Canopy plans expansion in the United States with the acquisition of weed candy maker Wana Brands
Oct. 14 (Reuters) – Canadian company Canopy Growth Corp (WEED.TO) said on Thursday it would buy weed candy maker Wana Brands for $ 297.5 million, as the largest producer of jars world is looking to expand into the U.S. cannabis market.
Demand for jarred edibles such as gummy candies has increased during the pandemic, as people trapped at home turn to cannabis-related products for relaxation and entertainment.
“The categories that resonate the most with consumers, especially in the THC space, are gummies and drinks, we continue to research other modes of consumption, but these two seem to be the ones taking off,” Canopy chief executive 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 brand gummies in states such as California, Arizona, Illinois, Michigan and Florida.
Canadian pot producers are considering cross-border expansion as the industry has sparked investor interest in some U.S. states legalizing pot and heightened expectations for federal marijuana reform.
“We remain more optimistic than others on the regulatory front and believe our ecosystem in the United States is strong enough to grow even without short-term federal approval,” Klein added.
Canopy’s U.S.-listed shares, which are down 46% so far this year, are up nearly 2% to $ 13.55 in pre-market trading.
The acquisition will give Canopy access to Wana’s vertically integrated facility in Colorado and its licensing division, the company said, adding that it would continue to operate independently in the state until the conclusion of the agreement.
The transaction is structured into three separate option agreements allowing Canopy Growth to acquire a call option to acquire 100% of the stakes in each Wana entity, the company said in its statement.
Report by Rithika Krishna in Bengaluru; Editing by Vinay Dwivedi
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