Canadian cannabis producer Canopy Growth has signed an agreement with Canadian edibles manufacturer Indiva for the exclusive rights and interests to manufacture, distribute and sell in Canada edibles from Wana Brands, a leading edibles brand cannabis in North America.
The two companies also signed a manufacturing agreement that grants Indiva the exclusive right to manufacture and supply Wana Brands products in Canada for five years, with the option to renew the agreement for an additional five years upon mutual agreement. .
As part of the deal, Canopy Growth will purchase approximately 37.2 million shares of Indiva at a price of 5.79 cents per share, for a total consideration of nearly $2.2 million, giving it a 19.99% stake in Indiva.
Canopy said this was consistent with its “asset reduction” strategy.
At the end of this five-year period, the agreement can be renewed for another five years if both parties agree.
In 2020, Indiva obtained the exclusive right to produce and distribute Wana Brands products in Canada. In February 2021, this agreement was amended and extended for a period of five years.
That same year, Canopy announced that it had agreed to purchase Wana Brands pending federal legalization of cannabis in the United States.
If Canopy had exercised its option to purchase Wana prior to the conclusion of the Indiva-Wana Agreement, resulting in Wana terminating its agreement with Indiva, Indiva would have been entitled to receive termination compensation equal to four times the last three months of gross receipts from the sale of Wana products in Canada.
“Collectively, these agreements allow Canopy Growth to further own the Wana Brands value chain in Canada, while ensuring continuity of high-quality manufacturing and consistency with Canopy’s lean manufacturing strategy,” said David Klein, CEO of Canopy, in a statement.
“By better aligning our position as Wana’s owner across North America, we hope to accelerate the introduction in Canada of innovative products that have already proven extremely popular in the United States.”
Following the closing of the transaction, Canopy may appoint an observer to Indiva’s board of directors. The closing of the private placement is scheduled for June 6.
