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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 14, 2023
Canopy Growth Corporation
(Exact name of registrant as specified in its charter)
| Canada | 001-38496 | N/A | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 1 Hershey Drive Smiths Falls, Ontario |
K7A 0A8 |
| (Address of principal executive officers) | (Zip Code) |
(855) 558-9333
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered |
| Common Shares, no par value | CGC | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 15, 2023, Canopy Growth Corporation (the “Company”) and its subsidiary, Tweed Inc., entered into an agreement of purchase and sale (the “Agreement of Purchase and Sale”) with Hershey Canada Inc. (“Purchaser”), pursuant to which the Company agreed to sell its Hershey Drive facility in Smiths Falls, Ontario (the “Asset Sale”) to Purchaser for a purchase price of CAD$53.1 million, subject to certain adjustments. The Agreement of Purchase and Sale contains customary covenants, representations and warranties and closing conditions, and the sale is expected to close in September 2023. Following the closing of the Asset Sale, the Company will retain its Smiths Falls-based manufacturing facility to support post-production flower production.
The foregoing description of the Asset Sale is qualified in its entirety by reference to the Agreement of Purchase and Sale, a copy of which will be attached as an exhibit to the Company’s quarterly report on Form 10-Q for the quarterly period ending September 30, 2023, which the Company intends to file in November 2023.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 14, 2023, Thomas Stewart, who had been serving as the Company’s Chief Accounting Officer and Principal Accounting Officer, transitioned to the position of Vice President, Finance of the Company and is no longer serving as the Company’s Principal Accounting Officer as of such date.
Effective as of Mr. Stewart’s transition on August 14, 2023, Judy Hong, the Company’s Chief Financial Officer (“CFO”) and Principal Financial Officer, was designated as the Company’s Principal Accounting Officer.
Judy Hong has served as the Company’s CFO since November 2021. Having joined the Company in December 2019 to lead Canopy’s Investor Relations team prior to being named CFO, Ms. Hong’s deep knowledge of the consumer packaged goods sector has been integral in shaping the Company’s overall commercial strategy and guiding the Company’s engagement with the financial community. Ms. Hong’s financial and capital markets experience was built during her over 20 years’ experience at Goldman Sachs & Co. Ms. Hong’s roles at Goldman Sachs & Co. included serving as a Managing Director, in the Global Investment Research Division, from 2013 until her departure in 2019. During this time, Ms. Hong covered the Beverage and Tobacco sectors in the Consumer Products and Retail team within Global Investment Research and has been ranked in The Wall Street Journal’s “Best on the Street.” Ms. Hong earned an MBA from New York University’s Stern School of Business and a BS in Communications from Cornell University. From September 2014 to January 2020, Ms. Hong served as a Treasurer on the Board of Directors of Bottomless Closet, a non-profit organization based in New York.
Ms. Hong will not receive any additional compensation in connection with her designation as the Company’s Principal Accounting Officer.
There are no arrangements or understandings between Ms. Hong and any other person pursuant to which she was designated as Principal Accounting Officer of the Company. Ms. Hong does not have any family relationships with any of the Company’s directors, executive officers, or other person nominated or chosen by the Company to become a director or executive officer. There are no transactions between Ms. Hong and the Company that would be required to be reported under Item 404(a) of Regulation S-K.
| Item 7.01 | Regulation FD Disclosure. |
On August 17, 2023, the Company issued a press release to announce that it entered into the Agreement of Purchase and Sale in connection with the Asset Sale. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information set forth and incorporated by reference in Item 7.01 of this Current Report on Form 8-K (“Current Report”), including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information set forth and incorporated by reference in Item 7.01 of this Current Report, including Exhibit 99.1 attached hereto, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. | Exhibit Description | |
| 99.1 | Press Release dated August 17, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CANOPY GROWTH CORPORATION | ||
| By: | /s/ Judy Hong | |
| Judy Hong Chief Financial Officer |
||
Date: August 17, 2023
Exhibit 99.1
Canopy Growth Enters into an Agreement for the Sale of Hershey Drive Facility in Smiths Falls
Facility will be sold to Hershey Canada, Inc. for approximately CAD$53 million
Canopy Growth continues to execute on transformation to simplified, asset-light operating model
SMITHS FALLS, ON, Aug. 17, 2023 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (Nasdaq: CGC) announced today that it has entered into an agreement (the “Agreement”) to sell its Hershey Drive facility (the “Facility”) in Smiths Falls, Ontario, as part of the Company’s transformation to a simplified, asset-light operating model. Canopy Growth will retain its Smiths Falls-based post-harvest manufacturing facility.
