Full Press Release Details
Canopy Growth Announces CBI Conversion to Exchangeable
Shares and Newly Constituted Board of Directors
Conversion of Greenstar Promissory Note into Exchangeable
Shares further improves Canopy's balance sheet through the elimination of short term debt, reduces overall debt balance by C$100MM
FALLS, ONTARIO (April 18 2024) - Canopy Growth Corporation ("Canopy Growth" or the "Company")
(TSX: WEED) (NASDAQ: CGC) announced today that in connection with the creation of the non-voting and non-participating exchangeable shares
in the capital of Canopy Growth (the "Exchangeable Shares"), on April 18, 2024, Greenstar Canada Investment Limited
Partnership ("Greenstar") and CBG Holdings LLC ("CBG" and, together with Greenstar, the "CBG
Group"), each a wholly-owned subsidiary of Constellation Brands, Inc. ("CBI"), exchanged all 17,149,925
common shares in the capital of the Company (the "Common Shares") they collectively held for 17,149,925 Exchangeable
Shares (the "CBI Exchange") for no consideration. As a result of the CBI Exchange, the CBG Group no longer holds any
Common Shares. Each Exchangeable Share is convertible, at the option of the holder, into one Common Share. The Exchangeable Shares are
not traded on a public market and represent an interest in Canopy Growth directly, not Canopy USA, LLC ("Canopy USA").
"This is another important step forward
for the Canopy USA strategy following the recent and overwhelming approval of our shareholders to create this exchangeable class of shares,"
said David Klein, Chief Executive Officer of Canopy Growth. "We look forward to maintaining an enduring positive relationship with
CBI as our largest shareholder, and to the further advancement of the Canopy USA strategy that this change enables as Canopy USA moves
forward with the acquisitions of Wana, Jetty and Acreage."
As previously disclosed by the Company, on April 18,
2019, CBG, Greenstar and Canopy Growth entered into a second amended and restated investor rights agreement (the "Investor Rights
Agreement"), pursuant to which the CBG Group, among other things, was entitled to designate four nominees for election or appointment
to the board of directors of the Company (the "Board"), subject to certain conditions set out in the Investor Rights
Agreement (the "Nominee Rights").
In accordance with the consent agreement dated
October 24, 2022 among CBG, Greenstar and Canopy Growth (the "Consent Agreement") and as a result of the CBI Exchange,
CBG, Greenstar and Canopy Growth have terminated the Investor Rights Agreement, along with an administrative services agreement, co-development
agreement, and all other commercial arrangements between them and their subsidiaries, other than the Consent Agreement, certain termination
agreements and the Exchange Agreement (as defined below) As a result, CBI no longer holds any governance rights in relation to Canopy
Growth, including the Nominee Rights.
In connection with the termination of the Investor
Rights Agreement and subsequent to the Note Exchange (as defined below), on April 18, 2024, Garth Hankinson, Judy Schmeling and James
Sabia (collectively, the "CBG Nominees") each provided notice to the Company of his or her decision to resign from
the Board effective immediately (the "CBI Resignations"). Each of the CBG Nominees had been a nominee of the CBG Group
under the Investor Rights Agreement.
Ms. Schmeling had served as Chair of the
Board and as a member of the Audit Committee of the Board, and Mr. Sabia had served as a member of the Corporate Governance, Compensation
and Nominating Committee of the Board (the "CGCN Committee").
None of the CBI Resignations were the result of
any disagreement with the Company on any matter relating to the Company's operations, policies or practices.
