Cannabis Giant Canopy Growth Removed From Market Benchmark S&P/TSX Composite Index

S&P Dow Jones Indices announced changes to the S&P/TSX Composite Index, which will take effect on June 19, including the removal of Canopy Growth Corporation CGC from the index, a major market benchmark.

This decision by S&P Dow Jones Indices highlights Canopy's ongoing struggles. In two years, Canopy's shares have gone from trading at nearly CA$55 ($41) to CA$1.14, while the company's current valuation stands at less than CA$600 million.

In late March, Canopy entered into an exchange agreement with a subsidiary of Constellation Brands, Inc., to eliminate CA $100 million of the company's outstanding unsecured notes due 2023.

The agreement involves a cash payment for unpaid interest and a promissory note payable in 2024, bearing an interest rate of 4.25% per year. Canopy Growth intends to further negotiate to repurchase the promissory note in exchange for newly created exchangeable shares, aiming to preserve cash and reduce expenses.

Canopy Bolsters Portfolio

Despite these challenges, Canopy recently made a move to acquire a nearly 20% stake in Canadian cannabis edibles company Indiva Limited NDVAF.

Canopy and Indiva have entered into agreements granting Canopy Growth exclusive rights to manufacture, distribute and sell Wana-branded products in Canada, enhancing Canopy's ability to leverage the Wana brand.

In return, Canopy Growth will subscribe to 37.2 million common shares of Indiva through a private placement offering, giving Canopy Growth control over nearly 20% of the outstanding shares. The private placement is expected to close by June 6, 2023, subject to necessary approvals.

Price Action

Canopy's shares were trading lower by 5.32%, at $0.78 per share, at the time of market close on Monday afternoon.

Related News

• Canopy Growth Files Revised Proxy Statement, Modifies Canopy USA Structure To Comply With NASDAQ Listing Requirements
• Acreage's Floating Shareholders Approve U.S. Strategic Arrangement With Canopy And Canopy USA

Photo Credits: Christophe Dion on Unsplash.