'Scale Is Really the Thing' in Canopy Deal to Acquire U.S. Cannabis Company Acreage – Cheddar

Photo Credit: Richard Drew/AP/Shutterstock

April 18, 2019

Updated 21h ago

By Chloe Aiello

Canadian cannabis giant Canopy Growth announced on Thursday a major deal to acquire Acreage Holdings, a U.S. medical cannabis company whose board includes former U.S. House Speaker John Boehner. The blockbuster deal will effectively cement Canopy’s presence in the burgeoning U.S. marijuana industry ー but only after marijuana is legalized on the federal level.

“The deal isn’t done, done until cannabis is fully legal in the U.S., and of course we don’t know when that’s going to happen. But it’s all signed, and that’s just the trigger event,” said Debra Borchardt, co-founder, CEO and editor in chief of Green Market Report. “So it really is a done deal and we expect these stocks to really start to trade in lock with each other.”

Canopy Growth ($CGC), is the world’s largest legal cannabis producer. It currently trades on both the New York Stock Exchange and the Toronto Stock Exchange, and both exchanges ban listed companies from being involved in illegal industries. Because marijuana still illegal on a federal level in the U.S., Canopy is prohibited now from doing business in the U.S.

But that doesn’t mean Canopy and its other “big pot” contemporaries including Tilray ($TLRY), Cronos Group ($CRON), and Aurora Cannabis ($ACB) aren’t itching to get their claws into the U.S. cannabis industry, which is already projected to outshine Canada’s.

The Wall Street financial firm Cowen has estimated that the total adult use market in Canada generates about $4.5 billion to $5.3 billion in revenue, whereas the U.S. generates an estimated $50 billion, when including black market revenues.

“If Canopy Growth would have just taken [Acreage] on today, then that would have affected their listing here. But by doing it this way they’ve

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