Canadian government reviewing Constellation’s deal with marijuana firm Canopy

The Canadian government will take a closer look at a deal that could give global liquor giant Constellation Brands control over Canadian cannabis leader Canopy Growth, but analysts doubt the pending transaction will be held up for any significant amount of time.

“We can confirm that U.S.-based Constellation Brands Inc.’s proposed investment in Canopy Growth Corporation is subject to review under the Investment Canada Act,” Hans Parmar, spokesman for Innovation, Science and Economic Development Canada, told the Financial Post newspaper.

He said the proposed acquisition will be reviewed on its merits based on the overall economic benefit for Canada, “like all foreign investment transactions.”

It is thought to be the first cannabis-related investment to be scrutinized under the Investment Canada Act.

The Act provides that the acquisition of any Canadian company by a foreign entity is reviewable if the enterprise value is more than 1.5 billion Canadian dollars.

Constellation said last week it planned to significantly increase its ownership in Canopy Growth by investing an industry-record CA$5 billion ($3.8 billion) to make the marijuana titan its exclusive global marijuana partner.

Constellation has an option to increase its ownership in Canopy to more than 50%.

Matt Maurer of Toronto-based Torkin Manes cannabis law group stressed that the government’s review of this transaction has nothing to do with the fact it is a cannabis deal, nor does it have anything to do specifically with Canopy or Constellation.

“With 2½ months to go until the scheduled closing of the transaction, I suspect that it would be unlikely that the government’s review would hold up the transaction,” Maurer said.

“Indeed, both Canopy and Constellation would have been aware that the size and nature of this transaction would trigger the review process and, with that knowledge, still set a closing date for October 2018.”

The planned investment – scheduled to close this fall – also marks the entry of Wall Street giants Goldman Sachs and Bank of America Merrill Lynch into the cannabis industry.

Goldman advised Constellation; Bank of America Merrill Lynch is providing the financing for the transaction.

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9 comments on “Canadian government reviewing Constellation’s deal with marijuana firm Canopy
  1. awesomesound on

    There is so much wrong with Americans profiting from Canadian Cannabis The only reason Canadian producers can’t trade on the market is bc they are all listed as medical Co. It is illegal for Americans to profit from weed, while Canadians get a border ban for admitting weed use!

    Reply
    • Robert Hebel on

      It’s screwed up that having a fda and dea make current business impossible but saying it’s wrong for America to profit from a Canadian pot company that was financed illegally threw the bank of Montreal while cannabis was just as illegal incanada at that time Australia makes money on pot coming from Canada amount othes . Pot wasn’t discovered by a Canadian in fact more pot was smoked at Woodstock that one summer than has been in Canada to date let alone the American Indians. No body forced money in anyone’s pockets . The only thing a American company did was help speed up the full legalization in Canada who has no obstacles at all . Canada should be happy for the headstart and help if it wasn’t for America there wouldn’t be enough people incanada for 200 Canadian companies to be in business and grow the Canadian job market. It’s pot not political or personal is it ??

      Reply
  2. Mark on

    Not sure the foundational rationale nor point trying to be made in above comment.
    Bottomline, US cannabis and other interested co invest in canadian co because their industry amd market opportunities open globally through relaxed imort/export regs in comparison to US. The opportunity for cannabis biz expansion is very limited here.
    This is simply a way for a global liquor co to get into the cannabis biz on a global scale.
    Also canapy needs the money. They sitting on 500000 pounds of damaged mj; and that will signifinantly hit their top and bottomline in lack of ability to procrss and market.

    Reply
    • Robert Hebel on

      All stz is doing is being the first big company to put their company name and image on pot unlike the secret Canadian banks hiding behind capital investment dummy corps the other thing to be greatful for is Canada’s mysterious lack of insider strader laws buy just on pot . The only one that is stopping Canadian cannabis companies is the Canadian govt. that after all the secrets and only seeing things that would hurt the Canadians govt bottom line J.T. Is the other angle that Jeff sessions can’t slow down . It’s pot it’s becoming legal canopy unlimited room for froth isn’t a chocolate factory it’s about a mile from the Canadian USA border by stopping aphria and others to invest in USA pot companies your helping the USA and going to do exactly what Canadian govvt most fears loosing the strong hold

      Reply
  3. Annie on

    Crazy. Weed is illegal in US but the banksters can finance a corp doing biz in Canada… Big money! Yet a Colorado company can’t use the US banking system for loans. What a scam

    Reply

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