Canopy stockholders OK share structure for US marijuana holding company

Shareholders of Canadian cannabis company Canopy Growth Corp. have voted in favor of a new exchangeable share structure meant to enable Canopy’s planned entry into the American marijuana market via a U.S.-domiciled holding company, Canopy USA.

Canopy shareholders voted 95.5% in favor of the plan during a Friday meeting, according to a Monday news release.

The new share structure will allow Canopy to issue “an unlimited number of a new class of non-voting and non-participating exchangeable shares” without voting or dividend rights, which can be converted into common Canopy shares.

Canopy USA will then exercise options to acquire Canopy’s existing U.S. cannabis assets, including Acreage Holdings, Jetty Extracts and Wana Brands.

“Canopy Growth is expected to deconsolidate the financial results of Canopy USA and have a non-controlling interest in Canopy USA,” the company said in a statement.

“With this successful shareholder vote complete, our Canopy USA strategy is advancing and is poised to make Canopy the first and only U.S. listed cannabis company offering shareholders unique exposure to the rapid growth of the U.S. cannabis market,” Canopy CEO David Klein said in a statement.

“Canopy USA can now move quickly to acquire its U.S. assets in Wana, Jetty, and Acreage, and we expect Canopy Growth to begin highlighting Canopy USA’s financial performance to our shareholders later this year.”

Klein added that Canopy is “cautiously optimistic that cannabis will be moved (from Schedule 1) to Schedule (3) in the near-term,” which would boost cash flow for Wana, Jetty and Acreage.

Canopy also said that combining its U.S. assets under the Canopy USA umbrella “is expected to generate revenue and cost synergies.”

The shareholder approval comes roughly a year and a half after Canopy first announced its plan to create the Canopy USA holding company.

The special shareholder meeting Friday was announced alongside Canopy’s third-quarter earnings in February.

The Canopy USA plan has faced hurdles from both the Nasdaq stock exchange and the U.S. Securities and Exchange Commission.

Canopy shares trade as CGC on the Nasdaq and WEED on the Toronto Stock Exchange.