Canopy to speed entry into US cannabis market with new holding company

Canadian cannabis company Canopy Growth said Tuesday it’s consolidating its U.S. assets into a new holding company to speed up its entry into the U.S. market.

The company said the creation of Canopy USA will help it reduce costs and tap into the U.S. market, which is projected to be more than $50 billion by 2026. Marijuana is not yet federally legal in the U.S.

“As the growth of the U.S. cannabis market continues rapidly at the state level, this strategy enables us to take control of our own destiny and capitalize on the once-in-a-generation opportunity in the largest cannabis market in the world,” said David Klein, CEO of Canopy Growth Corp.

Canopy said the move will allow it to complete its acquisition of New York-based Acreage Holdings, Colorado-based edibles specialist Wana Brands and California extracts maker Jetty. Those assets will be housed under Canopy USA.

Canopy’s shares closed up 27% Tuesday.

Spirits giant Constellation Brands, which acquired a stake in Canopy Growth in 2017 for $190 million, said it will convert its existing common shares in Canopy into new exchangeable shares, which it said will protect shareholder value while retaining its interest in Canopy through non-voting and non-participating shares.

Constellation said in a statement that the transition is aligned with its decision to focus on its core beer, wine and spirits businesses.

“We believe that the conversion of our ownership interest will maintain Constellation’s ability to realize the potential upside of our investment in Canopy,” said Constellation’s CEO and President Bill Newlands.