Canopy Growth has come to the aid of TerrAscend. The cannabis company has announced the delivery of a loan for $20 million to the Florida-based hemp-derived cannabinoid (CBD) subsidiary of TerrAscend, Arise Bioscience, but it comes with several caveats to ensure the money is used appropriately. In return for the loan, TerrAscend put up as collateral 2,105,718 common share purchase warrants.
TerrAscend is one of the many companies that is already supported by Canopy Growth, which co-invested in the company three years ago. The new loan will help Arise develop new products, but cannot be used “in connection with or for any cannabis or cannabis-related operations in the United States, unless and until such operations comply with all applicable laws of the United States.”
The debenture, which is not convertible, has an interest rate of 6.1% per year, reaching maturity on December 9, 2030. There exists the possibility that it could mature sooner, provided certain terms are met and all interest payments as laid out in the agreement are paid. The warrants issued in return, which are not guaranteed by TerrAscend, are exercisable by Canopy once federal US laws regarding cultivation, distribution and possession of marijuana change.
Canopy Growth CEO David Klein explains, “TerrAscend’s management continues to perform very well in high-growth, competitive markets. With this additional loan into TerrAscend’s Arise business unit, we are confident the team will continue to execute at a high level and that they are well-positioned to drive strong value creation for Canopy shareholders.”
When federal regulations change and the money is available for use, it will go toward “general corporate purposes,” as well as to repay current debt or for “other permitted purposes” as outlined in the debenture agreement.
TerrAscend CEO and Executive Chairman Jason Ackerman adds, “I’d like to thank the Canopy Growth team for their ongoing support and investment as we scale our operations. I’m proud to consider them partners and look forward to continuing to execute on the opportunity ahead.”