Canopy Growth Plans Share Consolidation Amid Nasdaq Listing Noncompliance

LOS ANGELES– Canadian cannabis producer Canopy Growth has revealed its intention to seek approval for the consolidation of its shares after receiving a notification from the Nasdaq indicating its failure to meet the stock exchange’s listing standards. Among the requirements set by Nasdaq is the maintenance of a minimum bid price of at least $1 per share, which Canopy Growth has not met, as its closing bid price has remained below $1 per share for 30 consecutive business days.

In accordance with Nasdaq rules, Canopy Growth has been given 180 calendar days, starting from the date of the letter issued on July 11, to regain compliance. During this period, the company’s shares will continue to be traded on the exchange. It is important to note that the Nasdaq warning does not impact Canopy’s listing on the Toronto Stock Exchange in Canada.

Canopy Growth, in a news release, stated that it is currently evaluating all available options to rectify the deficiency and regain compliance. As part of these efforts, the company intends to seek approval from shareholders to consolidate its shares at the upcoming annual meeting scheduled for September 25. The proposed consolidation would involve a range of one post-consolidation common share for every five to 15 outstanding pre-consolidation common shares. The company’s board would have authority to execute the share consolidation until September 25.

Several other Canadian cannabis producers have faced similar warnings from Nasdaq over the past year. Hexo Corp., based in Quebec, and Sundial Growers, headquartered in Calgary, both received notices of noncompliance with the exchange’s listing standards, leading to share consolidations for both companies.

In a separate development on July 13, 2023, Canopy Growth entered into negotiated redemption agreements with holders of its 4.25% convertible senior notes, which were originally due on July 15. Under these agreements, Canopy redeemed approximately CAD 193 million ($160 million) of the principal amount, providing cash and issuing newly issued common shares and unsecured convertible debentures. The breakdown of the redemption includes CAD 101 million in cash, the issuance of 90,430,920 shares, and the issuance of approximately CAD 40.4 million in debentures.

Canopy Growth’s shares trade as “WEED” on the Toronto Stock Exchange and as “CGC” on the Nasdaq. The company’s pursuit of share consolidation and other strategic actions reflects its determination to navigate the challenges it currently faces and maintain compliance with stock exchange requirements.