Canopy Growth Corporation (TSX: WEED, NASDAQ: CGC) has announced the results of its special meeting of shareholders, which took place on April 12, 2024. At the meeting, a total of 32,250,578 common shares were voted, representing 35.40% of the issued and outstanding shares of the company. Shareholders passed a special resolution to authorize an amendment to the company’s articles of incorporation, which included the creation and authorization of a new class of non-voting and non-participating exchangeable shares in the capital of Canopy Growth.
The detailed results of the vote at the meeting showed that 30,818,252 votes were cast in favor of the amendment proposal, accounting for 95.56% of the total votes cast. Additionally, 1,313,601 votes were cast against the proposal, representing 4.07% of the total votes cast. There were 118,725 abstentions, accounting for 0.37% of the total votes.
Following the successful shareholder vote, Canopy Growth's CEO, David Klein, expressed that the company's Canopy USA strategy is advancing, poised to make Canopy the first and only U.S. listed cannabis company, and offering shareholders unique exposure to the rapid growth of the U.S. cannabis market.
Canopy USA is expected to move quickly to acquire its U.S. assets in Wana, Jetty, and Acreage, with the company anticipating to begin highlighting Canopy USA’s financial performance to its shareholders later in the year.
The company’s Canopy USA strategy, announced in October 2022, aims to accelerate its entry into the U.S. cannabis industry and unlock the value of its full U.S. cannabis ecosystem. Canopy USA holds the company’s U.S. cannabis investments, enabling it to exercise rights to acquire Acreage, Mountain High Products, Wana Wellness, and the Cima Group, as well as Lemurian, Inc. Canopy Growth is expected to deconsolidate the financial results of Canopy USA and have a non-controlling interest in the company, which will be accounted for as an equity method (fair value) investment.
The strategy is intended to fast-track entry into the U.S. cannabis market, establish a leading, brand-focused powerhouse, realize financial benefits through revenue and cost synergies within Canopy USA, and highlight the value of Canopy’s U.S. THC investments.
With the amendment proposal approved, the company is expected to create and authorize the issuance of an unlimited number of exchangeable shares. Additionally, following the creation of the exchangeable shares, Constellation Brands, Inc. (CBI), Canopy Growth's largest shareholder, is expected to convert its shares into exchangeable shares. Moreover, Canopy USA is expected to exercise its options and acquire Acreage, Wana, and Jetty, with the acquisitions of Wana and Jetty anticipated to be completed in the company’s Q2 FY2025, and the acquisition of Acreage expected to be completed by the end of Canopy Growth’s FY2025.
It is important to note that the exchangeable shares will not be publicly tradable on the TSX, NASDAQ, or on any stock exchange. Shareholders of Canopy Growth may elect to convert all or part of their shares into non-trading exchangeable shares, and holders of exchangeable shares may elect to convert all or part of their exchangeable shares into common shares. Following these announcements, the company's shares moved -2.1%, and are now trading at a price of $6.56. For more information, read the company's full 8-K submission here.
