Image of Nancy Whiteman

Nancy Whiteman, co-founder and CEO of Colorado-based cannabis edibles company Wana Brands, was the talk of MJBizCon in Las Vegas in October.

Attendees were abuzz about a deal in which Canadian cannabis producer Canopy Growth agreed to pay $297.5 million in cash upfront for the option to purchase Wana.

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The actual acquisition is conditional on the U.S. legalizing cannabis at the federal level.

The transaction raised some questions, however, including whether Wana had to wait to be paid the $297.5 million and what exactly was meant by federal legalization.

Whiteman said the Canopy deal made the most sense after studying different options for an exit strategy, including going public, teaming with a special purpose acquisition company (SPAC) for an initial public offering or courting private equity.

“This was a good fit to become part of something that was already established, that had deep resources, that shared our values,” Whiteman said.

“A partner that would help us grow – the kind of deal that I was looking for.”

MJBizDaily spoke with Whiteman about how the proposed acquisition came about, what she wanted in a partner and what this all means for the company in the near term.

What made you want to pull the trigger on this deal?

If you’re an independent brand, like Wana, you then have to also look at how is the market going to shift (with federal legalization).

One of my working assumptions is that distribution is going to become a lot more important. Dispensaries will not be the only game in town.

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There will be other ways to purchase THC products in the future.

So you start thinking about what kind of partner can bring distribution opportunities to the table.

And what kind of partner seems to be the type of organization that is investing in the industry for the long run who has the resources to really hang in there.

I was looking for a partner who shared that dual vision of the industry: that it could be both an effective alcohol replacement and recreational option, and it could be a driver for good on the health and wellness side.

We found from our discussions with Canopy that we were very aligned on that front. We also felt that Canopy had a certain level of business maturity.

Then with the investment from (alcohol giant) Constellation Brands, they also bring that financial resource.

And through Constellation they bring a partner who is very skilled at building premium brands, who has a lot of nontraditional cannabis distribution in their ecosystem.

Then we looked at who looks like they’re doing some interesting things, long term, to win in the United States.

Obviously, Canopy has made other investments, not just Wana. They have a similar relationship with Acreage; they’ve made a significant investment in TerrAscend.

So they have a number of interesting and strong brands, the Martha Stewart CBD brand; they have a number of brands that were of interest.

It really just seems like a very good fit for us.

Canopy said the proposed acquisition is conditioned on “federal permissibility of THC in the U.S.” What does that exactly mean? Is that as soon as there’s a vote or do regulations have to be in place? 

I’m going to have to leave that to greater legal minds than mine.

I don’t know exactly what that they will need in terms of what needs to be in place regulatorily or a vote or whatever to feel comfortable exercising the option.

Why structure the deal on that conditionality? Why not just sell right now?

So, Canopy is dual-listed. They’re listed both on the Toronto Stock Exchange (WEED) and on the Nasdaq (CGC).

The Nasdaq does not currently allow plant-touching companies in the United States. If (Canopy) directly owned Wana, they would be owning a plant-touching company.

And so that’s what prevents it.

Have you or Wana already received the upfront $297.5 million cash payment from Canopy? And if you have, do you have plans for it right now? Are you going to reinvest back into the business?

The simplest way to explain that is that Canopy really cannot make a direct or indirect investment into Wana.

And if I were to take the money and reinvest it into Wana, it would be actually an indirect investment on Canopy’s part into Wana.

So, no, I am precluded from reinvesting that money back into Wana.

But you did receive the cash payment when the deal was struck? 

Yes.

So what’s next now after this for you? Is it business as usual for a while? 

It is mostly business as usual. I’m remaining as the CEO. I remain the owner of the company, because this was an option to acquire, not an acquisition.

So we’re executing on our two major strategies, which we were executing on a month ago and we’re going to be executing on for a long period of time, which is to get to the best markets quickly and to focus on innovation and focus on R&D and next-generation products.

It doesn’t sound like you’re just going to be sitting on a beach with an umbrella in your drink.

No, no rest for the weary.

This interview has been edited for length and clarity.

Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.