On Thursday, Canopy Growth (CGC 10.36%) added another name to its asset list. The Canadian marijuana company announced that it acquired 100% of a privately held peer, AV Cannabis, better known as Ace Valley. Canopy Growth's new unit owns a brand with a range of "ready-to-enjoy" products that cover pre-rolled cigarettes, vaping goods (pens, cartridges, and batteries), and THC/CBD-infused gummies.
Ace Valley states on its website that it's currently at work on new products, although it provides no further details, nor any timetable.
Like Canopy Growth, Ace Valley is headquartered in Canada's most populous province of Ontario. According to its new owner, Ace Valley has top-five and top-10 domestic market positions with several of its products.
Canopy Growth said it "expects to unlock revenue growth opportunities and cost synergies as the Ace Valley brand is extended, leveraging Canopy Growth's distribution network, and by optimizing the mix of insourced and outsourced production to maximize margin."
It did not provide any estimates for how the absorption of the company might affect its finances. Similarly, it has not stated how much it is paying for Ace Valley.
Regardless, the brand particularly targets youthful cannabis consumers, an important demographic since young people of means tend to spend fairly liberally on favored products. Retailers aimed at the demographic also have a good chance of capturing long-term, or even lifetime, customers if they keep them satisfied.
Canopy Growth already offers the types of goods Ace Valley produces, although the former company doesn't specifically target younger consumers. Ace Valley, then, should be a complementary acquisition if integrated effectively.
On Thursday, Canopy Growth's stock basically traded sideways, and so was outpaced by the 1.2% rise of the S&P 500 index.