In a surprise development, leading Canadian Licensed Producer (LP) Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) and Houseplant have mutually agreed to end their relationship. The development comes after the companies operated a successful joint venture for three years.
According to a press release, the company determined that it is time for Houseplant to focus on developing a brand independently, while Canopy Growth focuses on advancing its wholly-owned brands for the Canadian market.
One of the reasons we have been favorable on the Houseplant brand is related to it being co-founded by Seth Rogen. We believe that he played a key role in how the brand gained traction and will monitor how the business evolves from here. According to Rogen, the termination of the joint venture agreement should not be viewed as an exit from the Canadian market. The breakup will provide Houseplant with a chance to grow the brand and we will monitor how the story advances from here.
During the course of the relationship with Canopy Growth, Houseplant became a popular consumer brand in Canada and is currently a top 10 brand in the premium cannabis market in Ontario. Houseplant is highly levered to the cannabis beverage market and reported to have sold more than one million cans of Houseplant beverages in Canada in the last year.
A few months ago, Houseplant launched a line of premium homewares and cannabis products in the US and has quickly become a high-profile brand. The relationship between the companies did not extend into the US and we believe this decision played a role in the termination of the joint venture. Since the companies are not working together in the US, we do not expect the breakup to negatively impact the business.
Going forward, some Houseplant cannabis products will continue to be available to retailers in Canada (through the end of September). In the future, Houseplant plans to re-launch in the Canadian market with a product line that is more consistent with its US offerings
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