Canopy Growth in Market Exclusive article Canadian cannabis giant Canopy Growth Corporation (NASDAQ: CGC) announced its decision to fully acquire Acreage Holdings, Inc. (OTC: ACRHF), a major U.S. marijuana operator, through its U.S. subsidiary, Canopy USA. This acquisition, which is anticipated to be finalized by mid-2025, marked a significant milestone in Canopy’s strategy to expand its footprint in the evolving U.S. cannabis market.
The acquisition will proceed in two stages. Initially, Canopy USA will acquire Acreage’s floating shares as per an October 2022 agreement. Subsequently, it will acquire the fixed shares under the original April 2019 agreement, which was amended in 2020. The combined transactions will result in Canopy USA owning 100% of Acreage.
Canopy Growth’s pursuit of Acreage began in April 2019, initially valuing the deal at $3.4 billion, contingent on the federal legalization of cannabis in the U.S. However, in 2020, the deal was restructured, reducing the valuation to $900 million to provide Canopy more flexibility to explore other U.S. market opportunities.
Despite this strategic acquisition, Acreage faces significant financial hurdles. As of March 31, Acreage reported $7.3 million in cash against $365.2 million in liabilities, along with an accumulated deficit of $775 million. The company has also defaulted on multiple debt payments. Canopy aims to resolve these issues through this acquisition, which includes a debt restructuring deal involving a $99.8 million acquisition of Acreage’s outstanding debt in exchange for $69.8 million in cash and the discharge of $30.1 million held in escrow.
This acquisition is part of Canopy’s broader strategy to capitalize on the growing U.S. cannabis market, which has seen significant regulatory shifts toward legalization.
Analysts have mixed opinions on the acquisition. Some view it as a necessary move to solidify Canopy’s position in the U.S. market, while others, are cautious, suggesting that Canopy may have a difficult task trying to turn around Acreage’s financial struggles. Despite these concerns, Canopy remains confident in its strategy and the potential of the U.S. cannabis market.