Canopy to fast-track entry into U.S. market

Canopy Growth Corp. ‘s U.S.-listed shares
CGC,
-4.18%
WEED,
-2.78%
rose 3.9% in premarket trades on Tuesday after the Canadian cannabis company announced a plan to consolidate its U.S. cannabis assets into a new holding company called Canopy USA. The holding company has an exchangeable share structure that is designed to trigger full ownership of U.S. cannabis investments and take advantage of U.S. cannabis market opportunities. Canopy USA will house Acreage Holdings Inc.
ACRHF,
+4.93%,
Wana and Jetty and allow Canopy to exercise rights to own 100% of the companies. Third-party investors will hold 100% of the common shares of Canopy USA, the company said. Canopy Chief Executive David Klein said the company expects the U.S. market to be worth more than $50 billion by 2026. Constellation Brands Inc.
STZ,
+2.04%,
which invested $4 billion in Canopy when Canada fully legalized cannabis for adult use in 2018, said it will convert its common stock holdings into new exchangeable shares, which will allow it to protect its own shareholder value, while retaining an interest in Canopy in non-voting and non-participating shares. That will allow the drinks giant to focus on its core beer, wine and spirits business. Constellation CEO Bill Newlands said the deal will allow the liquor company to “further reinforce our intent to not deploy additional investment in Canopy aligned with [the company’s] previously stated capital allocation priorities.” Shares of Constellation Brands are down 8.5% in 2022, compared to a loss of 20.3% by the S&P 500 [s spx], while Acreage shares have lost 61% of their value this year, compared to a 59% drop by the AdvisorShares Pure US Cannabis ETF
MSOS,
-4.63%.