Canopy Growth Corp. (CGC) is making a strategic push into the US cannabis market through its subsidiary, Canopy USA (CUSA). CUSA boasts a portfolio of prominent brands, including the leading edibles producer Wana, the solventless vape innovator Jetty, and multi-state operator Acreage Holdings (ACRFH). According to senior analyst Pablo Zuanic from Zuanic & Associates, these assets position Canopy USA for significant growth, with the potential for even greater upside from federal regulatory changes.
Canopy USA’s strategy is centered around scaling its brands by expanding product lines and entering new markets. Zuanic explains, “The goal is to build a portfolio of differentiated brands with unique attributes in key segments.” The company is prioritizing expansion in existing states, with Florida being a potential exception.
Zuanic estimates the value of Canopy USA’s assets at approximately $617 million. Acreage, the largest asset, is projected to be worth over $411 million, while Wana and Jetty are valued at $125 million combined. Canopy USA also holds a minority stake in TerrAscend (TSNDF), valued at $81 million. For context, Canopy Growth’s overall enterprise value (EV) is CAD 987 million ($724 million), with Canopy USA accounting for a significant portion. Excluding Canopy USA, Canopy Growth is valued at just CAD 16 million ($11.7 million), significantly lower than competitors Tilray (TLRY) and Aurora (ACB).
Canopy USA’s “asset-light” approach is a key differentiator. Zuanic explains, “The Canopy USA structure allows the company to scale brands without building large grow facilities, leveraging partnerships and reciprocity deals.” While retail ownership remains critical, especially in markets with limited licenses, Acreage’s retail footprint ensures brand visibility in key dispensaries.
Here’s a closer look at Canopy USA’s key assets:
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Wana:
This top edibles brand generated approximately $150 million in retail sales across 19 states in 2023.*
Jetty:
Known for its solventless vape technology, Jetty commands a price premium in California and is expanding into New York and New Jersey.*
Acreage:
This multi-state operator reported $39 million in 2Q24 sales with 5% EBITDA margins.Acreage’s second-quarter 2024 sales were $39 million, down 33% year-over-year, but gross margins improved to 43.4%. The focus, according to Zuanic, will be on growth in Ohio and Pennsylvania, where adult-use legalization could boost revenues. Although Wana has faced market share challenges in Colorado, where its share dropped from 30% to below 20%, Zuanic remains optimistic about its future growth. Jetty holds 3.3% of the California vape market and continues to expand in other states.
Canopy Growth’s US strategy via Canopy USA sets it apart from Canadian peers like Tilray and Aurora by focusing on brand scalability rather than vertical integration. “Most Canadian LPs are slow to enter the US market or focus on capital-intensive strategies,” Zuanic explains, adding that Canopy Growth’s asset-light model offers long-term sustainability.
Canopy’s financial structure, with an EV of CAD 987 million, is partly distorted by the value of its US assets, which do not yet reflect full market potential. Federal regulatory changes could significantly boost the value of Canopy USA’s assets. While Canopy Growth holds non-voting shares in Canopy USA, the structure provides flexibility to consolidate its US assets if cannabis is federally legalized.
For more in-depth insights into Canopy USA’s valuation methodology, Acreage Holdings’ market footprint, detailed brand performance, and potential federal impacts, Zuanic’s full report provides a comprehensive analysis.
