Last year, Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) reported a major development and acquired a majority ownership stake in BioSteel Sports Nutrition, a leading producer of sports nutrition products. At the time the deal was announced, the acquisition was expected to provide Canopy Growth with a state-of-the-art platform that would allow it to enter the sports nutrition and hydration segment.
When we look back at the terms and the timing of transaction, we believe that the there is a lot to be excited about. The investment has played a key role in the advancement of Canopy Growth’s plan to enter new markets with a platform that covers the production, distribution and marketing of cannabidiol (CBD) products. According to the terms of the investment, Canopy Growth acquired a 72% stake in BioSteel with an option to acquire the remaining 28% of the company.
The investment in BioSteel was supposed to lay the groundwork for Canopy Growth to capitalize on the US CBD industry and we believe that the management team has done a great job at executing on this strategy. Canopy Growth has a proven track record of success as it relates to forming strategic relationships with celebrities like Martha Steward and Snoop Dogg, and we believe that the most recent addition can prove to be a game-changer.
Earlier this week, BioSteel announced a momentous partnership with Patrick Mahomes who is considered to be the new face of the NFL. The deal is the first of its kind for Mahomes since winning the Super Bowl earlier this year and we are favorable on the visibility that will be generated through the relationship.
In partnering with Mahomes, BioSteel continues to lead the wave of health sports nutrition. The partnership with the star quarterback is expect to help reaffirm the brand’s position as one that redefines healthy sports nutrition. As a member of BioSteel, Mahomes will help increase awareness for the BioSteel brand as it continues to rise within its category and take on the industry’s giants.
BioSteel has been executing on a strategy that is focused on capturing market share in the US by forming relationships with the country’s top grocery store, gas stations, and convenience retailers. Through its partnership with Mahomes, the brand expects to extend its US footprint and reaching new health-minded consumers, athletes, and sports fans.
Through BioSteel, Canopy Growth has formed a key strategic partnership and we are favorable on the following that Mahomes’ has. We expect this relationship to benefit Canopy Growth more than the relationship that it has with Martha Stewart and Snoop Dogg. By working with Mahomes, Canopy Growth will be able to target a different subset of consumers and we are bullish on the growth prospects that are associated with it.