Canopy Growth Corp. agreed to acquire U.K. skin-care brand This Works for 43 million pounds ($54 million) in cash, the world’s largest cannabis producer’s latest move to expand in Europe.
The purchase will allow Canopy to launch a new range of CBD-infused skin-care and sleep-aid products for global sale, the company said Wednesday. CBD, or cannabidiol, is an active ingredient of cannabis that doesn’t make users high and can be sold in the U.K. when derived from hemp.
The CBD market is booming in the U.K. with products containing the compound now available in grocers Tesco Plc and J Sainsbury Plc as well as the high-end Harrods department store. Sales of CBD-based products are expected to be worth 12.5 billion pounds worldwide by 2025, according to the companies.
London-based This Works, founded in 2004 and known most widely for a sleep-aiding pillow spray, doesn’t currently make CBD-infused products. Chief Executive Officer Anna Persaud will continue to lead the company’s operations after the acquisition. Its products are currently sold across Europe, the U.S. and China.
The deal will play a key part in Smiths Falls, Ontario-based Canopy’s European expansion strategy and its entry into the health and wellness industry. The company is already collaborating with an Oxford, England-based research organization on clinical trials examining the use of cannabis for treatment of opioid dependence and cancer-induced pain.
The U.K. alone will have annual legal pot sales of about $800 million within five years, according to founder Bruce Linton, on par with current Canadian levels. Canopy has built a facility in Denmark that will produce as much as 200 kilos a week by the end of this year and plans to spend $115 million on new facilities in Italy, Greece or Spain.
“We believe CBD has the potential to disrupt the cosmetic and sleep-solution industries and have been working for years to build and establish the right entry point into this opportunity,” Linton said.