This is breaking news. Please check back for updates.
Canadian marijuana grower Canopy Growth announced Thursday a $3.4 billion deal to acquire Acreage Holdings after cannabis has been legalized in the United States.
The deal, which was finalized Thursday morning in New York, grants Canopy the right to buy all of Acreage’s stock following nationwide legalization; the two companies will operate independently until then. It will also grant Acreage access to Canopy vault of brands including Tweed.
“Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” said Canopy co-CEO Bruce Linton in a press release. “By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.”
Canopy’s stock soared more than 8% shortly after the opening bell Thursday following the announcement.
New York-based Acreage Holdings is one of the largest multistate cannabis operators in the U.S., with a presence in 20 states. It bills itself as developing a consumer-centric branded cannabis product line and has leveraged board director and former speaker of the U.S. House of Representatives John Boehner in its efforts on Wall Street.
For its part, $14 billion Canopy Growth remains one of the largest players in the burgeoning cannabis industry. The company is perhaps best known in the United States for its partnership with Corona beer maker Constellation Brands and its plans to locate a hemp operations in New York State. It has announced partnerships with both Martha Stewart and Seth Rogen in 2019.
But despite the announcement, the deal still faces a number of important questions. Though several U.S. states have approved the recreational use of marijuana in recent years, consumption of the plant remains prohibited by federal law.