SMITHS FALLS, ONTARIO and OAKLAND, CALIFORNIA (May 18, 2022) - PRESS RELEASE - Canopy Growth Corporation and Lemurian, Inc., a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology, announced today that they have entered into definitive agreements providing Canopy Growth, by way of a wholly-owned subsidiary, the right to acquire, upon federal permissibility of THC in the U.S. or earlier at Canopy Growth’s election, up to 100% of the outstanding capital stock of Jetty.
Founded in 2013, Jetty is a top 10 cannabis brand in California, and a top 5 brand in the Vape Category. Backed by award-winning technology, Jetty has paved the way for the most authentic and natural vape experience available to consumers. As a leader in solventless vape and a pioneer of extraction-related intellectual property (IP), Jetty has achieved strong growth over the past two years while generating positive EBITDA amidst the highly competitive California cannabis market.
These agreements present Jetty with potential opportunities to collaborate across Canopy’s robust U.S. THC ecosystem, which already includes the right to acquire both Acreage Holdings, Inc. and Wana Brands, as well as a significant conditional ownership interest in TerrAscend Corp. The two companies are also exploring avenues through which Jetty could bring the brand and its innovative product line up to the Canadian recreational market to fully realize the North American, cross-border potential of Jetty’s industry leading IP.
- Further Accelerates the Growth of the Company’s U.S. THC Ecosystem: Through these agreements, Canopy Growth continues to develop its robust U.S. ecosystem by adding an established cannabis brand that is the market share leader in solventless vapes, holding more than 75% share of the rapidly expanding California market with monthly sales growing by over 45% from February to March 2022. This strategic investment is aligned with Canopy Growth’s U.S. THC strategy and will help position the company to unlock the full potential of the U.S. market upon exercise of the options granted under the agreements.
- Extraction Technology: Jetty has developed industry-leading capabilities in extraction and clean vape technology. As one of the first brands to bring to market a vape free of fillers and cutting agents, Jetty has built on that legacy with the 2021 launch of its solventless vape and concentrate collection, made from just ice, water, heat and pressure. Their products have received critical acclaim winning Best Vape at the 2021 Cannabis Cup, in addition to consumer success with the top eight solventless vape SKUs in California and the #1 PAX Era pods brand three years in a row.
- Establishes a foothold in the Largest U.S. THC Market: Jetty is a beloved California brand and upon exercise of the options granted under the agreements, would give Canopy Growth a critical position in the largest and most historically significant THC market in the U.S. Jetty’s established presence as the fifth largest vape brand in the California market is supported by nine years of operations and serving cannabis consumers with unrefined live resin, high THC distillate vapes, infused pre-rolled joints and solventless vape products.
"Canopy Growth is building a house of premium cannabis brands with a focus on the core growth categories that will power the market’s path forward, now including Jetty - a pioneer of solventless vapes,” said David Klein, CEO, Canopy Growth. “There are significant opportunities for Jetty to scale at the state-level across the U.S. by leveraging Canopy’s U.S. ecosystem, and we’re actively working on plans to bring the brand to the Canadian recreational market.”
“Jetty has put the consumer at the heart of our focus since the outset, and we’re proud to have pioneered the cleanest vape technology on the market. This agreement between Canopy Growth and Jetty is mutually beneficial and provides long-term growth opportunities for our employees and our brand. Canopy shares our vision and will support us as we bring the highest-quality Jetty products to consumers across North America and the world. We can’t wait to be a part of what Canopy is building as we continue to define the future of cannabis and introduce more consumers to what makes Jetty products so special,” said Ron Gershoni, co-founder and CEO, Jetty. "Along with founding members Nate Ferguson and Rob Ferguson, we look forward to continuing to lead our team at Jetty and working alongside the team at Canopy to further expand our brand."
The agreements are structured as two separate option agreements whereby Canopy Growth has a call option to acquire up to 100% of the equity interests in Jetty.
Under the agreements, Canopy Growth will make aggregate upfront payments in the amount of approximately USD$69 million payable through a combination of cash and Canopy Growth common shares, a majority of which will be Canopy Growth common shares, in exchange for approximately 75% of the equity interests in Jetty, subject to certain adjustments.
Upon exercise of the rights to acquire up to 100% of the equity interests in Jetty covered by the first option agreement, Canopy Growth will make an additional payment pursuant to the terms of the agreements, also to be satisfied through a combination of cash and Canopy Growth common shares.
Until such time as Canopy Sub elects to exercise its rights to acquire Jetty, Canopy Growth and Canopy Sub will have no direct or indirect economic or voting interests in Jetty, Canopy Growth and Canopy Sub will not directly or indirectly control Jetty, and Canopy Growth and Canopy Sub, on the one hand, and Jetty, on the other hand, will continue to operate independently of one another.
Paul Hastings LLP is acting as U.S. legal counsel to Canopy Growth. Cassels Brock & Blackwell LLP is acting as Canadian legal counsel to Canopy Growth. Raines Feldman LLP is acting as legal counsel to Jetty.