Broadens Canopy Growth's Portfolio of Premium
Brands with Significant Opportunities to Scale Across North
America
SMITHS
FALLS, ON and OAKLAND,
Calif., May 18, 2022 /PRNewswire/ - Canopy Growth
Corporation ("Canopy Growth" or "the Company") (TSX: WEED) (NASDAQ:
CGC) and Lemurian, Inc. ("Jetty"), a California-based producer of high-quality
cannabis extracts and pioneer of clean vape technology, announced
today that they have entered into definitive agreements (the
"Agreements") providing Canopy Growth, by way of a wholly-owned
subsidiary ("Canopy Sub"), the right to acquire, upon federal
permissibility of THC in the U.S. or earlier at Canopy Growth's
election, up to 100% of the outstanding capital stock of Jetty.
Founded in 2013, Jetty is a top 10 cannabis brand in
California1, and a top
5 brand in the Vape Category2. Backed by award-winning
technology, Jetty has paved the way for the most authentic and
natural vape experience available to consumers. As a leader in
solventless vape and a pioneer of extraction-related intellectual
property (IP), Jetty has achieved strong growth over the past two
years while generating positive EBITDA amidst the highly
competitive California cannabis
market.
These Agreements present Jetty with potential opportunities to
collaborate across Canopy's robust U.S. THC ecosystem, which
already includes the right to acquire both Acreage Holdings, Inc.
and Wana Brands, as well as a
significant conditional ownership interest in TerrAscend Corp. The
two companies are also exploring avenues through which Jetty could
bring the brand and its innovative product line up to the Canadian
recreational market to fully realize the North American,
cross-border potential of Jetty's industry leading IP.
Strategic Benefits
- Further Accelerates the Growth of the Company's U.S. THC
Ecosystem: Through these Agreements, Canopy Growth continues to
develop its robust U.S. ecosystem by adding an established cannabis
brand that is the market share leader in solventless vapes, holding
more than 75% share of the rapidly expanding California market3 with monthly
sales growing by over 45% from February to March 20224. This strategic investment
is aligned with Canopy Growth's U.S. THC strategy and will help
position the Company to unlock the full potential of the U.S.
market upon exercise of the options granted under the
Agreements.
- Extraction Technology: Jetty has developed
industry-leading capabilities in extraction and clean vape
technology. As one of the first brands to bring to market a vape
free of fillers and cutting agents, Jetty has built on that legacy
with the 2021 launch of its solventless vape and concentrate
collection, made from just ice, water, heat, and pressure. Their
products have received critical acclaim winning Best Vape at the
2021 Cannabis Cup, in addition to consumer success with the top
eight solventless vape SKUs in California and the #1 PAX® Era® pods brand
three years in a row5.
- Establishes a foothold in the Largest U.S. THC
Market: Jetty is a beloved California brand and upon
exercise of the options granted under the Agreements, would give
Canopy Growth a critical position in the largest and most
historically significant THC market in the U.S. Jetty's established
presence as the fifth largest vape brand in the California market is supported by nine years
of operations and serving cannabis consumers with unrefined live
resin, high THC distillate vapes, infused pre-rolled joints and
solventless vape products.
"Canopy Growth is building a house of premium cannabis brands
with a focus on the core growth categories that will power the
market's path forward, now including Jetty - a pioneer of
solventless vapes," said David
Klein, CEO, Canopy Growth. "There are significant
opportunities for Jetty to scale at the state-level across the U.S.
by leveraging Canopy's U.S. ecosystem, and we're actively working
on plans to bring the brand to the Canadian recreational
market."
"Jetty has put the consumer at the heart of our focus since the
outset, and we're proud to have pioneered the cleanest vape
technology on the market. This agreement between Canopy Growth and
Jetty is mutually beneficial and provides long-term growth
opportunities for our employees and our brand. Canopy shares our
vision and will support us as we bring the highest-quality Jetty
products to consumers across North
America and the world. We can't wait to be a part of what
Canopy is building as we continue to define the future of cannabis
and introduce more consumers to what makes Jetty products so
special," said Ron Gershoni,
Co-Founder and CEO, Jetty. "Along with founding members
Nate Ferguson and Rob Ferguson, we look forward to continuing to
lead our team at Jetty and working alongside the team at Canopy to
further expand our brand."
Transaction Details
The Agreements are structured as two separate option agreements
whereby Canopy Growth has a call option to acquire up to 100% of
the equity interests in Jetty.
Under the Agreements, Canopy Growth will make aggregate upfront
payments in the amount of approximately USD$69 million payable through a combination of
cash and Canopy Growth common shares, a majority of which will be
Canopy Growth common shares, in exchange for approximately 75% of
the equity interests in Jetty, subject to certain adjustments.
Upon exercise of the rights to acquire up to 100% of the equity
interests in Jetty covered by the first option agreement, Canopy
Growth will make an additional payment pursuant to the terms of the
Agreements, also to be satisfied through a combination of cash and
Canopy Growth common shares.
Until such time as Canopy Sub elects to exercise its rights to
acquire Jetty, Canopy Growth and Canopy Sub will have no direct or
indirect economic or voting interests in Jetty, Canopy Growth and
Canopy Sub will not directly or indirectly control Jetty, and
Canopy Growth and Canopy Sub, on the one hand, and Jetty, on the
other hand, will continue to operate independently of one
another.
