Canopy Growth Enters German Marijuana Market by Buying Distribution Network MedCann

Article by Sunny Freeman, Financial Post

Canopy Growth Corp. is solidifying its international growth agenda with its all-stock acquisition of German-based MedCann, giving it a distribution network in Europe’s largest economy.

MedCann has navigated the complex regulatory environment for import and distribution, putting Tweed-branded cannabis strains into pharmacies in Germany — where the burgeoning industry relies on imports. Germany legalized access to medical cannabis in 2005, but no domestic production currently exists.

The all-stock deal is initially worth about $7.2 million based on Canopy Growth’s Friday’s closing price of $10.60 a share, plus the addition of new stock to be issued upon hitting certain milestones. That would give MedCann a potential 1.6 million shares in the company, about one per cent of its outstanding stock.

“Germany has begun a process of enabling medical access to cannabis and through a policy that recognized Canopy as the first legal supply source from North America,” said Bruce Linton, chairman and CEO of Canopy Growth.

“This acquisition establishes a distinct and purely medicinal corporate entity that helps us today but also positions us for domestic medicinal production inside Germany if the regulatory environment shifts.”

The deal gives Canopy another market in which to sell its excess inventory, along with its recently announced export deal to Brazil. The company will export its Tweed-branded strains but not Bedrocan Canada products due to licence restrictions.

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