Canopy Growth to acquire Supreme Cannabis

Consolidation in the cannabis industry continues as the producer looks to grow its share in the premium market.
7acres

Canopy Growth is set to acquire Supreme Cannabis, best known as the parent company of leading Canadian premium cannabis brand 7Acres.

The deal is valued at approximately $435 million and will give Canopy a Canadian recreational market share of 13.6%, according to an announcement from the company. 7Acres also has number one market positions in premium flower and vapes, as well as a top-five position in pre-rolled cannabis – as a result of the acquisition, Canopy says it will hold 23.3% of the market share of premium flower in Ontario and 21.4% in B.C.

Through its “Respect The Plant” positioning, 7Acres has established itself as a premium, quality-focused brand with marketing efforts focused on making features of its products – like terpenes, the growing process and the cultivators behind them – accessible to both new and experienced consumers. While 7Acres is Supreme’s leading brand, its portfolio also includes wellness-focused Blissco, taste-and-flavour focused Sugarleaf and value brand Hiway, as well as Truverra, which operates in the medical market.

Canopy will also acquire Supreme’s hybrid cultivation greenhouse facility in Kincardine, Ont., which the company says has a track record of consistently producing premium flower at low cost, with potential to scale further.

David Klein, CEO of Canopy Growth, said in Thursday’s announcement that the deal fits with the company’s recent strategic focus on continuing to drive growth and market leadership by focusing on premium brands. The deal is also expected to result in $30 million in cost synergies within two years; since late 2019, many major cannabis companies have been looking to cut costs, from closing down production facilities to scaling back head office staff.

For Supreme’s part, it gets access to Canopy’s sales and distribution network, as well as consumer insights and research and development capabilities.

The deal is the second acquisition Canopy has made in two weeks; it acquired Ace Valley last week, growing the company’s presence in non-flower product formats. It is also part of accelerating consolidation in the cannabis industry, which includes merger deals between Aphria and Tilray, as well as Hexo and Zenabis, with all four companies currently working to close their respective deals in the near future.