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7 Major Takeaways From Canopy Growth’s Masterful Trojan Horse Into The U.S. Cannabis Industry

Oct 15, 2021 • 6:58 AM EDT
3 MIN READ  •  By Michael Berger
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Yesterday, Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) announced one of the most significant transactions in the history of the business and signed definitive agreements to acquire 100% of Wana Brands, which is the largest cannabis edibles brand in North America.

The transaction significantly strengthens Canopy Growth’s leverage to the US cannabis industry and we are bullish on the amount of synergies that can be found between the companies. The agreement provides Canopy Growth with the right to acquire the leading edible brand when regulations on tetrahydrocannabinol (THC) change at the federal level in the US.

7 Key Takeaways From the Wana Brands Acquisition 

From a legalization standpoint, we believe the legal cannabis movement in the US is rapidly advancing. So far this year, several large-scale Canadian Licensed Producers (LPs) have acquired strategic US cannabis assets and we have been highly focused on this trend. Due to the agreement to acquire Wana, we believe that Canopy Growth has significantly improved its growth prospects and are bullish on the transaction due to the following:

  1. From selling cannabis edibles to licensing proprietary intellectual property (IP), Wana has an attractive operating structure with several revenue streams and we are favorable on the number of avenues the brand has for growth
  2. In the US, Wana is levered to several burgeoning markets and sells products in 12 states and in Canada. Before the end of 2022, the cannabis edible brand expects to sold in more than 20 states
  3. Several states that Wana has leverage to are recreational cannabis markets (California, Arizona, Illinois, and Michigan) and we are favorable on this. Before the end of the 2022 calendar year, Wana expects to start selling products in new recreational markets like New York and New Jersey. 
  4. According to leading cannabis data provider Headset, gummies are one of the fastest growing verticals in the cannabis industry (in both the US and Canada) and accounts for more than 70% of all edibles purchased
  5. Based on Canopy Growth’s consumer research, edibles are expected to continue to be an attractive market due to it being the primary entry point for new consumers of THC products. We believe the distribution that Canopy Growth has will help Wana capture more market share and are favorable on the amount of due diligence that has been conducted on the vertical. 
  6. Wana has a profitable business and a proven track record of reporting strong revenue growth and category-leading gross and EBITDA margins. Wana’s proven licensing model provides Canopy Growth with the opportunity to scale the brand ahead of legalization in US
  7. The acquisition is expected to complement Canopy Growth’s diversified product portfolio across the recreational cannabis industry and we are bullish on the combined company. The transaction bolsters Canopy Growth’s product, brand, and geographic exposure in the US and will monitor how it uses its resources to further grow the brand

Canopy Growth is a US Execution Story

Upon exercising its right to acquire Wana, Canopy Growth will own and operate Wana’s vertically integrated facility in Colorado as well as its licensing division, which currently covers 11 states. The acquisition expands on the leverage that Canopy Growth has to the US via its right to acquire Acreage Holdings as well as its conditional ownership interest in TerrAscend.

Canopy Growth is a leading diversified cannabis and cannabinoid-based consumer product goods (CPG) company. Through BioSteel sports nutrition, the company has been capitalizing on the health and wellness consumer vertical in strategic markets like Canada, the US, and the European Union (EU). Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands (Nasdaq: STZ) and we are bullish on how the story has advanced and improved with the planned acquisition of Wana Brands

If you are interested in learning more about Canopy Growth’s acquisition of Wana Brands, please send an email to support@technical420.com with the subject “Canopy Growth’s Acquires Wana Brands” to be added to our distribution list. 

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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