Canopy Growth Buys A Colorado-Based Hemp Research Company

As a way to leverage the newly budding cannabis space, Canopy Growth Corp. CGC has taken several proactive steps in diversification.

What Happened

Canopy Growth on Monday announced it has entered into an agreement to acquire the assets of ebbu, Inc., a leader in hemp research. The Colorado-based research company designs cannabis-based medicine using infused products within the realm of chromatography, pharmacology, genetics and delivery technologies.

Canopy Growth will pay C$25 million in cash, as well as issue over 6 million common shares to ebbu. Ebbu’s intellectual property and company advancements apply directly to Canopy Growth’s several capabilities, according to the press release.

“Beyond the technological edge this transaction provides, we are pursuing this acquisition because Canopy shares ebbu's core ethos of building consumer trust," said Mark Zekulin, Co-CEO & President, Canopy Growth. "We collectively believe consumer trust is achieved by driving the scientific agenda needed to build predictable, repeatable outcomes and layering on brand power."

Why It’s Important

Through this transaction, Canopy Growth will have the ability to employ ebbu’s assets for research and development.

“The same technology platform can 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's Smiths Falls-based research facilities.”

Considering the rise in competition within the space, this move will give Canopy Growth a big opportunity to further develop its product range and multi-industry exposure.

What’s Next

The transaction requires regulatory approval, including that of the Toronto Stock Exchange and the New York Stock Exchange. The asset acquisition is expected for November, but no production or sale of products will occur in the U.S. until it is federally legal.

Canopy Growth's U.S. shares were up 9.3 percent following the news, trading around $54.45 at time of publication.

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