Canopy Growth, the Canadian cannabis conglomerate, which owns a variety of marijuana brands and companies, has struck a deal to purchase the U.S.-based cannabis firm, Acreage Holdings, for $3.4 billion on the condition that marijuana becomes federally legalized in the United States, CNBC reports.
Canopy is reportedly paying Acreage $300 million upfront, but the two companies will continue to operate separately for the time being. Should weed become federally legal in America, Canopy will earn the right to buy all of Acreage’s stock, though Acreage will in turn have access to various Canopy brands such as Tweed, one of Canada’s most prominent cannabis producers and retailers (Canopy itself was borne out of Tweed Marijuana Inc. in 2015.)
“Today we announce a complex transaction with a simple objective,” said Canopy co-CEO Bruce Linton in a statement. “Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists. 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 is already valued at $14 billion, and last summer the company received a massive boost when the alcoholic beverage giant, Constellation Brands — the parent company of Corona, Modelo, Svedka and more — invested $4 billion. The company is also making cultural inroads, teaming with Seth Rogen to launch a recreational cannabis company, Houseplant, in Canada, as well as Martha Stewart, who will help to develop various CBD products (their first venture will be “sensible products for people’s beloved pets”).
Acreage, meanwhile, is based in the U.S. but is publicly traded in Canada. The company has invested in medical and recreational cannabis retail and cultivating operations across the U.S. and boasts a board that notably includes former Republican Speaker of the House, John Boehner. In February, Acreage made news when CBS rejected a proposed Super Bowl ad about the medical benefits of marijuana.