(Reuters) -Top Canadian cannabis producer Canopy Growth Corp is creating a holding company to speed up its entry into the United States and complete the purchase of Acreage Holdings Inc, Wana Brands and Jetty Extracts, it said on Tuesday.
Its U.S.-listed shares rose 4.8% in premarket trade as the deals are expected to give Canopy a leading market share in the United States as soon as it is legally possible.
The pot producer will not right away benefit from the transactions as weed remains federally illegal and Canadian companies that grow or sell marijuana cannot do so in the United States.
But with President Joe Biden earlier this month seeking a review on how the drug is classified in the United States, a potential change in legislation would allow Canopy to operate in the country directly.
In anticipation of the changes, Canopy on Tuesday outlined a complex holding company structure to set up Canopy USA LLC.
Canopy had in 2019 secured a right to buy Acreage for $3.4 billion once the U.S. legalizes marijuana. Canopy USA will now skip the wait and take over the firm right away, it said.
Canopy USA will also take over Wana and Jetty, streamlining ownership. It will be indirectly owned by Canopy Growth, and have its own four-person board of directors with two members designated by Canopy Growth.
The deals, which need shareholder approvals, would also see Corona-maker Constellation Brands Inc become a more passive owner of Canopy Growth.
Constellation owns around 35.7% of Canopy’s common stock, which it intends to convert into exchangeable shares. The conversion would keep Constellation’s stake unchanged, but it will give up rights to nominate directors to Canopy Growth’s board.
Constellation could still choose not to convert its stake, in which case Canopy USA will not proceed with these deals.
(Reporting by Shariq Khan; Editing by Savio D’Souza and Arun Koyyur)
