Local marijuana firm paid $10M after nixed mega-merger

A Southwestern Ontario marijuana grower has been paid $10 million after a plan to merge with a leading cannabis lifestyle brand was scuttled. WeedMD, an Aylmer-based licensed pot producer that recently expanded to Strathroy, was on track to merge with Hiku Brands Ltd. in a $240-million deal orchestrated in April.

But WeedMD announced Tuesday that the deal had fallen through and the company was paid a $10-million termination fee. Londoner Keith Merker, who had been chief financial officer, now helms WeedMD, replacing chief executive Bruce DawsonSculley, who will stay on as an adviser, the company has announced. “Over the past year, WeedMD has executed on our growth strategy and we continue moving forward with our strategic plan,” Merker said in a statement.

“With an additional $10 million in non-dilutive capital ... we’re in a solid position financially and operationally to continue executing and delivering on all of our goals and objectives.”

Shortly after the termination of the merger was announced, Canada’s largest cannabis producer said it had struck an agreement to acquire Hiku: Canopy Growth Corp., a Smith Falls-based grower with 10 production sites and operations in eight countries around the world, will acquire Hiku in a $250-million all-stock deal, Canopy said. Hiku is the owner of Tokyo Smoke, a Toronto-based hipster coffee shop and marijuana accessory chain, and Kelowna-based producer DOJA Cannabis Company Ltd.

“Hiku equals brands. Canopy is built on brands. So we combined them,” Canopy chief executive and chairman Bruce Linton said in a statement.

Weed MD recently struck a deal to become a supplier of medical marijuana for Shoppers Drug Mart, becoming the smallest company to partner with the pharmacy chain. Though Shoppers hasn’t yet received the green light to distribute prescription pot, the Lob law-owned company has inked six supply deals with producers, including Aphria, Tilray and MedReleaf.

A publicly traded company with 70 employees, WeedMD has operated an 8,000-square-metre facility on the former Imperial Tobacco site in Aylmer since 2016. The company recently expanded with a greenhouse near Strathroy, where it expects to harvest its first crop in September. WeedMD is holding its annual shareholder meeting in Toronto Wednesday.