Canopy Growth and Acreage Implement Amended Arrangement

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Canopy Growth Corporation Logo (CNW Group/Canopy Growth Corporation)

SMITHS FALLS, ON and NEW YORK, NY, Sept. 23, 2020 /CNW/ – Canopy Growth Corporation (“Canopy Growth“) (TSX: WEED) (NYSE: CGC) and Acreage Holdings, Inc. (“Acreage“) (CSE:ACRG.A.U, ACRG.B.U) (together, the “Companies“) are pleased to announce the implementation of Acreage’s previously announced amended arrangement under section 288 of the Business Corporations Act (British Columbia) with Canopy Growth (the “Amended Arrangement“).

Pursuant to the Amended Arrangement, Acreage’s articles have been amended to create new Class E subordinate voting shares (the “Fixed Shares“), Class D subordinate voting shares (the “Floating Shares“) and Class F multiple voting shares (the “Fixed Multiple Shares“). Each existing Class A subordinate voting share of Acreage (each, a “Subordinate Voting Share“) has been exchanged for 0.7 of a Fixed Share and 0.3 ‎of a Floating Share, each existing ‎Class B proportionate voting share (each, a “Proportionate Voting Share“) has been exchanged for 28 Fixed Shares and 12 Floating Shares and each existing Class C multiple share (each, a “Multiple Voting Share“) has been exchanged for 0.7 of a Fixed Multiple Share and 0.3 of a Floating Share.

The Fixed Shares and Floating Shares will begin trading on the Canadian Securities Exchange (the “CSE“) under the ticker symbol ACRG.A.U and ACRG.B.U, respectively, as of the opening of markets today.

“Thank you to the Acreage shareholders for voting in favour of this amended arrangement and for believing in the potential Canopy Growth can bring to their investment,” shared David Klein, Canopy Growth CEO. “We are encouraged by Acreage’s recent actions to improve the focus and financial performance of its business and begin building our brands in the U.S., through the introduction of the Tweed brand in several U.S. states. The amended arrangement provides Canopy the most efficient entryway into the U.S., once federally permissible, and we believe will continue to benefit shareholders of both companies over the long-term.”

“With today’s announcement, we look forward to continuing to build on our momentum to accelerate our pathway to profitability,” said Bill Van Faasen, Interim CEO of Acreage Holdings. “Canopy’s Tweed branded flower has been a success since our launch late last year, and we will continue to expand to new markets and introduce new products and form factors. We are also excited to develop our hemp division to meet consumer needs in what is expected to be a $10 billion market opportunity.”

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In accordance with the Amended Arrangement, upon ‎the occurrence (or waiver by Canopy Growth) of changes in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event“), Canopy Growth will, subject to the ‎satisfaction or waiver of certain closing conditions, acquire ‎all of the issued and outstanding Fixed Shares on the basis of 0.3048 of a common share of Canopy Growth (each, a “Canopy Growth Share“) per ‎Fixed Share (following the automatic conversion of the Fixed Multiple Shares and subject to adjustment ‎in accordance with the terms of the arrangement agreement entered into between Acreage and Canopy Growth on April 18, 2019, as amended on May 15, 2019 and on September 23, 2020 (the “Arrangement Agreement“).

In addition, Canopy Growth holds an option, exercisable at the discretion of Canopy Growth, to acquire all of the ‎issued and outstanding Floating Shares at the time that Canopy Growth acquires the Fixed Shares, for ‎cash or Canopy Growth Shares, as Canopy Growth may determine, at a price per Floating Share based ‎upon the 30-day volume-weighted average trading price of the Floating Shares on the CSE relative to the trading price of the Canopy Growth Shares at the time of the ‎occurrence or waiver of the Triggering Event, subject to a minimum price of US$6.41 per Floating Share. ‎

Holders of Acreage shares and certain securities convertible or exchangeable into Subordinate Voting Shares as of the close of business on September 22, 2020 (the “Record Date“), are entitled to receive approximately US$0.30 per share, being their pro rata portion (on an as converted to Subordinate Voting Share basis) of US$37,500,024 (the “Upfront Payment“) paid by Canopy Growth. It is expected that the Upfront Payment will be distributed to such holders of record within three business days. Shareholders of Acreage as of the Record Date with questions regarding the Upfront Payment should contact their broker for additional information.

In addition, in connection with the Amended Arrangement, a subsidiary of Canopy Growth has advanced US$50 million to Universal Hemp, LLC (“Hempco“), a subsidiary of Acreage, pursuant to the terms of a secured debenture (the “Debenture“). In accordance with the terms of the Debenture, the funds cannot be used, directly or indirectly, in connection with or for any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States. An additional US$50 million may be advanced pursuant to the Debenture subject to the satisfaction of certain conditions by Hempco. The Debenture bears interest at a rate of 6.1% per annum, matures 10 years from the date hereof or such earlier date in accordance with the terms of the Debenture and all interest payments made pursuant to the Debenture are payable in cash by Hempco. The Debenture is not convertible and is not guaranteed by Acreage.

Acreage will continue to operate as a stand-alone entity and to conduct its business independently, subject to compliance with certain covenants contained in the Arrangement Agreement. 

Additional Details

For more information about the Amended Arrangement please see the Acreage proxy statement and management information circular dated August 17, 2020 (the “Circular“) which was filed with the United States Securities and Exchange Commission (the “SEC“) and is available on the EDGAR website at and under Acreage’s profile on SEDAR at

In order to receive Fixed Shares and Floating Shares in exchange for Subordinate Voting Shares, Proportionate Voting Shares or Multiple Voting Shares, Acreage registered shareholders must complete, sign, date and return the letter of transmittal that was previously mailed to each Acreage shareholder (the “Letter of Transmittal“). The Letter of Transmittal was filed with the SEC and is available on the EDGAR website at and under Acreage’s profile on SEDAR at For those Acreage shareholders whose shares are registered in the name of a broker, investment dealer, bank, trust company, trust or other intermediary or nominee, they should contact such nominee for assistance in depositing their Subordinate Voting Shares, Proportionate Voting Shares or Multiple Voting Shares and should follow the instructions of such intermediary or nominee. 

The Companies intend to update their respective shareholders by press release of the ‎following key milestones: (i) the occurrence or waiver of the Triggering Event; (ii) the proposed effective date for the acquisition of the Fixed Shares and, if applicable, the Floating Shares; (iii) material developments ‎relating to the Amended Arrangement; and (iv) material regulatory developments in the United States. 


Cassels Brock & Blackwell LLP and Paul Hastings LLP acted as legal counsel to Canopy Growth. Ernst & Young LLP (EY) acted as tax advisors to Canopy Growth. 

DLA Piper (Canada) LLP and Cozen O’Connor acted as legal counsel to Acreage. Foros acted as financial advisor to the Acreage board of directors and Eight Capital provided a fairness opinion to the Acreage special committee. Wildeboer Dellelce LLP acted as legal counsel to the Acreage special committee.

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