Everyone remembers when Kevin Murphy and Bruce Linton did the television rounds last year touting the new partnership between Canopy Growth and Acreage Holdings. Theirs was a marriage made in heaven, assuming the US would ever come to its senses and legalize cannabis. It was a big “if.”
Well, it’s a year later, and Bruce Linton is gone, and the US is no closer to legalizing weed. According to a statement released earlier this week, Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) and Acreage Holdings, Inc. (CSE:ACRG.A.U, ACRG.B.U) are implementing a previously announced amended arrangement.
The language of the new arrangement is a bit dry, but may be of interest to investors. As per the statement released earlier this week, “Pursuant to the Amended Arrangement, Acreage’s articles have been amended to create new Class E subordinate voting shares (the “Fixed Shares”), Class D subordinate voting shares (the “Floating Shares”) and Class F multiple voting shares (the “Fixed Multiple Shares”).”
Furthermore, the two companies announced the exchange rates as follows, with existing Class A subordinate voting shares of Acreage equivalent to 0.7 of a Fixed Share and 0.3 of a Floating Share, and Class B proportionate voting shares equal to 28 Fixed Shares and 12 Floating Shares. Finally, existing Class C multiple shares are now worth 0.7 of a Fixed Multiple Share and 0.3 of a Floating Share.
As of this week, Fixed Shares and Floating Shares will trade on the Canadian Securities Exchange under the ticker symbols ACRG.A.U and ACRG.B.U.
“Thank you to the Acreage shareholders for voting in favour of this amended arrangement and for believing in the potential Canopy Growth can bring to their investment,” shared David Klein, Canopy Growth CEO, in a statement. “We are encouraged by Acreage’s recent actions to improve the focus and financial performance of its business and begin building our brands in the US, through the introduction of the Tweed brand in several US states. The amended arrangement provides Canopy the most efficient entryway into the US, once federally permissible, and we believe will continue to benefit shareholders of both companies over the long-term.”
“With today’s announcement, we look forward to continuing to build on our momentum to accelerate our pathway to profitability,” said Bill Van Faasen, Interim CEO of Acreage Holdings in a statement. “Canopy’s Tweed branded flower has been a success since our launch late last year, and we will continue to expand to new markets and introduce new products and form factors. We are also excited to develop our hemp division to meet consumer needs in what is expected to be a $10 billion market opportunity.”
Once the so-called “triggering event” occurs, which is the legalization of cannabis in the United States, assuming certain closing conditions are met, Canopy Growth will acquire all of the issued and outstanding Fixed Shares. The company will do so based on 0.3048 of a common share of Canopy Growth per Fixed Share.
Canopy also holds the option to acquire all of the issued and outstanding Floating Shares.
Finally, according to the statement released earlier this week, “Acreage will continue to operate as a stand-alone entity and to conduct its business independently, subject to compliance with certain covenants contained in the Arrangement Agreement.”