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April 29, 2019, 6:42 a.m. EDT

Canopy Growth’s quiet co-CEO on the pot company’s ambitions in the U.S. and more

In rare interview, Mark Zekulin discusses how Canopy’s deal with Constellation Brands helped in recent purchase of Acreage Holdings warrants

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By Max A. Cherney

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Zekulin: The bottling plant [at our Smiths Falls headquarters], it’s the combination of a couple of worlds coming together. They have built bottling plants, they know how to do that. The teams collectively worked together to estimate demand, we’re building these products, we’re marketing, we’re figuring out whether it should go in a can or a bottle, what the brand name should be and all of that type of stuff.

Ultimately, when that site comes together, it will reflect the knowledge their team has on bottling — we don’t know anything about bottling — but it matched with our intellectual property on cannabis, we do know how to make cannabis drinks. That knowledge is worked into the bottling plant in terms of layers of requirements that Health Canada imposes on any cannabis bottling plant. It’s a great example of two pieces of knowledge that can come together to build the right-size facility in the timeline we need.

/zigman2/quotes/200603886/composite CGC 16.63, +0.06, +0.36%

MW: How did Constellation help with aspects of selecting Acreage Holdings as an acquisition target?

Zekulin: We certainly draw on resources where it makes sense, but it’s still us, it’s our deal. Constellation has resources to lend to do the analysis faster, so I think that’s just a classic example: They’re a bigger company. They don’t know what we know about cannabis, but they have a more advanced organization structure for obvious reasons.

MW: What is the timeline Canopy Growth is estimating for U.S. federal cannabis legalization?

Zekulin: Our view is that with every day that passes, things keep pointing toward sooner rather than later. That doesn’t mean it will be. It could be a year, it could be three or five years. In our view, it is only going to get closer, and not just because of the passage of time. But, certainly, who knows?

MW: What’s the plan to work with Acreage Holdings prior to federal legalization in the U.S., before the right to buy the company is triggered?

Zekulin: The point of the Acreage deal is that we can help them. Even after the deal closes, they’re their own company and we can’t tell them what to do. But we can do licensing deals. We have great brands that we can make available. We have great intellectual property that underscores those brands. Through that arrangement, there is a good way for us to give them the tools they need to execute our brands and therefore be successful. I think it’s a huge advantage for them if ultimately federal legalization happens sooner than later — we’re giving them the tools to separate themselves from the pack even more in the U.S. Even if it’s six years from now, they will have established themselves that much better in the U.S.

MW: Why opt to list in the U.S. on the New York Stock Exchange with the CGC ticker versus the WEED ticker used in Canada?

Zekulin: You know I love [the ticker] WEED, and I think if all else were equal we would have made it WEED everywhere. But, sometimes you just want to take baby steps. There are a lot of stakeholders involved: your banks, your market makers, the New York Stock Exchange. Overall it felt like folks weren’t ready for that.

Max A. Cherney is a MarketWatch reporter based in San Francisco. Follow him on Twitter @chernandburn.

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