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Canopy Growth shareholders approve new exchangeable shares

EditorIsmeta Mujdragic
Published 04/15/2024, 08:01 AM
CGC
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SMITHS FALLS, ON - Canopy Growth (NASDAQ:CGC) Corporation (TSX: WEED) (Nasdaq: CGC) announced today that its shareholders have approved a special resolution to create a new class of non-voting exchangeable shares, marking a significant step in the company's strategy to enter the U.S. THC market. The vote took place at a special meeting on Friday, April 12, 2024, where a majority of 95.56% of votes cast were in favor of the amendment to the company's articles of incorporation.

The approval enables Canopy Growth to accelerate its presence in the U.S. market through its U.S.-domiciled holding company, Canopy USA, LLC. This entity holds the rights to acquire several U.S. cannabis investments, including Acreage Holdings (OTC:ACRGF), Inc., Wana Wellness, LLC, and Lemurian, Inc., known as Jetty. The acquisitions of Wana and Jetty are expected to be finalized in the second quarter of fiscal year 2025, with the Acreage acquisition anticipated by the end of fiscal year 2025.

Canopy USA's establishment is a tactical move to position Canopy Growth strategically within the U.S. THC market, which is projected to reach approximately $50 billion by 2026. The creation of exchangeable shares is part of a broader strategy that aims to leverage the company's U.S. cannabis assets without granting voting rights or dividend entitlements to the holders of these new shares.

David Klein, Chief Executive Officer of Canopy Growth, expressed optimism about the company's U.S. strategy following the shareholder vote. He highlighted the potential for immediate financial benefits, such as the removal of certain business deductions restrictions, which could enhance cash flow for the U.S. assets in question.

The exchangeable shares will not be publicly tradable on the TSX or NASDAQ but can be converted into common shares of Canopy Growth. Constellation Brands (NYSE:STZ), Inc., Canopy Growth's largest shareholder, is expected to convert its shares into exchangeable shares, and its nominees on the company's board are anticipated to resign following certain actions related to the investor rights agreement.

The information in this article is based on a press release statement from Canopy Growth Corporation.

InvestingPro Insights

In light of Canopy Growth Corporation's recent strategic developments, real-time metrics from InvestingPro paint a detailed picture of the company's financial health and market performance. As of the last twelve months leading up to Q3 2024, Canopy Growth has a market capitalization of approximately $707.75 million, underscoring its significant presence in the cannabis industry. Despite the challenges the company faces, including a revenue decline of 1.24% during this period, Canopy Growth has experienced notable price increases, with a strong return of 228.9% over the last month.

InvestingPro Tips suggest that while the company is quickly burning through cash and analysts do not anticipate profitability this year, there have been positive revisions in earnings estimates by three analysts for the upcoming period. This could indicate a potential shift in market sentiment or expectations of strategic pivots that may improve Canopy Growth's financial trajectory.

Moreover, it's important to note that Canopy Growth has been navigating through a period of high price volatility, which could be relevant for investors looking for short-term trading opportunities or those considering the long-term potential amidst the evolving U.S. cannabis market landscape. The company does not pay dividends, which may influence investment decisions for income-focused shareholders.

To gain a deeper understanding of Canopy Growth's financials and market potential, investors can explore additional InvestingPro Tips, with PRONEWS24 offering an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With a total of 11 additional tips available on InvestingPro, stakeholders can equip themselves with a comprehensive analysis to navigate the market effectively.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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