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Canopy Growth stock was up Thursday after the company announced a deal for the rights to acquire the U.S.’s Acreage Holdings. Other marijuana stocks saw gains Thursday morning, but several gave them back by mid-afternoon.

The announcement comes amid rising sentiment that the U.S. might soon take steps toward legalizing weed.

The back story. Canopy Growth (ticker: CGC) is one of the hottest pot stocks, gaining 60% in 2019 and nearly 80% from a year earlier. Its gains were helped by a multibillion-dollar investment last year from the brewer of Corona, Constellation Brands (ticker: STZ).

Because marijuana isn’t legal at the federal level in the U.S., companies that sell it for recreational consumption in states where it is legal can’t list on major U.S. exchanges. They often go to the Canadian Securities Exchange in Toronto (and the OTC Markets Group in the U.S.).

Canadian growers that sell only in their country can list in both Canada and the U.S. and attract investment from Fortune 500 companies. Canopy, for example, is dual-listed on the Toronto Stock Exchange and the New York Stock Exchange.

What's new. Canopy confirmed on Thursday what CNBC reported Wednesday night, that the company was nearing a deal to acquire Acreage Holdings and gain a foothold in the U.S. “Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” Canopy CEO Bruce Linton said.

The deal is valued at US$3.4 billion. Acreage will receive $300 million up front, ($2.55 per Acreage voting share) and will get the rest when Canopy exercises the ownership right—which the deal makes a requirement to do so at such time as cannabis production and sale becomes federally legal in the United States.

Analysts had speculated that the deal was a way for Canopy to lock in a price while U.S. companies are cheap.

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Cowen analyst Vivien Azer said in a note to clients on Wednesday that the news comes just as bipartisan legislation was reintroduced in Congress that would end federal interference in states that have legalized cannabis. One of the sponsors, Sen. Cory Gardner (R-Co.) had said President Trump “has been very clear to me that he supports our legislation.”

Shares of Canopy jumped 5.9% to $45.29 and Acreage stock (ACRGF) rose 1.3% to $22.64. Among other stocks in the sector Aurora Cannabis (ACB) was roughly flat at $8.96 and Cronos Group (CRON) was down 1.3% to $15.70. Constellation Brands (STZ) which owns a stake in Canopy was up 3.91% to $198.96

Looking ahead. Jefferies analyst Owen Bennett wrote in a note to clients Thursday morning before the deal was announced that it is “a big positive in our view.” He noted that “the U.S. is the world’s biggest market by far. If Canada-based growers want to become large-cap stocks, they need a U.S. presence.”

Still, Barron’s Bill Alpert has taken a cautious approach to marijuana stocks, especially U.S.-based growers.