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by Stockwatch Business Reporter

The S&P/TSX Cannabis Index lost 6.74 to 165.26, while the CSE Composite Index lost 9.01 to 661.55. Cannabis-focused venture capital firm Canopy Rivers Inc. (RIV) shot up 28 cents to $1.20 on 4.81 million shares, after having its shackles removed by Canopy Growth Corp. (WEED), down 45 cents to $32.83 on 1.01 million shares. The two companies have announced a complex transaction whereby Canopy Growth will sell its shares in Canopy Rivers back to the firm, effectively cutting ties, in exchange for Canopy Rivers' stake in Terrascend Corp. (TER: $12.51), the private Vert Mirabel and other cannabis interests. The implied transaction value is $297-million.

The relationship between Canopy Growth and Canopy Rivers goes back to 2017, when the former established the latter as its venture capital arm. Canopy Rivers currently holds interests in 18 companies and Canopy Growth holds a control block (of roughly 36.5 million Class B shares and 15.2 million Class A subordinate shares) in Canopy Rivers. Canopy Rivers' investments have generally been designed to round off Canopy Growth's. Now the two companies are severing their relationship in an effort to give Canopy Rivers more options while boosting Canopy Growth's holdings in the companies it sees as most desirable. Canopy Rivers will even rebrand under an unspecified new name to reflect the split.

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