Drake gets into Cannabis Business partnering with a well known Canadian company
Drake will own 60 percent of More Life Growth, with Canopy owning the remaining stake
Drake is teaming up with Canopy Growth Corp. for a new venture to sell recreational cannabis and accessories in Canada and abroad, a move that could quickly establish the hip-hop superstar as a major player in the legal pot industry.
The joint venture, dubbed More Life Growth Co., will see Canopy expand its celebrity partnership portfolio to include the 33-year-old musician famous for such hits as God’s Plan, Hotline Bling and Best I Ever Had in the hope his presence can help bolster flagging cannabis sales in Canada.
"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."
Under the terms of the arrangement announced Thursday, Drake will own 60 percent of More Life Growth, with Canopy owning the remaining stake and having the right to nominate two members to the company’s board.
In exchange, Drake granted More Life the right to "exclusively exploit certain intellectual property and brands" in association with cannabis and cannabis-related products and merchandise. Those international rights could expire after 18 months depending on certain performance conditions. Meanwhile, Canopy has sublicensed those rights in Canada and will exclusively distribute More Life products in this country.
More Life will assume ownership of a licensed Scarborough, Ont.-based cannabis production facility which Canopy will continue to operate and maintain.
The launch of More Life, a nod to a mixtape the Toronto-based artist released in 2017, comes at a pivotal time for the cannabis industry. Canadian licensed producers have suffered from softer-than-expected sales amid a rocky roll-out of retail stores in the first year of legalized recreational pot, leading to many publicly-traded companies trading at multi-year lows.
However, having a global superstar of Drake's calibre enter the industry may spark renewed interest from consumers as well as consumer packaged goods companies wary about entering the space.
“By definition, Drake is business. He’s big business across the board,” said John Yorke, president of marketing consultancy Rain43, in an interview with BNN Bloomberg’s Jon Erlichman.
“Everything he touches has a business purpose behind it. Drake is about what’s cool, what’s hip, what’s out there. He has this ability, as his business, to be in front of every trend over the past 10 years.”
For Canopy, adding Drake as a partner significantly bolsters the Smiths Falls, Ont.-based company’s profile at a time when it has suffered several quarters of steep losses, seen its stock price tumble, and as it attempts to execute a management transition after ousting its former leader, Bruce Linton.
"When we first began talks with Drake we were extremely inspired by and aligned with his vision to bring best-in-class cannabis products to the world,” said Canopy Growth chief executive officer Mark Zekulin in a statement. “Drake’s perspective as a culture leader and entrepreneur combined with Canopy Growth’s breadth of cannabis knowledge will allow our new company to bring an unmatched cannabis experience to global markets.”
Joining forces with a celebrity of Drake’s stature will help to endorse and validate cannabis to a mainstream audience, according to Beacon Securities Analyst Russell Stanley. It would also give Canopy Growth more global appeal from an investor perspective, he added.
“There still may be some people out there unfamiliar with cannabis investments but you’d be hard pressed to find someone who doesn’t know Drake,” Stanley said in a phone interview.
The Come Up Show from Canada [CC BY 2.0]