Two months on from the confirmation of Canadian licensed producer Canopy Growth’s (TSX: WEED; NYSE: CGC) rumoured bid to acquire U.S.-based company Acreage Holdings (CSE: ACRG.U; OTC: ACRGF), the deal is still managing to make headlines across the North American cannabis industry.
The terms of that proposed acquisition include one key sticking point that has stood out for investors and analysts alike – the deal hinges on cannabis either becoming fully legalized at the federal level in the U.S., or at least being removed as a Schedule I controlled substance through the Controlled Substances Act.
While Illinois just became the 11th state to legalize recreational usage – in addition to the 33 states that already allow medical use – cannabis remains illegal at the federal level and will likely remain so for at least another year as the U.S. Presidential election cycle begins in earnest.
By entering an agreement to acquire Acreage now, well ahead of any serious attempts at nationwide U.S. legalization, Canopy is hoping to capitalize on the early mover advantage inherent to Canadian companies that have been up and running for close to a year since the Cannabis Act went into effect.
In addition to that major U.S. regulatory hurdle, the deal must still be approved by the shareholders of both companies.
With the looming decision deadline of Monday, June 17 quickly approaching, Acreage and Canopy released statements today urging shareholders to vote in favour of the acquisition deal through a campaign titled “1 + 1 = global leadership.”
Canopy and Acreage issued this joint statement to shareholders about the upcoming vote:
The two companies further stated that if the deal is approved, Acreage shareholders will receive a cash payment of between $2.51 – US$2.63 per subordinate voting share held.
Acreage CEO Kevin Murphy and Canopy Growth CEO Bruce Linton released a series of video clips answering shareholder questions about the acquisition, which can be found over here.