CBx Daily

Drake Bets On More Trees For More Life With Canopy Growth

Dec 21

By Namon Freeman

  • Drake partners with Canopy Growth for a majority stake in one of its Canadian brands
  • More Life to “jugg” wellness, discovery and personal growth through cannabis

Canopy Growth (CGC +15.27%) adds another all-star celebrity to its dream team roster of influencers, which includes the likes of Martha Stewart, Seth Rogan and Snoop Dogg. Drake will have a 60% stake in the Toronto based company, More Life Growth, previously a wholly owned subsidiary of Canopy. It has a Health Canada license to cultivate, process and sell cannabis.

Why This Matters: Celebrity partnerships may get you more views and likes but it doesn’t always equate to more green as Jefferies analyst, Owen Bennett pointed out and wrote, “every additional celebrity or licensed brand they add runs the risk of creating customer confusion and even diluting sales around Tweed,” (Canopy’s core brand). Canopy’s shares are down 63% since their early second quarter high. Such poor performance probably played a significant role in their founding CEO’s departure in July.

While Canopy’s brand may benefit from increased exposure to Drake’s 60 million Instagram followers, its stock price still sits at a palsy $19 and is rated as underperforming

While Canopy’s brand may benefit from increased exposure to Drake’s 60 million Instagram followers, its stock price still sits at a palsy $19 and is rated as underperforming. Global sales for the sector were expected to grow 38% this year to 16.9 million. With vaping related illnesses on the rise, future policy could potentially wrangle in the growth along the cannabis frontier. Canopy reported a net loss of C$1.3 billion for the second quarter. Perhaps executives really think Drake is the plug and can give Canopy more life. Who knows they may be singing “Started from the bottom now we’re here” in a few years.

Situational Awareness: It seemed the company was heading in a new direction, opting to concentrate on executing existing operations over making any new acquisitions, until the news of this partnership. Canopy now has exclusive rights to distribute More Life products in Canada and the right to nominate two directors to More Life’s board.

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