The country’s largest pot producer plans to get even bigger with a record-setting bought deal financing round.
Canopy Growth Corp. (TSX:WEED) announced Thursday afternoon that it would raise $200 million in a bought deal offering led by BMO Capital Markets and GMP Securities, among others. The underwriters may also exercise an over-allotment option that would see the total financing raised to $230 million.
First announced on Wednesday, the financing was originally valued at $175 million, but Canopy revised its offering “due to strong demand.”
The Smith Falls-based firm says in a statement it will use the fresh funding to expand its production capacity, in addition to having some extra working capital.
It’s already been a monumental year for marijuana financing. Leamington, Ont.’s Aphria announced plans for a $115-million round in the first week of 2018.
That would’ve held the record for the largest public equity deal in Canadian cannabis history, until Gatineau-based Hydropothecary announced a $130-million round the week after. Hydropothecary’s financing deal was similarly increased after strong initial demand.
Now it appears that Canopy Growth will hold that record when its round closes, which the company expects by Feb. 7. Canaccord Genuity acted as an underwriter for each of the three deals.
Canadian cannabis producers are ramping up towards the anticipated legalization of recreational marijuana in the country, a move slated for July of this year.
Shift in banking policy
The Bank of Montreal's participation in a major financing deal for Canopy Growth marks a big policy shift for Canada's biggest banks, which may be warming up to the cannabis sector.
Until now, Canadian banks have been reluctant to service the country's burgeoning marijuana industry, leaving smaller banks and financial institutions to cash in on pot companies' financing and commercial banking needs.
However, the legislative landscape in Canada is changing rapidly as the federal and provincial governments gear up for legalization of cannabis for recreational use by this summer, and pot stocks have seen significant gains over the past year in anticipation.
But BMO's participation in the Canopy deal comes as lawmakers crack down south of the border – where many of Canada's big banks have ties – on marijuana, which remains illegal in the U.S. under federal law.
With reporting by the Canadian Press.