Counsel
Paul Hastings LLP is acting as U.S. legal counsel to Canopy
Growth. Cassels Brock &
Blackwell LLP is acting as Canadian legal counsel to Canopy Growth.
Raines Feldman LLP is acting as legal counsel to Jetty.
About Canopy Growth
Canopy Growth (TSX:WEED, NASDAQ:CGC) is a world-leading
diversified cannabis and cannabinoid-based consumer product
company, driven by a passion to improve lives, end prohibition, and
strengthen communities by unleashing the full potential of
cannabis. Leveraging consumer insights and innovation, we offer
product varieties in high-quality dried flower, oil, softgel
capsule, infused beverage, edible, and topical formats, as well as
vaporizer devices by Canopy Growth and industry-leader Storz &
Bickel. Our global medical brand, Spectrum Therapeutics, sells a
range of full-spectrum products using its colour-coded
classification system and is a market leader in both Canada and Germany. Through our award-winning Tweed and
Tokyo Smoke banners, we reach our adult-use consumers and have
built a loyal following by focusing on top quality products and
meaningful customer relationships. Canopy Growth has entered into
the health and wellness consumer space in key markets including
Canada, the United States, and Europe through BioSteel sports nutrition, and
This Works skin and sleep solutions; and has introduced additional
hemp derived CBD products to the United
States through our First & Free and Martha Stewart CBD
brands. Canopy Growth has an established partnership with Fortune
500 alcohol leader Constellation Brands. For more information visit
www.canopygrowth.com.
About Jetty Extracts
Founded in 2013, Jetty is one of the true originals in the
California cannabis market. Jetty
began its operations in San Diego
with a focus on craft and innovation while applying a strict
adherence to compliance, fiscal responsibility, environmental
concerns, and community commitment (with a little time for some
surfing in between). Today, Jetty's 65-plus employees work at the
company's 14,000 sq. ft. Oakland headquarters and various other
locations throughout California.
The company continues to focus on its state-of-the-art production
facility, utilizing the latest technology to create
industry-leading extracts including award-winning Solventless Vape,
Live Resin Vape, and other products. Jetty also founded and
operates The Shelter Project, a need-based program that has
provided over $1 million worth of
free cannabis products to cancer patients. To learn more about
Jetty subscribe to our newsletter at JettyExtracts.com.
Notice Regarding Forward-Looking
Information
This news release contains "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and "forward-looking information"
within the meaning of applicable Canadian securities legislation.
Often, but not always, forward-looking statements and information
can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "estimates", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved. Forward-looking statements or
information involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Company or its subsidiaries to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements or
information contained in this news release. Examples of such
statements include statements with respect to the closing of the
transaction, the benefits of the transactions, future expansion of
the Jetty brand into additional markets, and the timing of the
payments under the Option Agreements.
Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results,
performance, prospects and opportunities to differ materially from
those expressed or implied by such forward-looking information,
including the timeline for federal permissibility in the United States, the integration of the
businesses and the ability to achieve the anticipated synergies
contemplated by the transaction; inherent uncertainty associated
with projections; the diversion of management time on
transaction-related issues; expectations regarding future
investment, growth and expansion of operations; regulatory and
licensing risks; changes in general economic, business and
political conditions, including changes in the financial and stock
markets; risks related to infectious diseases, including the
impacts of the Covid-19 pandemic; legal and regulatory risks
inherent in the cannabis industry, including the global regulatory
landscape and enforcement related to cannabis, political risks and
risks relating to regulatory change; risks relating to anti-money
laundering laws; compliance with extensive government regulation
and the interpretation of various laws regulations and policies;
public opinion and perception of the cannabis industry; and such
other risks contained in the public filings of the Company filed
with Canadian securities regulators and available under the
Company's profile on SEDAR at www.sedar.com and
with the United States Securities and Exchange Commission through
EDGAR at www.sec.gov/edgar, including the Company's
annual report on Form 10-K for the year ended March 31, 2021.
In respect of the forward-looking statements and information,
the Company has provided such statements and information in
reliance on certain assumptions that they believe are reasonable at
this time. Although the Company believes that the assumptions and
factors used in preparing the forward-looking information or
forward-looking statements in this news release are reasonable,
undue reliance should not be placed on such information and no
assurance can be given that such events will occur in the disclosed
time frames or at all. Should one or more of the foregoing risks or
uncertainties materialize, or should assumptions underlying the
forward-looking information prove incorrect, actual results may
vary materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although the Company
has attempted to identify important risks, uncertainties and
factors which could cause actual results to differ materially,
there may be others that cause results not to be as anticipated,
estimated or intended. The forward-looking information and
forward-looking statements included in this news release are made
as of the date of this news release and the Company does not
undertake any obligation to publicly update such forward-looking
information or forward-looking information to reflect new
information, subsequent events or otherwise unless required by
applicable securities laws.
______________________________
|
1 Based on
March 2022 BDSA data for dollars sold for all product
categories
|
2 Based on
March 2022 BDSA data for dollars sold for all product
categories
|
3 Based on
year-to-date BDSA data for dollars sold of rosin cartridges through
March 2022
|
4 Based on
BDSA data for dollars sold of rosin cartridges in February and
March 2022
|
5 Based on
BDSA data for dollars sold from 2019 through 2021
|
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SOURCE Canopy Growth Corporation