Canadian cannabis giant to ingest Wana edibles brand for nearly $300M

Editor’s note: This article has been updated to include comments from a Wana Brands official.

BOULDER — Canopy Growth Corp. (TSX: WEED, Nasdaq: CGC), an Ontario, Canada-based cannabis brand umbrella company, has inked an agreement with Boulder’s Wana Brands to acquire the pot gummies maker for $297.5 million in cash and other considerations. 

The agreement gives Canopy call options to buy each of Wana’s three entities — Mountain High Products LLC, Wana Wellness LLC and The Cima Group LLC — for 15% of their fair market values at the time the option is exercised. Canopy can also make additional deferred payments upon certain anniversaries of the upfront payment.

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The call options give Canopy the right to acquire the entirety of Wana’s operations upon federal legalization of THC products in the United States, a move that Canada’s federal government has already made. 

While it remains to be seen when Congress will make a move toward nationwide legalization, leaders with both Wana and Canopy believe such a move is inevitable.

“A three-year timeline is a fairly common one” among discussions within industry circles, Wana chief marketing officer Joe Hodas told BizWest.

Until Canopy exercises its option upon federal legalization, Wana will continue to operate independently.

“Today’s announcement reflects the culmination of more than a decade of hard work, dedication and vision put forth by our employees and partners, as well as an unwavering commitment to the plant and our customers,” Wana CEO Nancy Whiteman said in a prepared statement. “We have long considered what the next phase of our growth might look like, and this deal is not only a great testament to our focus on bottom line growth and fiscal diligence, but also to the value we believe Wana can bring to Canopy and its shareholders now and in the future.”

Hodas said Canopy was attracted to Wana in part because it is able to license its products in multiple states and Canadian provinces.

Wana, which sells its products in Colorado, California, Arizona, Illinois, Michigan and Florida, ranks as North America’s top cannabis edibles company by market share. The company expects to have license agreements in place in more than 20 states, including large East Coast states such as New York that recently approved adult-use recreational marijuana, by the end of 2022. 

Canopy “understands brand loyalty,” Hodas said. “In an industry where there’s not a lot of brand loyalty, we have a tremendous amount.”

The Canopy deal is not expected to result in any major structural changes within the company and Wana is committed to its Boulder roots, Hodas said.

“Our Colorado presence is very appealing to them,” Hodas said of Canopy. “Colorado is our home, Boulder is our home — I don’t see that changing anytime soon or long term.”

Acquiring Wana, “the number one 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 prepared statement. “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. We’re confident in the future growth of the edibles category and the tremendous opportunities with Wana.”

Wana recently launched two new product lines, Wana Optimals Fit for weight loss and fitness, and Fast Asleep for nighttime use. Other new lines are in the development pipeline. 

“We take a lot of time on the R&D front, and I think Canopy really finds that appealing,” Hodas said. 

The Wana acquisition news sent Canopy’s stock into a tizzy Thursday morning, shooting up more than 7% during morning trading and closing the day up more than 3%.

Paul Hastings LLP is acting as U.S. legal counsel to Canopy Growth and Bryan Cave Leighton Paisner LLP is representing Wana in the acquisition process. 

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