Canopy Growth and Acreage implement amended arrangement

On Sept. 23, 2020, Canopy Growth Corporation and Acreage Holdings, Inc. announced they have implemented the previously announced amended arrangement under s. 288 of the Business Corporations Act (British Columbia) involving Acreage and Canopy Growth (the “Amended Arrangement”).

Pursuant to the Amended Arrangement, Acreage’s articles were amended to create two new classes of shares, the “Fixed Shares” and “Floating Shares”. Each existing Acreage share was exchanged for 0.7 of a Fixed Share and 0.3 ‎of a Floating Share, with proportionate adjustments for Acreage’s existing proportionate voting shares. Holders of Acreage shares and certain convertible securities also received approximately US$0.30 per share, being their pro rata portion of an upfront payment of approximately US$37.5 million from Canopy Growth.

In accordance with the Amended Arrangement, upon ‎the occurrence, or waiver by Canopy Growth, of changes in federal laws in the U.S. related to cannabis, Canopy Growth will, subject to the ‎satisfaction or waiver of certain closing conditions, acquire ‎all of the issued and outstanding Fixed Shares on the basis of 0.3048 of a common share of Canopy Growth per ‎Fixed Share. Canopy Growth also holds an option, exercisable at the discretion of Canopy Growth, to acquire all of the ‎issued and outstanding Floating Shares at the time that Canopy Growth acquires the Fixed Shares, for ‎cash or Canopy Growth shares, as Canopy Growth may determine, at a price per Floating Share based ‎upon the 30-day volume-weighted average trading price of the Floating Shares on the CSE relative to the trading price of the Canopy Growth shares, subject to a minimum price of US$6.41 per Floating Share. ‎

In connection with the Amended Arrangement; (i) Acreage amended an existing US$21 million credit facility; and (ii) a Canopy Growth subsidiary advanced US$50 million to Universal Hemp, LLC, an Acreage subsidiary, pursuant to the terms of a secured debenture. An additional US$50 million may be advanced pursuant to the debenture subject to the satisfaction of certain conditions.

Additionally, Canopy Growth and Acreage amended and restated their intellectual property license agreement.

Cassels Brock & Blackwell LLP acted for Canopy Growth with a deal team that included 
Jonathan Sherman, 
Jamie Litchen, 
Jeffrey Roy,
Tayyaba Khan (securities, M&A and cannabis), 
Chuck Rich, 
Daniel Cipollone,
Paras Patel (banking and specialty finance and cannabis), 
Jessica Lewis (litigation), 
Chris Norton,
Tera Li Parizeau (tax).

Paul Hastings LLP also acted as legal counsel to Canopy Growth.

DLA Piper (Canada) LLP acted as legal counsel to Acreage with a deal team that included
Robert Fonn, 
Russel Drew, 
Cam Fitch,
Sydney Kert,
Chris Pejovic,
Jamie Mandell,
Ashton Wiebe (capital markets and securities, M&A, cannabis), 
Kevin Fritz (tax),
Ilia Danef, 
Veronica Monteiro (finance),
Brent MacLean,
Samuel Bogetti (litigation), 
David Spratley (IPT).

Cozen O’Connor also acted as legal counsel to Acreage. 

Wildeboer Dellelce LLP acted as legal counsel to the Acreage special committee with a deal team that included 
Rob Wortzman,
Troy Pocaluyko.