CGC Stock: What to Know Ahead of Canopy Growth’s Share Conversion Vote This Week


  • Canopy Growth (CGC) will hold its special meeting of stockholders this Friday, April 12.
  • The company seeks approval to create a new class of shares to represent its U.S. business, Canopy USA.
  • CGC stock is up more than 100% so far this year.
CGC stock - CGC Stock: What to Know Ahead of Canopy Growth’s Share Conversion Vote This Week

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It has been a great month for Canopy Growth (NASDAQ:CGC), as shares of CGC stock are up by more than 230%. These gains have been led by a combination of several factors, such as comments from President Joe Biden and Vice President Kamala Harris about reclassifying marijuana from a Schedule 1 drug, the legalization of marijuana in Germany and a November vote to legalize recreational marijuana in Florida.

Now, the attention of CGC shareholders has shifted to the company’s upcoming special meeting on Friday, April 12. On that day, the votes for two proposals will be revealed.

The first proposal seek approval for the authorization and issuance of an “unlimited number of a new class of non-voting and non-participating exchangeable shares in the capital of Canopy Growth.” Canopy wants to create a new class of shares in order to represent its U.S. business, Canopy USA (CUSA), which was incorporated in October 2022.

The second proposal seeks approval for allowing one share of CGC common stock to be convertible to one exchangeable share at any time through the option of the shareholder.

CGC Stock: What to Know Ahead of Canopy Growth’s Share Conversion Vote This Week

Upon approval of the first proposal, CUSA will be eligible to exercise rights and acquire five companies that Canopy holds conditional interests in. These companies include Mountain High ProductsWana Wellness and The Cima Group.

Once CUSA makes at least one of these acquisitions, Canopy expects to deconsolidate CUSA from its financial statements while having a non-controlling interest in the company. Non-controlling interest arises when one company owns more than 50% but less than 100% of another company.

Two independent proxy advisors have already recommended shareholders vote in favor of both proposals. The first advisor, Glass Lewis, concluded that the proposals are not contrary to shareholder’s interests following analysis. Institutional Shareholder Services (ISS), the second advisor, added that a new class of shares would help the company remain in-line with U.S. legal regulations.

Canopy is betting big on the federal legalization of marijuana in the U.S. and it believes that creating a new class of shares will give it a step forward in the competitive industry. According to MJBiz, the U.S. retail marijuana market could be worth as much as $50 billion by 2026.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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