Canopy Growth completes ebbu asset acquisition

Published: November 26, 2018

Canopy Growth completes ebbu asset acquisition

Canopy Growth Corporation has closed the previously announced acquisition of the assets of ebbu Inc., a leader in hemp research and innovation.

Intellectual Property (“IP”) and R&D advancements achieved by ebbu’s team apply directly to Canopy Growth’s hemp and THC-rich cannabis genetic breeding program and its cannabis-infused beverage capabilities. In addition, ebbu’s IP portfolio will contribute to the clinical formulations program executed by Canopy Health Innovations, a wholly owned subsidiary of the Company.

Canopy Growth operates a rapidly emerging, field-scale hemp operation based in Saskatchewan and by applying ebbu’s IP, the Company has the potential to vastly reduce the cost of CBD production, a sought-after cannabinoid in both the wellness and medical spaces.

Staying with Canopy Growth’s long-held position on business operations in the United States, this transaction would not have been finalized were it not in clear accordance with US federal law, along with the requisite exchange consent by the TSX. Canopy Growth, through a newly formed subsidiary, will employ ebbu’s assets and personnel to conduct R&D. There will be no production or sale of products resulting from such R&D in the United States unless and until it would be federally legal to do so.

The same technology platform will be utilized to produce other novel cannabinoids at scale and continue the process of unlocking the potential of lesser-understood elements in the cannabis plant, with the IP also being deployed at Canopy Growth’s Smiths Falls-based research and breeding facilities.

Canopy Growth has paid CDN $25 million in cash and issued 6,221,210 common shares (“shares”) for the assets being acquired. Up to a further CDN $100 million shall be payable under the purchase agreement if certain scientific related milestones are achieved within two years. Canopy Growth will have the option of satisfying such milestone payments in cash, shares or a combination of cash and shares. If such payments are satisfied in shares, the number of shares shall be calculated based on the volume weighted average price of the shares on the TSX for the 20 trading days immediately prior to the date of achievement of the applicable milestone.