U.S.-listed shares of Canopy Growth Corp. rose 7% on Monday after the Canadian hemp company unveiled its latest steps to enter the U.S. market while complying with Nasdaq listing requirements.
The company said it filed a revised proxy statement with the U.S. Securities and Exchange Commission, updating its strategy to accelerate its entry into the U.S. hemp industry through a U.S.-based company called Canopy USA LLC.
Canopy USA LLC will place companies in which it has options that would give it full control if cannabis is legalized at the federal level, namely Acreage Holdings, Inc., Jetty Extracts and Wana Brands.
has long sought to enter the US market and take advantage of far greater opportunities than it has in its native Canada, where it continues to suffer heavy losses. But with federal legalization apparently still some way off, it has developed a plan to fast-track that goal.
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Last October, the company believed it had a plan to agree with US regulators, but Nasdaq objected to its intention to consolidate Canopy USA’s revenue into its financial results.
The idea was that the acquisition would place Canopy USA on its own board, as well as for Canopy Growth and majority shareholder Constellation Brands Inc.
cede voting rights by converting their shares into exchangeable shares.
Canopy said it will now change the structure so that it owns no more than 90% of Canopy USA, adjust the composition and nomination rights of Canopy USA’s board of directors and make other changes. The changes mean it will no longer require Canopy USA’s figures to be consolidated in its results.
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“Canopy USA is a new strategy designed to take advantage of a once-in-a-generation market opportunity,” CEO David Klein said in a statement. “We are pleased to have found a path forward that allows us to stay within NASDAQ’s listing requirements while maintaining the meaningful value associated with this program.”
The U.S. hemp market is expected to be a more than $50 billion market opportunity by 2026, Canopy said.
“Canopy USA’s portfolio includes the most recognized, iconic cannabis brands in the US, which Canopy Growth believes are ideally positioned in the fastest growing categories such as edibles, vape and flower,” the statement said.
Canopy now plans to hold a meeting of stockholders after the SEC reviews the amended proxy statement to vote on whether to amend its bylaws. That would allow it to create a class of non-voting exchangeable shares in Canopy Growth’s capital.
Shares are down 45% year to date, while the AXS Cannabis ETF
fell 26% and the S&P 500