Canopy Growth Corporation and Indiva Limited have entered into license and assumption agreements providing Canopy Growth exclusive rights to manufacture, distribute and sell Wana products in Canada.

Simultaneously, to support continuity of quality supply and aligned to Canopy Growth's asset-light strategy for sourcing cannabis 2.0 formats, Canopy Growth and Indiva also entered into a contract manufacturing agreement under which Canopy Growth will grant Indiva the exclusive right to manufacture and supply Wana products in Canada for five years, with the ability to renew for an additional five-year term.

"Collectively, these agreements provide Canopy Growth more complete ownership over the value chain for the Wana brand in Canada, while ensuring continuity of high-quality manufacturing and consistency with Canopy's asset-light production strategy,” said Canopy Growth CEO David Klein. “By better aligning our ownership position in Wana throughout North America, we expect to accelerate the introduction of product innovation in Canada that has already proven enormously popular in the United States. We expect this arrangement to be immediately accretive to Canopy Growth's EBITDA, and we look forward to partnering with Indiva to further bolster Wana's position as a leading edible brand in Canada."

As consideration for the agreements, Indiva will complete a non-brokered private placement offering of common shares whereby Canopy Growth will subscribe for 37,230,000 common shares for an aggregate purchase price of $2,155,617 at a price per common share of $0.0579. The issue price was determined based on the 10-day volume weighted average trading price of the common shares on the TSX Venture Exchange during the 10 consecutive trading days ending on the last trading day immediately prior to the date hereof. 

"We are excited to form this investment and contract manufacturing partnership with Canopy Growth, and we look forward to continuing to produce Wana gummies for many years to come," said Niel Marotta, President and CEO of Indiva. "The benefits of this partnership to Indiva's shareholders are three-fold: First, the strategic investment bolsters Indiva's balance sheet. Second, the initial five-year term of the contract manufacturing agreement, and the potential to renew for an additional five-year term, extends the timeline and economic benefit to Indiva from sales of Wana gummies well beyond the remaining term of the existing licensing agreement. Lastly, Indiva's commitment to production innovation has made us Canada's leading producer of high-quality cannabis edibles, and we look forward to leveraging our recent investments in automation for the processing and packaging of edible products." 

Upon closing of the private placement, Canopy will exercise control and direction over 19.99% of the issued and outstanding Common Shares. The balance of the consideration will be paid by Canopy to Indiva as follows: (i) additional consideration representing a value of $844,383; (ii) a cash payment of $1,250,000 on May 30, 2024.

Indiva intends to use the net proceeds of the private placement to satisfy its existing obligations under its license to manufacture and sell Wana branded products in Canada and for its costs and expenses related to the manufacture and supply of Wana branded products under the manufacturing agreement.

Following the closing of the private placement, Canopy Growth will have the ability to nominate an individual as a board observer on Indiva’s Board of Directors. Canopy Growth and Indiva will also enter into a customary standstill and voting support agreement.

The private placement is expected to close on or before June 6 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSXV. The common shares to be issued under the private placement will have a hold period of four months and one day from the closing date.

"This is a great step forward in solidifying both Wana's brand leadership, as well as integrating Wana with Canopy Growth's strong presence in Canada," said Nancy Whiteman, CEO of Wana Brands. "This new agreement allows us to bring our most innovative products to Canada much more rapidly, while allowing Canopy Growth to begin recognizing the EBITDA benefits that Wana can help drive. We already know the team at Canopy Growth well, which should make for a smooth transition, and it will be great to have the oversight of the Canopy Growth team on the Wana brand in Canada. We thank Indiva for all they have done to make Wana the top edible in Canada over the past three years1 and we are pleased that we will have the opportunity to continue to work with their great team in a production capacity."