Canopy Growth Acquires 19.99% Stake in Indiva, Secures Distribution Rights for Wana Edibles in Canada

LOS ANGELES– In a strategic move to expand its presence in the cannabis edibles market, Canadian cannabis producer Canopy Growth has announced the acquisition of a 19.99% stake in edibles manufacturer Indiva. The deal also grants Canopy exclusive control over the distribution and sales of the highly sought-after Wana branded products in Canada.

Wana is recognized as one of the top cannabis edibles brands in North America, known for its wide range of high-quality products. The agreement between Canopy Growth and Indiva helps both companies avoid a potentially contentious battle involving the coveted Wana brand.

Under the terms of the agreement, Canopy and Indiva have entered into a license arrangement granting Canopy exclusive rights to manufacture, distribute, and sell Wana products in Canada. In turn, Canopy has entered into a contract manufacturing agreement, providing Indiva with the exclusive right to manufacture and supply Wana branded products in Canada for the next five years.

This move aligns with Canopy Growth’s “asset light” strategy, which focuses on optimizing operational efficiency and leveraging partnerships. At the end of the five-year term, the agreement allows for the option to renew for an additional five years, subject to mutual agreement.

To finance the transaction, Canopy will subscribe to 37.23 million common shares of Indiva, amounting to gross proceeds of CAD 2.16 million ($1.7 million). The remaining consideration includes CAD 844,383, along with a cash payment of CAD 1.25 million scheduled for May 30, 2024.

Indiva had previously secured the exclusive rights to produce and distribute Wana products, including popular items such as gummies and soft chews, in Canada in 2020. The agreement was later amended and extended to a five-year term in February 2021. Canopy, in the same year, announced its intention to acquire Wana Brands, pending federal legalization of cannabis in the United States.

Had Canopy exercised its option to purchase Wana prior to the conclusion of the Indiva-Wana deal, resulting in the termination of Indiva’s agreement, Indiva would have been entitled to a termination payout worth four times the most recent three months’ gross revenue from Wana product sales in Canada.

Canopy Growth CEO David Klein highlighted the significance of the agreements, stating, “Collectively, these agreements provide Canopy Growth more complete ownership over the value chain for the Wana brand in Canada, while ensuring continuity of high-quality manufacturing and consistency with Canopy’s asset-light production strategy.” Klein further emphasized the company’s aim to introduce innovative Wana products in Canada, leveraging the brand’s success in the United States.

Upon completion of the deal, Canopy will have the ability to nominate a board observer on Indiva’s board of directors. The private placement is expected to close by June 6.

Canopy Growth shares trade as “WEED” on the Toronto Stock Exchange and “CGC” on the Nasdaq, while shares of Indiva are traded on the TSX Venture Exchange as “NDVA.”

All monetary values mentioned are in Canadian dollars unless otherwise specified.