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Drake goes into business with Canadian cannabis company



The growing North American cannabis industry – and especially the thriving hemp-derived CBD sector – has become a red-carpet-like affair with celebrities and athletes signing up to look up some brand.

Aubrey Drake Graham, best known as hip-hop artist Drake, teamed up with Canadian cannabis giant Canopy Growth to launch cannabis manufacturer More Life Growth Company in Graham's hometown of Toronto.

Drake joins a growing wave of celebrities who have aligned themselves with the cannabis industry by selling products, participating in corporate boards, or in this case creating a joint venture.

"I don't think they have reached full saturation yet," said Ryan McConnell, senior vice president of Kantar Futures, a business insights and brand consulting firm.

Celebrities endorsements and partnerships are a way to help give a business credibility and trust, he said. And for a growing ̵

1; and somewhat illegal – industry, which can be huge.

"[Cannabis] is a field that is not legitimate in anyone's eyes yet," he said. "It still has that veneer of being illegal."

But not all celebrity bonds are created equal. People are attracted to brands that are genuine and authentic, said Diana Eberlein, an entertainment marketing specialist.

"If it feels inauthentic, they will lose the audience very quickly," said Eberlein, who now leads the marketing efforts at SoRSE, a company that helps make water from cannabis oil. SoRSE worked with Mad Tasty, a brand of sparkling hemp water launched by OneRepublic singer Ryan Tedder.

Canopy Growth's other celebrity partnership has struck that chord well, she said. It made perfect sense that Snoop Dogg, actor Seth Rogen and even Snoop's buddy Martha Stewart ventured into the cannabis industry.

Drake, although very popular, does not get the immediate connection to cannabis, she said.

"But Drake is such a big name," she said. "So it really depends on how he drives the brand going forward."

Drake's arrangement with Canopy Growth is no different from most celebrity-cannabis deals, which are largely approvals, minority investments or advisory roles. Drake is the majority owner of a company licensed by Health Canada, which oversees the country's regulated cannabis market.

Under the agreement, Drake will own 60% of More Life Growth Company while Canopy Growth will retain the other 40% and have the option of "exploiting only certain intellectual property rights" in Canada and internationally.
For Canopy Growth, which has become a bit of a poster child for the listed cannabis businesses in operational and financial flow, the deal underlined at least one analyst following the company.

"We have a relatively weak view of the Canadian outlook to justify the implied value that Canopy provides," Andrew Carter, an analyst with brokerage and investment banking firm Stifel, said in a research note Thursday. "Canadian cannabis brand development is difficult with restrictions that specifically prohibit the use of celebrity names, and we believe Canopy delivers a cash flow positive asset. "

Looking at the deal in the long run, however, it may play well for Canopy.

19659005]" Another option to improve its positioning for the United States, "Carter wrote." Canopy's continued investment toward greater global opportunity is a differentiating factor versus peers pursuing measures to ensure viability. "


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