Following the CBI Resignations, the Board is now
The Company also announced that on April 18,
2024, Canopy Growth entered into an exchange agreement (the "Exchange Agreement") with Greenstar, pursuant to which
Greenstar converted approximately C$81.2 million of the principal amount of the C$100 million principal amount promissory note issued
to Greenstar by Canopy Growth on April 14, 2023 (the "Promissory Note") into 9,111,549 Exchangeable Shares (the
"Note Exchange" and together with the CBI Exchange, the "Transactions"), calculated based on a price
per Exchangeable Share equal to C$8.91. Pursuant to the terms of the Exchange Agreement, all accrued but unpaid interest on the Promissory
Note together with the remaining principal amount of the Promissory Note was cancelled and forgiven for no additional consideration by
Greenstar. Following the closing of the Note Exchange, there is no outstanding balance owing under the Promissory Note and the Promissory
Note has been cancelled, which has resulted in an overall reduction in debt on the Company's balance sheet in the amount of C$100
million. As a result of the Transactions, CBG and Greenstar now hold an aggregate of 26,261,474 Exchangeable Shares.
The Note Exchange is considered to be a "related
party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special
Transactions ("MI 61-101"). Pursuant to Section 5.5(a) and 5.7(1)(a) of MI 61-101, the Company is
exempt from obtaining a formal valuation and minority approval of the Company's shareholders with respect to the Note Exchange as
the fair market value of the Note Exchange is below 25% of the Company's market capitalization as determined in accordance with
MI 61-101. In addition, the Note Exchange was approved by the board of directors of the Company with the CBG Nominees each having disclosed
their interest in the Note Exchange by virtue of their positions with CBI and abstaining from voting thereon. The Company did not file
a material change report 21 days prior to the closing of the Note Exchange as the details of the Note Exchange had not been finalized
at that time. The Company has not received, nor has it requested, a valuation of its securities or the subject matter of the Note Exchange
in the 24 months prior to the date hereof.
Vice President, Communications
Director, Investor Relations
Canopy Growth is a leading North American cannabis
and consumer packaged goods ("CPG") company dedicated to unleashing the power of cannabis to improve lives.
Through an unwavering commitment to our consumers,
Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep
Space. Canopy Growth's CPG portfolio features gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology
made in Germany by Storz & Bickel.
Canopy Growth has also established a comprehensive
ecosystem to realize the opportunities presented by the U.S. THC market through its rights to Acreage Holdings, Inc., a vertically
integrated multi-state cannabis operator with principal operations in densely populated states across the Northeast, as well as Wana
Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high- quality cannabis
extracts and pioneer of clean vape technology.
Beyond its world-class products, Canopy Growth
is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment - pioneering
a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement.
more information visit www.canopygrowth.com.
Notice Regarding Forward-Looking Information
press release contains "forward-looking statements" within the meaning of applicable securities laws, which involve certain
known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business
and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use
of such terms and phrases as "intend," "goal," "strategy," "estimate," "expect,"
"project," "projections," "forecasts," "plans," "seeks," "anticipates,"
"potential," "proposed," "will," "should," "could," "would," "may,"
"likely," "designed to," "foreseeable future," "believe," "scheduled" and
other similar expressions. Our actual results or outcomes may differ materially from those anticipated. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Forward-looking statements
include, but are not limited to, statements with respect to: expectations regarding the advancement or acceleration of the Canopy USA
strategy; expectations regarding the Company's continued relationship with CBI; the timing and outcome of Canopy USA's
exercise of rights to acquire its U.S. assets in Wana Wellness, LLC, The CIMA Group, LLC and Mountain High Products, LLC (referred to
herein as Wana), Lemurian, Inc. (referred to herein as Jetty) and Acreage Holdings, Inc. (referred to herein as Acreage) including
the satisfaction or waiver of the closing conditions set out in the underlying agreements and receipt of all regulatory approval; expectations
regarding the U.S. federal laws and regulations and any amendments thereto; expectations regarding the potential success of, and the costs
and benefits associated with, our acquisitions, joint ventures, strategic alliances, equity investments and dispositions; our ability
to successfully create and launch brands and further create, launch and scale cannabis-based products; our ability to continue as a going
concern; our ability to execute on our strategy and the anticipated benefits of such strategy; the timing and nature of legislative changes
in the U.S. regarding the regulation of cannabis, including THC; the future performance of our business and operations; and our ability
to comply with the listing requirements of the Nasdaq Stock Market LLC and the Toronto Stock Exchange.