Canopy Growth Corp (NYSE:CGC) recently struck a fully diluted deal worth $350 million with Hiku Brands Co. Ltd. the owner of cannabis clothing and accessories selling Tokyo Smoke chain of coffee shops. With this deal that also includes options and warrants, the Ontario-based cannabis producer will gain 100% acquisition of the retailer.
Hiku is a budding company with all its attention focused on retail and its early steps have helped it create a brand identity among the clients by giving them an exclusive experience at its stores. The Chief Executive Officer at Canopy, Bruce Linton said that the retailer is thinking about products, brands, and alcoholic customer loyalty in a very smart way. Going forward, Hiku will sell recreational cannabis through its stores once it becomes legal from October 17, 2018.
The retailer has also applied for licenses in Alberta and will use the strategy in every province where private ownership is allowed. It seems that there will be a give and take relationship between Canopy and Hiku. According to Linton, “They need product to fill the stores. And we want to be able to have more and more stores. The reason Apple and Lululemon do well is they don’t sell you a computer or a workout outfit; they give an education platform and an experience. I think when you exit prohibition, you want to do that.”
The deal between Canopy and Hiku will be sealed only after two-thirds of shareholders of the retailer approves of it. The meeting for approval is expected to take place in August.
Drop in price will not affect Canopy, says Linton
The CEO of Canopy, the largest marijuana company in the world is dreaming big as very shortly recreational cannabis will be legalized in Canada. The company has already started planning beyond dried bud and is aiming to get pharmaceutical patents and a big slice of the future marijuana beverage industry. According to Linton, even if the price of cannabis and related products comes down to zero, his company will still continue to make money.
The current month has been quite a busy one for Canopy as it acquired a medical marijuana company from Columbia, launched a Latin American subsidiary and then now has struck a deal with Hiku, the retail cannabis chain.