Canopy Growth does not buy Acreage Holdings, it buys the right to purchase Acreage Holdings
Canopy Growth Corp. did not take over Acreage Holdings Inc., which reported Wednesday, but is preparing to pay billions for the rights to purchase the US pot company.
A source familiar with the talks confirmed Wednesday afternoon as a Canopy Growth
CGC, + 2.81%
WEED, + 2.81%
deals with Area
ACRGF, + 9.1[ads1]4%
was "98% finished", but the final price was still being prepared. Acreage had a market value of $ 2.45 billion from Wednesday's close, but the deal would be worth "billions" in Canadian dollars, the source said.
If Canopy Growth were to land in space, it would probably go out of the Toronto Stock Exchange Rules, where the shares are listed. TSX does not allow companies to own ownership of unlawful businesses, which Acreage technically does because marijuana is still federally illegal in the United States. Canopy will also have to give up its US listing, which was cross-listed from TSX, and instead look at Canadian securities trading and over-the-counter trading in the United States, as publicly listed US companies do.
Instead, Canopy Growth will purchase the rights to purchase land when (or if) marijuana becomes federally legal in the United States at an agreed price, according to the source. Many cannabis companies in Canada have purchased subscription rights in companies with US operations, and Canopy already has some included in Slang Worldwide Inc.
SLGWF, + 1.76%
and others owned by Canopy Rivers Inc.
RIV, + 10.05%
investment company, which is listed on the TSX Venture exchange.
Canopy's US listed shares jumped more than 10% in the after-trade after preliminary contract reports were released on Wednesday afternoon, even though the gains later appreciated slightly to around 8%. The stock closed 2.8% higher Wednesday, as ETFMG Alternative Harvest ETF
MJ, -0.15%
lost 0.2% and Horizons Marijuana Life Sciences Index ETF
HMMJ, + 1.03%
received 1%.
This report is updated with Acreage's market value.
