To win in cannabis, you need to win the recreational market: Canopy Growth CEO
Canopy Growth Corp.'s venture with Drake to sell recreational cannabis and accessories in Canada and abroad has "not been progressing as originally intended," the company's chief executive said.
Canopy announced its joint venture with the Canadian born hip-hop superstar in November under the More Life Growth Co. moniker. Under the arrangement, Drake will control 60 per cent of the company, with the pot giant owning the remaining stake and having the right to nominate two members to the venture’s board. Part of that deal was to provide More Life with use of Canopy's production facility in Scarborough, Ont., which the new venture would operate and maintain.
However, since the initial announcement was made, little work has been done to progress the More Life brand, with Canopy chief executive officer David Klein focusing on restructuring the pot giant's costs and on pursuing more promising ventures.
"I would say that [More Life] has not been progressing as originally intended and we're still working on details to determine where it goes," Klein, who formally took on the CEO role in January, told BNN Bloomberg in a phone interview.
"It may be something that can't get to where we all want it to go. In many regards, at its essence, it's almost a real estate play where More Life is going to do a lot of activity on cannabis destinations. I don't know if that still fits anybody's way of thinking, at least in the COVID world."
A representative from Drake's management team wasn't immediately available for comment.
Along with Drake, Canopy has carved out a niche in partnering with high-profile personalities such as Martha Stewart, Seth Rogen, and Snoop Dogg. All this comes despite restrictions in the Canadian market that prevent celebrities from endorsing its cannabis products. Canopy plans to launch its first CBD products via its partnership with Stewart next month in the U.S., Klein said during a call with analysts on Monday.
Canopy is ensuring it doesn't run afoul of Health Canada's regulations by ensuring that the celebrities it has partnered with remain at arms-length in regards to marketing. For example, Canopy renamed its "Leafs by Snoop" brand to "LBS" while Rogen has yet to comment publicly on his Houseplant venture since it was launched in March 2019.
Still, Klein is hopeful that the company will find a way to salvage the More Life venture.
"I wouldn't say it would be dropped entirely, but it might change," Klein said. "When I looked at the IP that Canopy has on its plate, I will admit that More Life was pretty far down the list of things to get to.”
"Make no mistake about it, we love Drake, [but] we're still trying to figure out a business venture that makes sense for everybody."
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