Canopy Growth Corp. and MTL Cannabis Corp. announced that they have entered into a definitive agreement under which Canopy Growth will acquire all of the issued and outstanding common shares of MTL and settle all of the debt and debt instruments owed by MTL in a transaction valued at approximately $125 million on an all-equity basis and approximately $179 million on an enterprise value (TEV) basis.
Under the terms of the agreement, each MTL shareholder will receive a fixed consideration for each MTL share equal to: (i) 0.32 of a Canopy Growth common share (each whole share, a “Canopy Growth Share”) and (ii) $0.144 in cash.
MTL was founded by Quebec entrepreneurs and brothers Richard and Michel Clément, who built the company around a deep commitment to growing high-quality cannabis flowers. The quality of cannabis products produced through MTL’s disciplined, artisan approach to growing has earned national recognition, including being named Canada’s #1 recommended brand by enthusiasts in the Brightfield 2024 study.1. MTL provides proven operational excellence, loyal customer demand and experience in producing cannabis that works for the market. Canopy Growth intends to leverage the expertise of the MTL team as it continues to expand its line of cannabis products.
“MTL offers skilled operators, strong brands and a profitable business that will strengthen our leadership in the Canadian medical market and deepen our presence in key Canadian adult markets, including Quebec,” said Canopy Growth CEO Luc Mangeau. “Their growing experience combined with our national scale allows us to improve product quality, expand supply and accelerate our path to profitable growth. Together, we are building a stronger and more competitive Canadian business for the long term.”
“MTL was built on the idea that high-quality flowers, grown with care and consistency, will always earn the trust of consumers and patients,” said MLT Cannabis Co-Founder and Chief Cultivation Officer Richard Cleman. “Joining Canopy Growth gives us a platform to bring this philosophy to more Canadians. Our respective portfolios are very complementary and we see a great opportunity to expand MTL’s reach through Canopy Growth’s national distribution and retail relationships. We are incredibly proud of what our team has built and look forward to working with Canopy Growth to continue to elevate Canadian cannabis.”
Key transaction points are available for agreement here.
1 Recognized as Canada’s #1 Budtender Recommended Brand in the Brightfield 2024 Study, Brightfield Group, Canadian Budtender Study 2024 (in partnership with O2O). Findings based on a survey of ~670 Canadian youth in several Canadian provinces.
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friends,
Hemp stocks peaked in early 2021 after a rally in 2020, but have been on a downward trend since then. That 2020 rally was pretty big from the depths of the post-pandemic lows, but the Global Hemp Stock Index is up just 5.2% that year overall. Since then, it has fallen from 44.39 on 12/31/20 to 5.26 currently, a decline of 88.2%. The index was at 100 as of 12/31/12 and has fallen over 94% since then. Only in 2026, the decline was 20.2% year-on-year. What a terrible storm this has been.
I wrote about 280E tax at the end of 2022, naming its potential elimination as one of them two great cannabis catalysts potentially, and another could be exiting the OTC for US hemp companies. Although none of these have happened, the 280E taxation could be abolished if the hemp reclassification takes place. The president issued a decree, but there is no timetable.
These stocks have risen over the past year, but they have fallen significantly since the 2024 election. Hemp stocks certainly look cheap by most standards, but for some, the risk remains that their balance sheets will be left in a very bad shape. A number of companies have already surrendered to debt holders, such as 4Front, Ayr Wellness, Cannabist, Gold Flora, MedMen, Schwazze and Tilt Holdings, but others will have to refinance their debt. I have called Curaleaf out on their massive debt and they have recently extended some of it, although the debt level remains quite high. There are other MSOs that are also facing challenges with their debt.
280E taxation remains a big issue for US hemp operators, but it’s not really a problem for Canadian LPs operating in Canada or around the world. Not only are they not subject to 280E taxation, they trade on NASDAQ and not OTC. However, these stocks are also in a bear market. My model portfolio of 420 Investor currently has 42.8% exposure to Canadian LPs and only 10.3% exposure to MSOs. The Global Hemp Stock Index, recently recalculated on 3/31, currently has 25.8% exposure to MSOs and 29.1% exposure to Canadian LPs.
What I like about Canadian LPs is that they have potential exposure in Europe and Australia, as Canada is a fairly mature market. Canada, which does not have a 280E tax, has a very high tax on cultivation. Maybe that will change. In any case, that market has started to consolidate, with acquisitions and license cuts. However, there are many outstanding licenses (1,002, including 110 pending removal due to suspension, cancellation or expiration). These stocks trade at or below tangible book value. Some of them are subject to 280E end of taxation through their investments.
Here’s the past half-year’s action in the seven Canadian LPs currently in the Global Hemp Stock Index:
All have fallen and two have lost more than half their value. During this period, MSOS is down 23.2%, and the Global Cannabis Stock Index is down 31.5%.
