Canopy Growth acquires Acreage and KeyLeaf Life Sciences, plans higher growth margins and cannabis beverage plant
Canopy Growth is one of the biggest cannabis companies in the world at this point — the Canadian company has been steadily picking up resources and making deals to take advantage of Canadian legalization (and obviously has its eye on legalization in the US, eventually). The company made a whole bunch of news this week, and also had an investor call, revealing more of their future plans.
First, they finalized their acquisition of Acreage Holdings, a Canadian cannabis investment firm. Acreage’s shareholders approved the deal unanimously, making it clear that they are placing a full bet on Canopy to guide the ship. Acreage already operates with 80 licenses in the US across 20 states, and it will take charge on Canopy’s deals and development in Canada’s neighbor to the south. Acreage says it isn’t worried about whether or not the US will legalize — the company is big enough that it can wait out any legislative battles, and the big question is whether Canopy wants to focus on North America or head to the global stage.
Canopy also picked up a company called KeyLeaf Life Sciences, which runs a series of extraction facilities, including a science facility in Illinois (where legalization is going into effect in January). KeyLeaf has already been working to scale up Canopy’s facilities, and Canopy actually took control of KeyLeaf in November of last year.
Finally, on the financial call this week, Canopy shared two hints at where it’s headed in terms of strategy. First, the company says its gross margin took a tip this past year, from 34% to just 16% of net revenue, but that’s less a sign of performance, and more a sign that the company is spending a ton of money building up infrastructure and ramping up scale. Canopy says it’s headed for gross margin to be 40% at the end of this fiscal year, and that’s while its revenue is shooting up as well. That’s pretty amazing growth.
The company is also planning to roll out a cannabis beverage facility in Canada — the paperwork is set to be signed by the end of the month, and they’re rolling in equipment in August and hoping to be ready for production by September. Cannabis beverages and edibles aren’t legal in Canada yet, but they’re expected to be approved by around that time.
The development of this company has been just phenomenal, and by all accounts, they’re still just getting started. We’ll continue to watch as they grow and scale up, getting prepared to have product ready and available when the laws allow it to arrive.