Canopy Growth Corp. has added another celebrity to its roster of partners, announcing that it’s teaming up with Canadian musician Drake to launch a new pot producer.
Drake joins lifestyle guru Martha Stewart, rapper Snoop Dogg and actor Seth Rogan in working with Canopy, the biggest cannabis company in the world by market value. This is the first such partnership signed after co-Chief Executive Officer Bruce Linton was fired in July.
“The opportunity to partner with a world-class company like Canopy Growth on a global scale is really exciting,” Drake said in a statement. “The idea of being able to build something special in an industry that is ever growing has been inspiring.”
Toronto-based More Life Growth Co. will be 60% owned by Drake and 40% owned by Canopy. Previously a wholly owned subsidiary of Canopy, the company is already licensed to cultivate, process and sell cannabis. Canopy has exclusive rights to distribute More Life products in Canada, and Drake has granted More Life the exclusive rights to certain intellectual property and brands in Canada and internationally.
Canopy has the right to nominate two directors to More Life’s board and a pre-emptive right to maintain its ownership in the company.
Shares didn’t react much to the announcement, gaining 0.2% at 11:24 a.m. in Toronto.
Jefferies analyst Owen Bennett was cautious on the news, saying celebrity partnerships can help with branding and consumer recognition, but it’s “not the key driver of shareholder value.”
“The true value comes from the fully owned core brands. Here we have our reservations around Canopy,” Bennett wrote. “Every additional celebrity or licensed brand they add runs the risk of creating customer confusion and even diluting sales around Tweed,” Canopy’s core brand.
The partnership comes at a tough time for cannabis stocks, with Canopy’s shares down 63% since their recent high on April 29. The company reported a net loss of C$1.3 billion in the quarter ended June 30.