Canopy inks option deal to buy CA cannabis extractor for at least $69M

Smiths Falls, Ontario’s Canopy Growth Corp. entered a deal giving it the right to buy California-based Jetty Extracts for at least $69 million (89 million Canadian dollars) in cash and stock.

The transaction is contingent on federal legalization of marijuana in the United States.

Canopy said in a news release it will have no economic or voting interests in Jetty until it elects to exercise its rights to acquire the cannabis extracts business.

The deal is structured as two separate option agreements, which give Canopy a call option to acquire up to 100% of the equity interests in Jetty.

If Canopy exercises the rights to acquire up to 100% of Jetty’s equity, the Canadian company said, it will make an additional payment of cash and stock.

The specific payment was not stated.

Canopy previously inked two similar deals that give the Smiths Falls company the right to acquire cannabis multistate operator Acreage Holdings and edibles maker Wana Brands when marijuana prohibition ends in the U.S.

“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,” Canopy CEO David Klein said a statement.

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“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.”

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