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Pot company Canopy Growth shares plan to acquire California's Jetty Extracts

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Canopy Growth Corp. has signed a deal that will give it the right to acquire California cannabis company Jetty Extracts, if the U.S. federally legalizes the main ingredient in marijuana.

The deal announced Wednesday is structured as two separate option agreements that give a subsidiary Smiths Falls, Ont.-based Canopy set up the ability to acquire up to 100 per cent of Jetty’s equity interests upon legalization or if Canopy exercises its rights earlier. 

Under the agreements, Canopy will make aggregate and upfront payments of cash and common shares totalling about US$69 million in exchange for a 75 per cent interest in Jetty, which is registered as Lemurian, Inc.

Once Canopy exercises its right to acquire all of the interests, it will begin making extra payments through cash and common shares.

The deal is meant to lay the groundwork for Canopy’s expansion into the U.S. should the country look to turn its patchwork of cannabis policies into a single federal stance.

Marijuana is currently legal for medical purposes in about 39 states and for recreational use in roughly 19. However, federal laws still consider it a Schedule I controlled substance with high risk of abuse and no accepted medical use, putting it in the same class as drugs like heroin and peyote.

In recent months, the U.S. has been edging toward federal legalization through the More Act, which would declassify marijuana as a controlled substance, eliminate criminal penalties around its use and establish a system to expunge cannabis convictions.

In the event the act passes, Canadian cannabis companies have been scrambling to buy U.S. assets and plot a path into the market, which some suggest will be more lucrative than Canada’s.

Canopy already has the right to acquire U.S. cannabis company Acreage Holdings, Inc. and Colorado-based edibles maker Wana Brands, as well as a significant conditional ownership interest in pot producer TerrAscend Corp.

The Jetty deal will give Canopy a foothold in California, the U.S.’s largest market for tetrahydrocannabinol (THC), the component responsible for marijuana’s psychoactive side-effects.

“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,” said Canopy CEO David Klein, in a news release.

Oakland-based Jetty is known for making solventless vapes, unrefined resin, small batch concentrates and infused pre-rolls. The company was founded in 2013 with the goal of removing harmful additives from vapes, which it produces with just ice, water, heat, and pressure.

Until Canopy exercises its rights, the companies will operate independently of one another and Canopy and the subsidiary will not hold any economic or voting interests in Jetty.

Last month, Canopy announced it would lay off about 243 workers as part of a new cost reduction strategy meant to make its cannabis cultivation more affordable and uncover supply chain efficiencies. It reported a net loss of $115.5 million in its latest quarter. 

Ahead of the Jetty announcement, its stock closed at $7.54 on Tuesday.

This report by The Canadian Press was first published May 18, 2022.

Companies in this story: (TSX:WEED)

Tara Deschamps, The Canadian Press

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Alberta

Exercise in ‘patience’ pays off for Kadri, says winning a factor in joining Flames

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By David Alter

Nazem Kadri said the Calgary Flames expressed interest the moment he became an unrestricted free agent, but it was an “elaborate process” before he finally signed on the dotted line on Thursday.

“The patience definitely did me some good,” Kadri told reporters in a Zoom call Friday. “There were some decisions to be made.”

The Flames’ wild off-season took another dramatic turn Thursday when the team signed the coveted free agent to a seven-year, US$49-million deal.

Before the deal could be made official, Calgary sent forward Sean Monahan and a conditional 2025 first-round pick to the Montreal Canadiens for future considerations in a move to create salary cap space for Kadri’s contract.

“That’s part of the reason why it’s been taking so long,” Kadri said from Paris, where he is on vacation.

The 32-year-old Kadri was one of the biggest names available in free agency after an all-star season with Colorado that ended with the Avalanche winning the Stanley Cup.

The benefits of returning to Canada, where his NHL career started, and taking part in the ‘Battle of Alberta’ with the provincial-rival Edmonton Oilers were benefits to signing with the Flames, but what ultimately led him to sign was how close he feels the team is to winning a Stanley Cup.

“Ultimately, it’s about winning and that played a huge factor in me coming to Calgary,” Kadri said. “The time is now and it certainly can be close with the moves we’ve made and me hopping on board.”

The 31-year-old Kadri had 87 points (28 goals, 59 assists) in 71 games for the Avalanche in 2021-22. He added 15 points in 16 playoff games, including the overtime winner in Game 4 of the Stanley Cup final against Tampa Bay.

That was his return to action after being injured in Game 3 of the Western Conference final after being hit from behind by Edmonton forward Evander Kane.

Kadri’s addition capped a wild off-season for the Flames that saw star forward Johnny Gaudreau walk away in free agency.

The Flames’ leading scorer last season (115 points), and a finalist for the Hart Trophy as league MVP, Gaudreau informed the Flames before the start of the free agency period that we would not be re-signing with the Flames in a desire to move closer to home.

The New Jersey native signed a seven-year, $68.25-million contract with the Columbus Blue Jackets when free agency opened on July 13,.

