Canopy Growth signs deal for U.S. edibles company Wana Brands

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TORONTO — Canopy Growth Corp. says it has signed a deal to secure the right to buy U.S. cannabis edibles company Wana Brands if the United States moves to allow THC federally.

Wana makes and sells cannabis gummies in Colorado and licenses its intellectual property to partners in several other states and in Canada.

Several U.S. states have legalized recreational cannabis use, but it remains illegal under federal law.

Under the agreement, the Smith Falls, Ont., cannabis company will make an upfront cash payment of US$297.5 million and acquire three call option agreements to acquire Wana entities Mountain High Products LLC, Wana Wellness LLC and the Cima Group LLC.

Upon the exercise of each call option agreement, Canopy Growth will make a payment equal to 15 per cent of the fair market value of the entity when the option is exercised. Canopy Growth may also make additional deferred payments as of the 2.5 and five-year anniversaries of the upfront payment.

The call option payments and the deferred payments may be made in cash, shares or a combination at Canopy’s discretion.

Companies in this story: (TSX:WEED)

 

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