Canopy Growth Secures Additional Funding Amid Financial Struggles

1.2 min readPublished On: May 3rd, 2024By HCN News Team

LOS ANGELES- Canopy Growth Corp., a Canadian cannabis producer, announced a new round of funding, securing approximately $50 million through a financing deal. This funding follows a $35 million capital raise in January and comes at a time when the company is grappling with financial difficulties, including high debt levels and operational losses.

Under the terms of the agreement with an unnamed institutional investor, Canopy will issue a five-year convertible debenture valued at C$96.4 million ($71 million), with an annual interest rate of 7.5%. The debenture offers the investor an option to convert into common shares of Canopy at a price of C$14.38 per share. Additionally, the company will provide 3.35 million common share purchase warrants with an exercise price of C$16.18 per share over a five-year period. The deal also involves the restructuring of approximately C$27.5 million ($20.3 million) in debt, which is due in September 2025.

Canopy intends to use the $50 million net proceeds from this transaction for working capital and other general corporate purposes. This financial maneuver is part of broader efforts by Canopy’s management to cut costs and reduce debt as the company copes with ongoing profitability challenges and low wholesale pricing in Canada’s recreational cannabis market.

In its effort to position itself strategically for potential U.S. market entry, Canopy acquired edibles brand Wana and multistate operator Acreage Holding in 2022. These acquisitions are seen as key to establishing a strong presence in the U.S., pending federal regulation changes that could favor the cannabis industry.

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The News Team at Highly Capitalized are some of the most experienced writers in cannabis and psychedelics business & finance. We cover capital markets, finance, branding, marketing and everything important in between. Most of all, we follow the money.