As was discovered last night by many sector followers, Canopy Growth Corp (TSX: WEED) (NYSE: CGC) this morning announced a partnership with Canadian icon Drake. The partnership will see Drake take control of a previously wholly owned Canopy Growth facility as part of a wider branding and royalty agreement between the two parties.
Under the terms of the agreement, Drake will become a 60% owner in a previously wholly owned Scarborough, Ontario cultivation facility. The transaction will take the form of a share transfer to certain entities owned by Drake. Renamed to that of More Life Growth Company, the facility is fully licensed by Health Canada and is currently operational. Canopy will continue to manage the day to day and maintenance operations of the facility, and will have all rights to distribute product grown at the facility.
As a result of receiving majority ownership in the firm, Drake will grant the More Life Growth Company the rights to certain intellectual property and branding to be used for the manufacturing and sale of cannabis products and accessories, both in Canada and internationally. The renewal of international branding rights in 18 months however will be contingent upon certain performance milestones being met.
The More Life Growth Company will then sublicense those brands to Canopy Growth in exchange for undisclosed royalty payments. The sublicense grants exclusivity to Canopy Growth within Canada, while also providing the right for Canopy to extend licensing internationally.
The two parties have also entered numerous investor and shareholder rights agreements in relation to the More Life Growth Company, enabling Canopy to elect two directors to the board. Canopy also maintains a right to maintain its ownership percentage in the firm.
No financial details were released in conjunction with the partnership announcement.
Canopy Growth Corp closed yesterdays session at US$19.42 on the New York Stock Exchange.
Information for this briefing was found via Sedar and Canopy Growth Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
