Canopy Growth to buy U.S. cannabis company Acreage Holdings but only if U.S. legalization happens

Canopy Growth Corp. has signed an agreement to buy U.S. company Acreage Holdings Inc in a deal valued at $3.4 billion US if cannabis becomes federally legal in the United States.

Bruce Linton, Canopy's chairman and co-chief executive, says the deal secures the company's entrance strategy into the United States as soon as a federally-permissible pathway exists.

Acreage owns licenses to operate or has management services agreements in place with license holders in 20 states, including pending acquisitions.

The companies said they will also execute a licensing agreement granting Acreage access to Canopy Growth's brands including Tweed and Tokyo Smoke, along with other intellectual property.

Under the deal, Acreage shareholders will receive an immediate payment of approximately US$2.55 per subordinate voting share or US$300 million.

Once cannabis becomes federally legal in the U.S. and Canopy exercises its right, it will pay an additional 0.5818 of a Canopy share for each Acreage subordinate voting share.