Buzz on the Bullboards: WEED announces $3.4B U.S. acquisition

Investors visit the Stockhouse Bullboards (naturally) to talk stocks. But they also come to the Bullboards to post and swap information with other investors. An example of the latter took place yesterday on the Bullboard of Aurora Cannabis Inc (TSX: ACB, NYSE: ACB, Forum), typically one of the largest Bullboard hubs on Stockhouse.

At 8:48 am (EDT), Stockhouse Member, Jonzeeee posted that U.S. Big Bank, Bank of America had initiated coverage of Aurora Cannabis as “a buy”. A few hours later, at 12:13 pm – also on the ACB Bullboard – NB1017 posted that BoA was already acting on its own advice: buying into both Aurora Cannabis and Canopy Growth Corp (TSX: WEED, NYSE: CGC, Forum).

Schaeffer’s Investment Research, which wrote the article Why Bank of America is Buying Weed Stocks ACB and CGC, noted that BoA is strongly bullish on both Aurora and Canopy Growth. Contrast this with the relentlessly negative slant towards the cannabis industry from both the Canadian and U.S. mainstream media – the subject of a new Stockhouse Editorial feature. Clearly Bank of America doesn’t find the media bias against cannabis persuasive.

Strangely, neither Aurora nor Canopy Growth moved much on this news yesterday.

ACB $11.95 up 1.1%
WEED $57.11 up 2.81%

Perhaps this is because Big Banks (on both sides of the Canada/U.S. border) are already well-represented among the institutional shareholders of WEED? Peruse a directory of Canopy Growth’s institutional shareholders and investors will find no less than 7 Canadian and U.S. Big Banks already with investments in Canopy Growth (prior to BoA’s investment). Several European Big Banks are also represented along with many other players in the financial industry.

Then we have the breaking news for this morning…

Canopy Growth signs deal to buy U.S. pot giant Acreage Holdings

This is moving the market (WEED was up over 10% in morning trading), and for obvious reasons. This is a $3.4 billion deal. It’s primarily equity-financed, but there is a cash component, including an immediate payment of US$300 million.

This also affects Canopy Growth’s strategic partner, Constellation Brands. It’s massive strategic investment in WEED conveys a veto right on acquisitions of this magnitude. Constellation has waived this veto, and Canopy Growth and Constellation Brands have released an amended agreement. A particular clause in that release will be especially interesting to cannabis investors.

If Canopy exercises its right to acquire the shares of Acreage and Constellation were to exercise all of their outstanding Canopy warrants, Constellation’s ownership in Canopy is not expected to exceed 50 percent. [emphasis mine]

This is not simply a big cannabis deal in absolute terms. This will change some people’s thinking about the entire dynamics of the cannabis sector. Some analysts and industry insiders have been outspoken in predicting that U.S.-based cannabis companies would overrun the Canadian industry – because of much larger scale – once the U.S. cannabis industry is fully opened up for commercialization.

However, this was always a major caveat. Political opposition to the full normalization of cannabis laws and cannabis commerce remains deeply entrenched within significant factions of the U.S. government. It could still be several (many?) years before this becomes a reality.

Canadian cannabis companies that are effectively already fully mobilized (and capitalized) were never going to just stand still, waiting to be eaten by a still-emerging U.S. cannabis industry. Canopy Growth’s acquisition of Acreage Holdings adds an exclamation point to this line of reasoning.

U.S. regulatory restrictions currently prevent WEED from actively entering the U.S. cannabis industry itself. But evolving U.S. cannabis laws – and NAFTA – make it inevitable that Canadian cannabis companies will be able to expand into the U.S. This means that much like (larger) multinational beverage companies have already been acquiring a significant foothold in Canadian cannabis, (larger) Canadian cannabis companies can and will do the same thing with respect to buying into the U.S. cannabis marketplace.

Cannabis is also once again front-and-center in the Canadian investing landscape, as Arcview’s annual cannabis investment conference in Vancouver is scheduled for April 23 – 25 at the Westin Bayshore. This year’s event: Canada and Cannabis Investing in the Wake of Legalization. This week’s news adds further relevance to this theme.

Almost exactly six months after recreational cannabis was legalized in Canada (October 17, 2018), this event should provide attending investors (accredited investors only) with a good snapshot of this emerging industry. Heading into the Arcview conference, here is where the attention of Stockhouse investors is currently focused when it comes to publicly listed cannabis companies.



Aphria Inc (TSX: APHA, NYSE: APHA, Forum) has wrestled top spot on the cannabis Bullboard leaderboard this week from Aurora, unfortunately not for positive reasons. APHA is off sharply in recent sessions, falling from its close of $13.41 on Friday, April 12th to close at $10.47 on April 17th.


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Aurora Cannabis (as noted) regularly shows up near the top of our cannabis Bullboard rankings. Below that, cannabis cultivator Village Farms International Inc. (TSX: VFF, NASDAQ: VFF, Forum) has become a regular fixture in the Top-6 following a very strong surge in its share price – covered in previous editions of Buzz.

FSD Pharma Inc (CSE: HUGE, OTCQB: FSDDF, Forum) was a cannabis high-flyer in 2018, and built up a strong following at Stockhouse last year. The Company has pulled back significantly since that time, but discussion is once again heating up on the Bullboard as investors debate whether FSD Pharma will return to an upward trajectory.

The last two companies in this week’s Top-6 cannabis stocks on our Bullboards belong to a couple of established names in Canadian cannabis that haven’t surfaced among Bullboard leaders for a while. Organigram Holdings Inc. (TSX: V.OGI, OTCQB: OGRMF, Forum) is the big name in cannabis in Atlantic Canada. After bottoming immediately after Christmas at $4.24, OGI has gone on a tear, more than doubling in value as of this writing ($8.78).


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The scenario is reversed for Namaste Technologies Inc (TSX: V.N, OTCQB: NXTTF, Forum). The Company has fallen a long way from its previous highs, as it has battled financial headwinds as well as some turmoil in management. Investors are presently digesting the latest news for Namaste, including a management cease-trade order.

With cannabis the current center of attention, this leads to our new Investor Pulse Poll. Six months after the full legalization of cannabis in Canada, we wanted to survey Stockhouse investors on their investment success in the cannabis space. Vote now on our new Poll, located as always on the Stockhouse homepage.



Last, but not least, here are the results from our previous Poll. Stockhouse investors have traditionally been small-cap investors. We wanted to check in with you to determine if anything had changed here. No surprises…



This week’s big news is in cannabis but follow Buzz regularly to get updates on the most popular stocks at Stockhouse across metals & mining, energy, technology, and healthcare. Readers wanting to review older editions of Buzz on the Bullboards can find those here.




FULL DISCLOSURE: FSD Pharma Inc. is a paid client of Stockhouse Publishing.