Is the End of Prohibition Around the Corner?
Sometimes it's all in the details. What happens when the biggest cannabis company in the world strikes a multi-billion-dollar deal with an on-the-map American cannabis firm? It could be a sign that someone knows something, and that we might just be closer to the end of prohibition than we think.
Canopy Growth signed a $3.4 billion agreement to acquire the medical marijuana firm Acreage Holdings. As you may recall, Acreage failed in an attempt at getting a cannabis advertisement approved to be shown at Super Bowl LIII. The main caveat in the agreement, is that the moment the U.S. government ends marijuana prohibition, Canopy will then assume the Acreage properties and become the most powerful cannabis retailer in the US.
Although the deal is still contingent on a few details such as stockholder agreement and regulatory approval by both the U.S. and Canada – neither company seems too worried that their union will be challenged. “Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” Bruce Linton, co-CEO for Canopy, said in a press release. “By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.”
There are still a couple pertinent details of this marriage to go over. First is the fact that Constellation Brands, makers of Corona and Modelo beer, has a 37 percent equity stake in Canopy, and has the ability to take controlling interest in a few years. Despite how much the cannabis industry pushes to become its own entity, with its own set of unique rules, one of the largest brewers in the world is set to become a key cannabis producer in the United States. Constellation has already begun working with Canopy to create THC-infused beverages for the Canadian market, in experimental preparation for the United States once it becomes fully legal. Though, it’s hard to tell the exact point where they could pull out. “Big Alcohol” is shaping up to become “Big Cannabis”.
Another “X” factor is John Boehner, former House Speaker on the board of Acreage Holdings and an honorary chairman for the National Cannabis Roundtable (NCR). This group is heavily sourced by the cannabis trade, and has supporters in DC actively swaying federal lawmakers into supporting a wide array of issues ranging from medical marijuana research, to catching the federal government up with the publics’ contemporary views on marijuana. One piece of legislation that this group is eagerly interested in enacting is the STATES Act, which would permit states to legalize cannabis however they see fit, without possible federal interference. It’s the one marijuana-related bill that President Trump has said he “probably” would sign if Congress can get it together.
Boehner has hinted in the past that he has an idea on how the vote will end up in Congress when the time comes to end prohibition. “I’ve been having more and more meetings with my friends and colleagues on the Hill about this — some of the most conservative politicians around and their views are evolving on cannabis, too, just like the American people,” he stated at the American Cannabis Summit last year during a speech. Boehner has also reflected that full legalization is already a topic of conversation and its in the home stretch. “I have a strong suspicion we won’t be waiting five years to see the federal government legalize cannabis,” he said. “I’ve got to choose my words carefully. What I’m hearing behind closed doors is pretty sensitive.”
The new deal, between Canopy and Acreage, points to a timeframe for national cannabis legalization that may already be set. Ask yourself this- why would a company put out a $300 million deposit on an acquisition that may not even happen? It would be absurd to suggest that a well-off company, like Canopy, would give a large amount of investment capital to American marijuana without some kind of assurance that the laws were going to change. If you read between the lines, this contract, between Canopy and Acreage, has been signed presumably because Boehner has the 4-1-1 on the Congressional cannabis buzz and has convinced all other parties involved that U.S. marijuana prohibition is ending sooner, rather than later. The question is- will it be this year or later down the line?