Canadian grower Canopy Growth‘s $3.4B deal to acquire U.S. operator Acreage Holdings upon federal legalization “shakes the foundation of what has been true,” Keith Merker, the CEO of Canadian company WeedMD told Business Insider.

David Feldman, a cannabis lawyer at Duane Morris said waiting for more details about the agreement is “sort of like waiting for the Mueller report.” Bloomberg scours the horizon for more cross border deals.

  • Before the deal closes, Acreage CEO Kevin Murphy said the company plans to acquire more US cannabis companies.
  • In an interview, Murphy and Canopy Growth CEO Bruce Linton appear to say that even passage of the States Act, which would allow states to determine their own cannabis laws, would probably be enough to close the deal. A law to normalize banking might enable it as well.
  • In other Acreage news, a recent investigation by the Boston Globe found the company is one of several national companies allegedly “using onerous management contracts, financing and product purchasing agreements, shell companies, and other questionable tactics to quietly gain substantial power over numerous marijuana licenses seemingly held by independent firms,” to avoid caps on retail licenses. Acreage denies any wrongdoing.
  • Massachusetts is investigating and said there could be harsh penalties such as five year industry bans, for companies which mislead regulators on their ties to national firms. 
  • Retail caps are also a focus in Pennsylvania where the state is investigating whether Arizona-based Harvest mislead regulators about the number of stores it controls. The inquiry could complicate Harvest’s bid to acquire CannaPharmacy, a vertically integrated company in four northeast states. Harvest says it strives to be compliant.

Quick hits

  1. Three senior MedMen executives resigned as the high profile California retailer faces several law suits.
  2. California Delivery app Eaze crashed on 420.
  3. Pax Labs confirmed it raised $420M at a $1.7B valuation. Investors included hedge fund Tiger Global ManagementTao Capital Partners and Prescott General Partners. For more see Forbes.