Two weeks after it started trading on the Toronto Stock Exchange, Smith Falls-based Canopy Growth Corporation has secured additional financing.
By Jacob Serebrin
On Monday morning, the medical marijuana producer, formerly known as Tweed, announced a $25-million bought deal offering. The deal would see several underwriters, including GMP Securities L.P. and Dundee Securities, buy 6,849,315 common shares in Tweed.
Less than three hours later, it announced that the underwriters would be buying 8,220,000 shares, increasing the value of the offering to $30,003,000, with an over-allotment option that could bring its value to $34,503,450.
The announcements come three days after Canopy announced that it had secured $5.5 million in financing from a commercial lender.
“This sector appears now to be gaining visibility to institutional participants,” said Bruce Linton, the company’s chairman and CEO. “Major business finance actors are looking at it as both a valid and vibrant sector. If you thought about it a year ago, it may have been vibrant but not valid. Two years ago, it was not even on the radar. To me, these are just indicators that more sophisticated pools of capital are seeing this as a thing they should do.”
The financing from the commercial lender includes both a term loan and a revolving line of credit. It’s the second agreement that Canopy has entered into with the same lender.
“These new facilities strengthen our financial position and enable Canopy Growth to continue driving forward an aggressive expansion of our operations that we believe is necessary to help meet future cannabis market demand,” Mr. Linton said in a release announcing the financing. “We are very pleased with this second round of financing, seeing as it is the first time that the commercial lender has entered into multiple credit agreements with a licensed producer. We believe it signals a strong belief in the strength of Canopy Growth’s current and future potential business.”
Since its founding, Canopy has sought out more traditional financing than many medical marijuana companies, seeing it as a source of legitimacy and, in the early days, as a way to get the company’s name out in an industry where advertising is prohibited.
In 2014, Canopy, then known as Tweed, became the first publicly traded medical marijuana producer in Canada when it launched on the TSX Venture exchange.
On July 26, it became the first medical marijuana producer to trade on a major North American stock exchange when it moved to the TSX.
Canopy says the additional funding will allow it to capitalize on opportunities in a market that’s about to see some major changes.
In late August, the federal government is expected to introduce new regulations around medical marijuana in response to a Supreme Court decision that struck down the previous rules as unconstitutionally restricting access for patients.
Next spring, legislation to legalize marijuana in Canada is expected to be introduced.