Canopy Growth buys 20 % from Indiva, Canadian edibles manufacturer

Canadian cannabis producer Canopy Growth has signed an agreement with Indiva, a Canadian manufacturer of’edibles, for the exclusive rights and interests to manufacture, distribute and sell in Canada the edible products of Wana Brands, one of North America's leading cannabis-based edible brands.

The two companies have also signed a manufacturing agreement granting Indiva the exclusive right to manufacture and supply Wana Brands products in Canada for five years, with the possibility of renewing the agreement for a further five years by mutual agreement.

Under the agreement, Canopy Growth will purchase approximately 37.2 million Indiva shares at a price of 5.79 cents per share, for a total consideration of nearly $2.2 million, giving it a 19.99 % stake in Indiva.

Canopy stated that this was in line with its «asset reduction» strategy».

At the end of this five-year period, the agreement may be renewed for a further five years if both parties agree.

In 2020, Indiva obtained the exclusive right to produce and distribute Wana Brands products in Canada. In February 2021, this agreement was amended and extended for a further five years.

The same year, Canopy announced it has agreed to buy Wana Brands in anticipation of the federal legalization of cannabis in the United States.

If Canopy had exercised its option to purchase Wana prior to the conclusion of the Indiva-Wana agreement, resulting in the termination by Wana of its agreement with Indiva, Indiva would have been entitled to receive a termination fee equal to four times the last three months' gross revenue from the sale of Wana products in Canada.

«Collectively, these agreements give Canopy Growth greater ownership of the Wana Brands value chain in Canada, while ensuring continuity of high-quality manufacturing and consistency with Canopy's lean manufacturing strategy,» said David Klein, CEO of Canopy, in a statement.

«By better aligning our position as owner of Wana across North America, we hope to accelerate the introduction in Canada of innovative products that have already proved extremely popular in the United States.».

Following completion of the transaction, Canopy may appoint an observer to Indiva's Board of Directors. Closing of the private placement is scheduled for June 6.