Canopy Growth Corp. is not outright acquiring Acreage Holdings Inc., as reports said Wednesday, but it is preparing to pay billions for the rights to buy the U.S.-based pot company.
A source familiar with the negotiations confirmed Wednesday afternoon that a Canopy Growth CGC, +2.81% WEED, +2.81% deal with Acreage ACRGF, +9.14% was “98% done,” though the final price was still being worked out. Acreage had a market cap of $2.45 billion as of Wednesday’s close, but the deal will be worth “several billions” in Canadian dollars, the source said.
If Canopy Growth were to outright acquire Acreage, though, it would run afoul of rules for the Toronto Stock Exchange, where its shares are listed. The TSX does not allow companies to own stakes in businesses that run illegal operations, which Acreage technically does because marijuana is still federally illegal in the U.S. Canopy would also have to give up its U.S. listing, which was cross-listed from the TSX, and instead look to the Canadian Securities Exchange and over-the-counter trading in the U.S., as publicly-listed U.S. companies do.