Calgary was then informed that forward Matthew Tkachuk, who had a breakout season with 42 goals and 104 points, would not sign a contract extension after the upcoming season.

What looked like a potential nightmare for Calgary started to turn around when the Flames dealt Tkachuk to Florida for a package that included forward Jonathan Huberdeau, who had 115 points last season, and defenceman Mackenzie Weegar.

The Flames then locked up Huberdeau long-term with an eight-year, $84-million contract extension.

“It’s alarming to anybody when you lose players of that magnitude,” Kadri said. “But I think Brad (Flames GM Brad Treliving) has done a great job getting some return and valuable players.”

This is not the first time the Flames have tried to add Kadri to their roster. The Flames attempted to acquire him from the Toronto Maple Leafs in 2019, but Kadri used the no-trade clause in his contract to veto the deal. Kadri was then traded to the Avalanche on July 1, 2019.

“I didn’t see myself leaving (Toronto),” Kadri said about the situation. “That had nothing to do with the city of Calgary or the organization, I just wanted to stay where I was.

“It’s important for me to clarify that. I think it’s important because I’ve always admired the city of Calgary and Canada in general. I’m a Canadian boy. I love playing in Canada but it’s certainly ironic, but it was always a team that was on my radar.”

Kadri was selected seventh overall by Toronto in the 2009 NHL draft and has 512 points (219 goals, 293 assists) in 739 career games with the Maple Leafs and Colorado.

The London, Ontario native has yet to have his day with the Stanley Cup, but his plans include taking it to his hometown.

He also said he’s going to bring it to Toronto, where he spent his first eight NHL seasons.

“I’ve done a lot of growing up in that city as well and there’s been lots of supports of mine there,” he said.
This report by The Canadian Press was first published Aug. 19, 2022.

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Alberta

‘Just horrid’: Police watchdog now investigating death of man in Alberta RCMP cell

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CALGARY — An Alberta man is hoping for answers now that the province’s police watchdog is investigating the death of his son while in RCMP custody.

Addison Hartzler, 30, was found dead in an RCMP holding cell in Grande Prairie, Alta., on June 3, nine hours after he was arrested for public mischief on suspicion he had falsely reported a break-and-enter at the home where he was staying.

Greg Hartzler said he was told his son was acting in a “psychotic and delusional” manner, but police didn’t call paramedics or have him assessed by a doctor.

“They never even sought any medical attention in the entire nine hours they had him in custody. At no point in time was he ever assessed medically,” Hartzler told The Canadian Press Thursday.

“If they had, I believe he would have gone to the hospital in Grande Prairie directly from the house instead of the holding cell.”

The case was being investigated by RCMP, but Hartzler requested the Alberta Serious Incident Response Team look into it.

He was only informed Wednesday that ASIRT had taken over the investigation as of Aug. 9.

Hartzler said he wants to know if the RCMP was negligent in his son’s death and to protect other parents from going through a similar experience.

“Oh, Lord — If we can be an advocate for this, I guess maybe that’s our lot in life,” Hartzler said.

“From a father’s perspective and a family’s perspective, it’s just horrid. We were expecting him to be at our house that morning. By noon he was planning to leave Grande Prairie to come to his brother’s graduation,” he said.

Hartzler said his son had been in the Grande Prairie area northwest of Edmonton since April looking for work. He said they talked a day before his son’s death and the younger Hartzler seemed fine as he watched an NHL playoff game.

The father said he is relieved ASIRT is investigating.

“We’re trusting that we at least get somewhat of a better investigation with ASIRT doing it and hopefully more objective than what I believe RCMP (would do), even though it was their special unit. We’re hopeful we will get a more thorough investigation,” Hartzler said.

“At the end of the day, everything and every direction we turn to points to negligence. As Canadian people, we have to start saying enough is enough and the RCMP has to be held accountable for these types of actions.”

An RCMP spokeswoman said it’s not unusual for the special unit to do the investigation on cases where there are injuries to people in custody.

“What typically occurs is that even though it remains with us, there is an ongoing process where information about the investigation is shared with ASIRT so they have awareness of what happened and the facts and information as it progresses,” said Cpl. Deanna Fontaine.

“In this case, in the course of that, a decision was made by ASIRT to take it back.”

Alberta Justice said the original decision to leave the investigation with the RCMP was made due to a lack of resources with ASIRT at the time.

“ASIRT’s resourcing issues at the time were well known and were raised in correspondence with the Hartzler family’s lawyer in the interest of being fully transparent regarding the capacity challenges the agency was facing,” said spokesman Jason van Rassel.

“We can now confirm that the director of law enforcement referred this case to ASIRT for investigation on Aug. 9. As this matter is now with ASIRT, Alberta Justice and Solicitor General isn’t able to provide further comment.”

This report by The Canadian Press was first published Aug. 18, 2022.

Bill Graveland, The Canadian Press

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