Pursuant to the terms of the Agreement, the Facility will be sold to Hershey Canada, Inc. (“Hershey”) for cash consideration of approximately CAD$53 million (the “Transaction”). The completion of the Transaction is subject to customary closing conditions.
“We are pleased to have reached an agreement with Hershey on this important sale. This is the latest milestone in our focused effort to reduce costs and further enhance our balance sheet,” said David Klein, Chief Executive Officer of Canopy Growth. “Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk. Once again, we have demonstrated Canopy Growth’s ability to achieve significant organizational and operational change to position the Company for future growth in the Canadian market.”
“Our intent to purchase the Hershey Drive property in Smiths Falls is another example of the strategic investments we’re making in our supply chain network and our Canadian operations to support growth,” said Jason Reiman, Chief Supply Chain Officer, The Hershey Company.
Upon the completion of the Transaction, Canopy Growth will have sold a total of seven properties for an aggregate gross amount of approximately CAD$155 million since April 1, 2023. Net proceeds received from the sale of the Facility will be used primarily to pay down the Company’s senior secured credit facility.
The sale of the Facility follows the centralization of post-harvest manufacturing at the Company’s former beverage facility in Smiths Falls, as well as the consolidation of all flower cultivation in the Company’s purpose-built sites in Kincardine, Ontario, and Kelowna, British Columbia.
By centralizing the Company’s core activities in purpose-built facilities and working with contract manufacturers for edibles, beverages, and vape products, Canopy Growth has optimized its capability to deliver winning products with greater agility and at improved margins, while reducing execution risks and investment in permanent capacity.
About Canopy Growth
Canopy Growth is a leading North American cannabis and consumer packaged goods (“CPG”) company dedicated to unleashing the power of cannabis to improve lives.
Through an unwavering commitment to our consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Canopy Growth’s CPG portfolio features sugar-free sports hydration brand BioSteel, targeted 24-hour skincare and wellness solutions from This Works, gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in Germany by Storz & Bickel.
Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through its rights to Acreage Holdings, Inc., a vertically integrated multi-state cannabis operator with principal operations in densely populated states across the Northeast, as well as Wana Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high-quality cannabis extracts and pioneer of clean vape technology.
Beyond our world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment—pioneering a future where cannabis is understood and welcomed for its potential to help achieve greater well-being and life enhancement.
For more information visit www.canopygrowth.com.
References to information included on, or accessible through, our website do not constitute incorporation by reference of the information contained at or available through our website, and you should not consider such information to be part of this press release.
Notice Regarding Forward-Looking Information
This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Often, but not always, forward-looking statements and information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Examples of such statements and uncertainties include statements with respect to the closing of the Transaction, including the satisfaction of the conditions to closing; the proceeds to be received by the Company from the Transaction, as well as the Company’s intended use of such proceeds; the Company’s intention to reduce costs and further enhance its balance sheet; the Company’s intention to transform to a simplified, asset-light operating model; the Company’s ability to achieve significant organizational and operational change to position the Company for future growth in the Canadian market; and expectations for other economic, business, and/or competitive factors.
Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including negative operating cash flow; uncertainty of additional financing; use of proceeds; volatility in the price of the Company's common shares; inherent uncertainty associated with projections; expectations regarding future investment, growth and expansion of operations; regulatory and licensing risks; changes in general economic, business and political conditions, including changes in the financial and stock markets and the impacts of increased rates of inflation; legal and regulatory risks inherent in the cannabis industry, including the global regulatory landscape and enforcement related to cannabis; additional dilution; political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation and the interpretation of various laws regulations and policies; public opinion and perception of the cannabis industry; and such other risks contained in the public filings of the Company filed with Canadian securities regulators and available under the Company's profile on SEDAR at www.sedar.com and with the United States Securities and Exchange Commission through EDGAR at www.sec.gov/edgar, including under the heading "Risk Factors" in the Company's annual report on Form 10-K for the year ended March 31, 2023.
In respect of the forward-looking statements and information, the Company has provided such statements and information in reliance on certain assumptions that they believe are reasonable at this time. Although the Company believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. Should one or more of the foregoing risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and the Company does not undertake any obligation to publicly update such forward-looking information or forward-looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.