Cannabis giant Canopy Growth to buy edibles brand Wana
By Susan Mate
16:32, 14 October 2021
Ontario, Canada-based Canopy Growth is looking to boost its footprint in the edibles market in Canada and the US, and has agreed to buy Colorado-based gummies-maker Wana.
The completed purchase of Wana, which operates Mountain High Products, Wana Wellness and Cima Group, hinges on the US making cannabis legal federally, Canopy said in a news release.
US federal legalisation
Once national legalisation occurs in the US, Canopy can choose to acquire call options to buy Wana, a leading American brand. The deal is structured as three separate option agreements, with Canopy making an upfront cash payment of $297.5m (£217.4m) as consideration for entering into the agreements. When the rights to acquire each Wana entity is exercised, Canopy will make a payment equal to 15% of the fair market value of such entity at the time the option is exercised.
Wana's products are available in 12 states, and it expects to have license agreements in place in more than 20 US states, including adult-use markets in New York and New Jersey, prior to the end of 2022
Wana's gummy brand in Canada is licensed by cannabis producer Indiva.
“As we establish Canopy Growth as the world's leading cannabis company, acquiring the number one cannabis edibles brand in North America will serve to strengthen our market position in both Canada and the United States,” said Canopy CEO David Klein in a statement.
Edible cannabis products represent about 20% of total sales, with nearly 2.3 million packaged units sold, according to a March 2021 report by Health Canada, which tracks data on cannabis use. Ottawa’s Canadian Cannabis Survey 2020 indicated 79% of cannabis users smoked marijuana, while 52% consumed it in food, up from 46% in 2019.
Gummies gain popularity
The gummies category is one of the fastest expanding segments in both the US and Canada, accounting for more than 71% of all edibles purchased, the companies said.
“We have long considered what the next phase of our growth might look like, and this deal is not only a great testament to our focus on bottom line growth and fiscal diligence, but also to the value we believe Wana can bring to Canopy and its shareholders now and in the future,” Wana CEO Nancy Whiteman said in the release.
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