US hemp stocks have been linked to potential realignments and possible elimination of 280E taxation, but those may not happen. Cannabis-backed companies would benefit from helping their clients, but most Canadian LPs are not subject to the US. Hopefully this bear market will end soon. Happy Easter and Passover everyone!
Sincerely,
Alan:
This week’s newsletter is sponsored by the Paul E. Saperstein Co.
Michigan Uniform Commercial Code (“UCC”) Article 9 Sale
On April 7, Monster Holdings Group’s equipment will be auctioned at the Jackson County Circuit Court in Jackson, Michigan at 9:00 a.m. ET. All applications must be submitted online. Learn more Article 9 of the sale of all assets of this mining company.
Interested parties may contact Paul Cotto at 617-227-6553 or email pcotto@pesco.com:.
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Based in Houston, Alan leverages his experience as an online community founder 420 Investorthe first and still the largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. time New Cannabis Ventureshe is responsible for content development and strategic alliances. Before turning his attention to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst with more than two decades of research and portfolio management experience. A prolific writer, with over 650 articles published since 2007 Looking for Alphawhere he has 70,000 followers, Alan is a frequent speaker at industry conferences and frequent source Media including the NY Times, Wall Street Journal, Fox Business and Bloomberg TV. Contact Alan. Twitter: |: Facebook |: LinkedIn: |: El
Statistics Canada released January retail sales for the country, with Cannabis sales are declining from December levels, down 8.4% to C$466.1 million, an all-time monthly high. The sequential decrease increased by the same 8.4% on a daily basis due to the same number of days compared to the previous month. December, originally reported at C$503.7 million, was revised slightly higher to C$508.6 million. December sales rose 6.4% from a year ago, up from May’s 8.3% and June’s 7.5%, but better than the previous lowest annual growth since legalization began in September 2024 of -0.9% and -1.6% in October due to the BC strike. Growth was much slower in December at just 3.9%. Total sales are expected to increase by 4.5% to C$5.39 billion in 2024 and by 4.1% to C$5.62 billion in 2025.
An increase in the number of shops as well as a fall in the prices of flowers that attract consumers from the illegal market have boosted sales. In Ontario, the most populous province, sales fell 8.6% from December and 4% from a year ago. Alberta was down 4.7% from December, but up 1% from a year ago. British Columbia was down 9.5% from December but up 31% from a year ago, while Quebec was down 12.5% from December but up 29% from a year ago.
February sales data will be released on April 24.
Based in Houston, Alan leverages his experience as an online community founder 420 Investorthe first and still the largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. time New Cannabis Ventureshe is responsible for content development and strategic alliances. Before turning his attention to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst with more than two decades of research and portfolio management experience. A prolific writer, with over 650 articles published since 2007 Looking for Alphawhere he has 70,000 followers, Alan is a frequent speaker at industry conferences and frequent source Media including the NY Times, Wall Street Journal, Fox Business and Bloomberg TV. Contact Alan. Twitter: |: Facebook |: LinkedIn: |: El
Statistics Canada has released December retail sales for the country, with Cannabis sales are on the rise from November levels, up 5.3% to C$503.7 million, a new monthly record high. This sequential increase was up 1.9% on a daily basis due to more days than in the previous month. November, originally reported at C$477.9 million, was revised slightly higher to C$478.4 million. December sales rose 2.9% from a year earlier, up from 8.3% in May, 7.5% in June and 6.2% in September. This was also below the 20.3% growth rate in August 2023 and better than the previous lowest annual growth since the start of legalization, which started at -0.9% in September 2024 and then -1.6% in October due to the BC strike, and it was down significantly from the 9.1% growth in December 2024. The previous record level in August was only 1.8% above the previous year’s level. Total sales are expected to increase by 4.5% to C$5.39 billion in 2024 and by 4.1% to C$5.62 billion in 2025.
An increase in the number of shops, as well as a fall in the prices of flowers that attract consumers from the illegal market, have boosted sales. In Ontario, the most populous province, sales rose 6.5% from November but fell 4% from a year earlier. Alberta was up 5.7% from November, but down 1% from last year. British Columbia was up 5.2% from November and 22% from a year ago, while Quebec was down 1.6% from November and 10% from a year ago.
January sales data will be released on March 20.
Based in Houston, Alan leverages his experience as an online community founder 420 Investorthe first and still the largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. time New Cannabis Ventureshe is responsible for content development and strategic alliances. Before turning his attention to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst with more than two decades of research and portfolio management experience. A prolific writer, with over 650 articles published since 2007 Looking for Alphawhere he has 70,000 followers, Alan is a frequent speaker at industry conferences and frequent source Media including the NY Times, Wall Street Journal, Fox Business and Bloomberg TV. Contact Alan. Twitter: |: Facebook |: LinkedIn: |: El
