'Canopy has just gone bigger than everyone else — they don't take small swings,' a cannabis CEO told Business Insider.
Bruce Linton, Founder and Co-CEO of Canopy Growth, speaks to CNBC on the floor of the New York Stock Exchange in New York, U.S., March 7, 2019., a US pot company, for $3.4 billion conditional on the federal legalization of marijuana in the US.
The structure of Canopy's deal could provide a framework for more of these cross-border mergers, and perhaps pave the way for the biggest consumer, tobacco, and pharmaceutical companies to enter the lucrative US cannabis market and spur a cannabis M&A boom, according to numerous cannabis CEOs, investors, and lawyers.
Flowering marijuana plants are pictured at the Canopy Growth Corporation facility in Smiths Falls, Ontario."There's never been another industry where you've had a federally illegal activity that's legal at the state level, and that is also fully legal in a neighboring country," said David Feldman, a partner at the law firm Duane Morris who leads the firm's cannabis practice group and was not involved on the deal.
While it's not clear whether the TSX or NYSE will change their policy — spokespeople from both exchanges declined to comment to Business Insider. Johnathan Sherman, a lawyer from the firm Cassels Brock that represented Canopy on the transaction, told Business Insider that the deal was in the works for over eight months and both exchange's regulators had been"looped in" to the discussions.
Master Grower Ryan Douglas smells a marijuana plant at Tweed Marijuana Inc in Smith's Falls, Ontario, February 20, 2014."The warrant will allow them to buy the entire company," said Miller. Both Slang's and Acreage's deals with Canopy are caveated that they're only exercisable upon a change in federal law, and"that immediately says right in black and white 'we're not going to do anything that goes offsides what the exchanges will allow," said Miller.
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