Canopy Bets on U.S. Hemp Market With $330 Million Acquisition

CBy Kristine Owram
‎October‎ ‎15‎, ‎2018‎ ‎6‎:‎27‎ ‎AM‎ ‎PDT
Deal is in ‘clear accordance’ with U.S. law, Canopy says
Ebbu has filed more than 40 patents for cannabinoid inventions

Canopy will pay C$25 million in cash and issue 6.22 million shares to acquire Ebbu. The shares are worth about C$404 million based on the Oct. 12 closing price. A further C$100 million could be paid if certain scientific milestones are achieved within two years of the deal’s close.

The Canadian cannabis company has said that it won’t enter the U.S. market until marijuana becomes legal at the federal level, and stressed Monday that the Ebbu acquisition is in “clear accordance with current U.S. federal law.”

Ebbu conducts research into cannabinoids, the chemical compounds found in the cannabis plant. It has filed more than 40 patents representing over 1,500 inventions, according to its website. Canopy will use Ebbu’s assets and personnel to conduct research and development and said there will be no production or sale of products in the U.S. unless it becomes federally legal to do so.

The deal will give Canopy intellectual property and research advancements that apply directly to hemp and cannabis genetic breeding programs, along with cannabis-infused beverage capabilities and its health research, the Smiths Falls, Ontario-based company said in a statement Monday.

Canopy owns a hemp operation in Saskatchewan and said Ebbu’s intellectual property will give it the potential “to vastly reduce the cost of CBD production, a sought-after cannabinoid in both the wellness and medical spaces.”
CBD, or cannabidiol, is found in both hemp and marijuana plants and has been the subject of much interest from outside players looking to get into the cannabis industry. Companies from Coca-Cola Co. to Walmart Inc.’s Canadian arm have been investigating the commercial possibilities of CBD, which doesn’t get you high but is thought to help with a wide range of ailments ranging from pain and inflammation to anxiety and sleeplessness.
U.S. Senate Majority Leader Mitch McConnell has introduced legislation that would legalize the production of industrial hemp.