Canopy Growth Momentum Continues with Recent Agreements

Canopy Growth Corporation (TSE:WEED) inks supply agreement for Australia, New Brunswick, and sells subsidiary

SmallCapPower | September 15, 2017: Canopy Growth Corporation (TSX: WEED) has had an eventful past week. The marijuana market leader in Canada announced today that it had signed a Memorandum of Understanding (MOU) to supply cannabis products to the province of New Brunswick for two years with an estimated retail value of $40 million in its first year.

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On Thursday, Canopy Growth said it has sold its wholly-owned subsidiary Mettrum (Bennett North) to Cannabis Care Canada (CCC). Mettrum is licensed by Health Canada under the Access to Cannabis for Medical Purposes Regulations (ACMPR) to produce and sell dried cannabis and cannabis oil.

CCC is financially backed by Laborers International Union of North America (“LiUNA”), North America’s single largest construction union with over 100,000 Canadian members. Under the terms of the agreement, CCC has paid $7.0 million in cash to acquire Bennett Road North and entered into a three-year “take or pay” Supply Agreement with Canopy Growth for high-quality dried flowers and refined cannabis resin, with the sale of product at Canopy Growth’s discretion.

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Chairman & CEO of Canopy Growth Bruce Linton said, “Entering into an agreement of this scale with Cannabis Care Canada signals loud and clear that attitudes towards cannabis are transforming across mainstream society as workers and employers increasingly recognize the merits of medical cannabis over other existing alternatives.”

And, on Wednesday, Canopy Growth reported that it has entered into a supply agreement with AusCann Group Holdings Ltd., whereby Canopy Growth will act as AusCann’s exclusive supplier of medical cannabis for the Australian market, beginning with the transfer of a range of medicines for research and commercialization in Australia.

Shares of Canopy Growth have powered more than 50% higher from its early June 2017 lows to its current price of $10.27.

Canopy Growth Corporation stock trades at TTM price to sales value of 35.26x and price to book of 2.60x.

Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.

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