Aug 17 (Reuters) - Canadian pot producer Tilray Inc on Tuesday said it will buy convertible debt of struggling U.S. rival MedMen Enterprises Inc's for about $166 million in a deal with partners, giving it a pathway to enter the United States.
Due to U.S. federal laws classifying marijuana as an illegal drug, companies not based in the country can not directly own a U.S. weed business. However, the Biden administration has promised reform, making Canadian producers hopeful they could operate in the country soon.
By buying convertible debt and warrants - which can be changed into shares later - Tilray gets the option to take a "significant equity position in MedMen... following U.S. cannabis legalization", it said in a statement.
Tilray shares rose 7% to $14.04 in aftermarket trading on the Nasdaq.
MedMen, once the largest U.S. cannabis company, put itself up for sale this year after years of growing losses and a string of scandals that led to lawsuits from former executives and investors.