Canada’s Canopy agrees to pay $297 million for right to buy US marijuana edibles maker Wana

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Source: 123RF

(This developing story was last updated at 1:22 p.m. ET Thursday.)

Canopy Growth has struck a deal to buy leading U.S. edibles maker Wana Brands for $297.5 million in the latest wager by a large Canadian producer that the United States will eventually legalize marijuana.

Smiths Falls, Ontario-based Canopy said the proposed acquisition is conditioned on “federal permissibility of THC in the U.S.”

Boulder, Colorado-based Wana is the No. 1 cannabis edibles brand by market share in North America.

Through a licensing agreement with Ottawa, Ontario-headquartered Indiva, privately held Wana also controls most of the Canadian edibles market.

Canopy’s announcement comes as Canadian companies have been striking deals this year totaling hundreds of millions of dollars to position themselves in the fast-growing cannabis markets south of the border.

The Canadian deal-makers include Cronos Group, Organigram and Tilray.

U.S. companies involved in the transactions include MedMen Enterprises, PharmaCann and Colorado-based CBD company Balanced Health Botanicals.

Canopy said it entered into definitive agreements with Mountain High Products, Wana Wellness and The Cima Group, collectively known as Wana.

The Canadian company is paying $297.5 million upfront in cash for call options to acquire 100% of each of the three Wana entities.

Canopy would not immediately purchase Wana outright in order to comply with stock market rules that bar Canadian companies from investing in businesses that violate U.S. federal law.

Once the United States lifts the federal ban on marijuana, Canopy would make a payment equivalent to 15% of the fair-market value of the Wana entities – in cash, shares or a combination of both – at the time the options are exercised.

Canopy may make additional deferred payments to each Wana entity as of the 2½- and five-year anniversary of the initial cash payment.

Canopy will have no economic or voting interest in Wana until it exercises its rights to acquire each Wana entity.

“As we establish Canopy Growth as the world’s leading cannabis company, acquiring the #1 cannabis edibles brand in North America will serve to strengthen our market position in both Canada and the United States,” Canopy CEO David Klein said in a news release.

“The right to acquire Wana secures another major, direct pathway into the U.S. THC market upon federal permissibility, and in Canada we’ll be adding the top-ranked cannabinoid gummies to our industry-leading house of brands.”

Image of Nancy Whiteman
Nancy Whiteman

In the news release, Wana co-founder and CEO Nancy Whiteman said: “We have met many partners along the way over the past 11 years, but none have felt like the best and right fit until today.”

Canadian edibles sales amounted to 91.7 million Canadian dollars ($74.2 million) in the first half of 2021, according to new data released by Statistics Canada.

That means edibles, including beverages, accounted for just over 5% of all sales in the recreational market.

In a note to clients about Canopy’s plan to buy Wana, U.S. brokerage firm Cowen said it was “encouraged” by Canopy’s diversified strategy to enter the U.S. “with strong long-term footing upon federal permissibility given the more favorable operating environment relative to Canada.”

Cowen said Wana manufactures and sells gummies in Colorado, while licensing intellectual property in another 11 states:

“The deal is an attractive complement to (Canopy’s) existing positioning with (Acreage Holdings) and (TerrAscend) which, while they do have their own wholesale branding, also have retail footprints that Wana will likely leverage as the pure-play brand looks to further penetrate the New York and New Jersey markets.”

Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq exchange.

Matt Lamers can be reached at