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by Stockwatch Business Reporter
The S&P/TSX Cannabis Index lost 4.04 to 58.31, while the CSE Composite Index lost 5.12 to 317.58. Canadian cannabis grower Canopy Growth Corp. (WEED) lost 36 cents to $7.18 on 3.18 million shares, as it added to its collection of conditional assets south of the border. It has entered an option agreement to buy California vape brand Jetty Extracts.
Canopy boasted that the acquisition, if it happens, will provide ownership of a "beloved" California brand that sits in the top five for vape makers in the California market. Exercising the option is conditional upon "federal permissibility of THC in the United States, or" -- intriguingly -- "earlier at Canopy Growth's election." To acquire the right to a 75-per-cent interest in Jetty, Canopy must pay $69-million (U.S.) upfront. It can subsequently acquire the rest for an undisclosed additional amount.
The deal mirrors Canopy's other deals to acquire U.S. cannabis companies, including the MSO (multistate operator) Acreage Holdings Inc. (ACRG.A.U: $1.01) and the Colorado edibles maker Wana Brands. Both of those deals are contingent on the lifting of the U.S. federal cannabis ban. Because of this ban, if Canopy acquired any U.S. cannabis companies at present, it would lose its TSX and Nasdaq listings (as the senior exchanges currently do not allow listings from companies that violate federal law). Conditional options are Canopy's way of staking a claim from a safe distance. Other Canadian companies such as Cronos Group Inc. (CRON: $4.30) and Fire & Flower Holdings Corp. (FAF: $3.24) are also making use of this loophole.
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