The deal is valued at nearly $300 million, but under the agreement, Canopy's option to buy Wana won't be finalized unless and until Congress legalizes marijuana at the federal level. The acquisition would include Wana's popular line of infused candies and tinctures sold in marijuana dispensaries across twelve states and Canada, as well as Wana's hemp-derived CBD brand of edibles.
Founded in Boulder in 2010 by Nancy Whiteman as a medical marijuana edibles maker, Wana became an established market leader after the sale of recreational cannabis started in Colorado in 2014 and has since branched out to eleven more states through licensing agreements. The company expects agreements in eight more states, including New Jersey and New York, before the end of next year.
The vast majority of recent marijuana purchases have involved stock options in the new owner, yet the Wana deal was all in cash — but with a big political condition. Although notable members of Congress have pledged support for marijuana legalization and hearings on the topic have been popping up over the last two years, even lighter marijuana reform bills for medical marijuana research and cannabis banking have failed to receive hearings in the Senate, and President Joe Biden's administration has been cold toward the idea of nationwide legalization.
The marijuana industry still feels it's a matter of when, not if, however, and Wana is prepared to wait two years or ten years for that to happen, according to chief marketing officer Joe Hodas. Until then, Wana remains independent.
"It's like buying the first-round draft pick three years from now," he explains. "They can't have any control over Wana until the option is exercised."
Once the option is exercised, Hodas expects the Wana brand to remain under Canopy, but acknowledges that the ambiguous timeline of federal legalization makes that part harder to predict.
Based in Ontario, Canada, Canopy Growth is a publicly traded marijuana holding company on the Canadian and U.S. stock markets. Canopy has purchased a variety of marijuana cultivation, infused product and accessory brands throughout North America, and owns several CBD product lines as well. Although Canopy purchased Ebbu, a Colorado-based hemp research lab, in 2018, the Wana deal marks a major step for Canopy inside U.S. dispensaries.
“The right to acquire Wana secures another major, direct pathway into the U.S. THC market upon federal permissibility, and in Canada we’ll be adding the top-ranked cannabinoid gummies to our industry-leading house of brands," Canopy CEO David Klein says in a statement announcing the deal. "We’re confident in the future growth of the edibles category and the tremendous opportunities with Wana."
Canopy's distribution and partnerships throughout North America presented a clear path for Wana to reach more customers, Hodas says. The company's largest shareholder is Constellation Brands, one of the largest alcohol producers and importers in the U.S.
"There are some good relationships that could potentially be had down the road there," Hodas adds.
News of the Wana deal comes on the heels of several other big takeovers in Colorado's marijuana space. In June, the Medicine Man dispensary chain agreed to an offer from Columbia Care, the New York corporation that bought the Green Solution in 2020. Two months later, Green Dragon, another dispensary chain in Colorado, signed a purchase offer from California marijuana delivery firm Eaze.
And earlier this week, LivWell, Colorado's largest dispensary chain at 21 stores, agreed to an acquisition offer from PharmaCann Inc., a multi-state marijuana firm based in Illinois. That came just days after Los Sueños, the state's largest outdoor marijuana cultivation, announced it had been purchased by Curaleaf, another multi-state corporation.
According to Hodas, the current consolidation is a sign of market maturity, and he expects more to come.
"You'll continue to see Colorado companies engage in this activity, but I think it's a part of the industry as a whole right now," he says. "We weren't looking for Canopy, per se, or even an acquisition. But we did know that in order to grow in this industry, some type of relationship would be necessary. Someone with deeper capital and greater reach."