana Brands and Jetty Extracts were its main products on Tuesday.
Premarket trade saw its U.S.-listed shares rise 4.8% as Canopy is expected to gain a significant market share in the United States.
The pot producer will not immediately reap the benefits of the transactions because weed remains federally illegal. Canadian companies that grow and sell marijuana are also prohibited from doing so in the United States.
President Joe Biden had earlier requested a review of how the drug is classified in America. However, a possible change in legislation could allow Canopy operations in the United States.
Canopy USA LLC will be created as a holding company structure in anticipation of the changes.
Canopy had in 2019 acquired a right to purchase Acreage for $3.4billion once the U.S legalizes marijuana. Canopy USA will now buy Acreage for $3.4 billion and take control of the firm immediately, it stated.
Canopy USA will also acquire Wana and Jetty, streamlining ownership. It will be in indirect ownership by Canopy Growth. It will also have its own board of directors consisting of four members and two Canopy Growth representatives.
The deals, which require shareholder approvals, would also see Corona Maker Constellation Brands Inc.(NYSE:) become a passive owner of Canopy Growth.
Constellation holds 35.7% of Canopy’s common stock. It plans to convert it into exchangeable shares. Constellation would retain its stake, but it would lose the right to nominate directors for Canopy Growth.
Constellation could choose to not convert its stake. Canopy USA would not proceed with these transactions in this instance.