Canopy Growth establishes new collaboration with Green House and Organa Brands

On December 1, 2017, Canopy Growth Corp. (Canopy Growth), Green House Holdings North America Inc. (Green House) and its affiliate in the Netherlands, GHSC Trading B.V., National Concessions Group Inc. (Organa Brands) entered into a collaborative joint venture. Together, these three companies comprise the most successful global cannabis businesses.

To establish the joint venture, Canopy Growth allocated a portion of ownership in Agripharm Corp., a 20,000 square foot indoor growing facility located in Ontario, to its new partners. Canopy Growth retained 40-per-cent ownership of Agripharm, while Green House and Organa Brands own 40 per cent and 20 per cent, respectively.

The venture will create a new Canadian home base for Green House Seeds and Organa Brands while Canopy Growth has the right, subject to limited exceptions, to purchase all the cannabis products produced by Agripharm for distribution through its Canadian system.

Although Agripharm is focused on the Canadian market, Canopy Growth, Green House, Organa Brands and their respective affiliates have entered into an agreement to also explore other federally-legal international opportunities as they arise, including with respect to medical research and development opportunities, product distribution platforms, and brick-and-mortar retail locations.

Canopy Rivers Corp. (Canopy Rivers), a partly-owned subsidiary of Canopy Growth, also entered into an agreement to provide the joint venture with up to $20 million in funding for the expansion of the facility in exchange for ongoing royalty payments and a warrant to acquire up to 4 per cent of the issued and outstanding common shares.

Cassels Brock & Blackwell LLP acted for Canopy Growth and Canopy Rivers with a deal team composed of John Vettese, Cathy Mercer and Jonathan Sherman (business, M&A and cannabis), Bernice Karn (intellectual property and cannabis), and Chuck Rich and Hilary Fender (financial services and cannabis).

Green House was represented by Dentons Canada LLP with a deal team that included Eric Foster, Donald Luck, Keith Stein and Andreas Kloppenborg.

Stikeman Elliott LLP advised Organa Brands with a team that included David McCarthy, Matt Hunt and Jonathan Lin (corporate, M&A), Ryan Sheahan (intellectual property) and Lindsay Gwyer (tax).