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Constellation walks from remaining warrants of cannabis firm Canopy

Alcohol giant Constellation Brands said all its warrants have expired to purchase common shares of Canadian cannabis producer Canopy Growth Corp. and signaled it has “no other present plans” that relate to Canopy.

“Constellation has no other present plans or future intentions that relate to Canopy,” Constellation said in a news release.

However, the company added its plans might change depending on market conditions, economic and industry conditions, Canopy’s business and financial condition or other relevant factors.

Constellation said “all 88,472,861 Tranche A warrants held by” the New York-headquartered company’s wholly owned subsidiary, CBG Holdings, expired Nov. 1.

And since the vesting of the remaining Tranche B and Tranche C warrants was predicated on the full exercise of the Tranche A warrants, the remaining 51.3 million warrants will not become exercisable.

Had the warrants been exercised in full, the common shares underlying them would have represented roughly 16.9% of Canopy’s outstanding common shares as of Sept. 30, 2023.

Constellation, via its subsidiaries, now holds 171.5 million common shares, representing approximately 20.7% of Canopy’s issued and outstanding common shares.

Tranche A warrants came with an exercise price of CA$50.40, but Canopy’s shares are currently trading below CA$1 per common share.

In 2018, Constellation invested 5 billion Canadian dollars ($3.7 billion) in Canopy.

However, the Smiths Falls, Ontario-based business has reported aggregate net losses totaling more than CA$5 billion since then.

Canopy shares trade as WEED on the Toronto Stock Exchange and CGC on the Nasdaq.

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