In perhaps the most bizarre transaction the cannabis industry has seen to-date, Canopy Growth Corporation (CGC) agreed to purchase Acreage Holdings (ACRGF), the John Boehner-backed American cannabis company for $3.4 billion.
There is, however, one caveat.
The acquisition will only be completed "at such time as cannabis production and sale becomes federally legal in the United States," according to numerous reports. Acreage has continually touted the STATES Act as the country’s path to federal legalization, even though key members of Congress, including Senate Majority Leader Mitch McConnell, have repeatedly said they do not back legalization.
Meanwhile, Canopy will pay Acreage $300 million upfront — for what, exactly, it is still unclear. Reports of the deal, however, sent both companies’ stock prices skyrocketing, with shares of Canopy up 8 percent, while Acreage's stock jumped more than 5 percent.
“Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally permissible pathway exists,” Canopy Chief Executive Officer Bruce Linton said in a statement. “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 has recently made a jump to the U.S. following the passage of the most recent farm bill. The Canadian Licensed Producer set up a hemp extraction facility in New York State to take advantage of the growing CBD market.