He is well known for releasing chart topping hits such as “What’s my name?” featuring Rihanna and “Started from the bottom,” which reached number six on the Billboard Hot 100. Now, Rapper Drake is getting involved with the cannabis industry, in spite of the fact that he is not as heavily associated with the plant as some other celebrities are.
Aubrey Drake Graham – the artist’s real name – announced the partnership with Canadian cannabis company Canopy Growth on Thursday, November 7. Drake, who was raised in Toronto, struck a deal with Canopy to launch to a pot-producing business in his hometown under the name ‘More Life Growth Company.’
Based on the details of Drake and Canopy’s agreement, the rapper will bag 60 percent ownership of the company; Canopy will hold on to the remaining 40 percent. The Canadian cannabis giant maintains the right to “exclusively exploit certain intellectual property” in Canada and on an international scale.
Celebrity cannabis endorsements are on the rise
Snoop Dogg, Martha Stewart, Mike Tyson, Whoopi Goldberg and Wiz Khalifa are just a handful of famous names with ties to the legal cannabis market, which was valued at USD $11.3 billion in the U.S. last year. Since the plant was previously tarnished with a gateway drug reputation, the recovering – or should we say thriving – cannabis industry depends on authentic brand credibility in order to harvest the rewards; celebrities offer a solution in helping to mend the plant’s image.
With a huge following and respected image, celebrities provide cannabis brands with an opportunity to leverage exposure. Celebrity cannabis endorsements can bolster credibility for brands currently active in the cannabis space, as well as amplify their online presence. Nonetheless, a celebrity’s motive for dabbling in these types of deals should be deeply rooted in their passion and respect for the herb, as opposed to merely cashing in on the “Green Rush”.
With this in mind, the Drake and Canopy Growth deal depends on authenticity for success. Lack of authenticity is a turn-off for consumers, the vast majority of whom will want to resonate with celebrities in order to be influenced by their cannabis product recommendations.
Then again, Drake is Über-famous so he shouldn’t have trouble persuading his audience. Plus, since he is now the majority owner of a cannabis company that has been licensed by Health Canada, he stands a good chance at dominating the space.
Industry analyst displeased with Drake and Canopy Growth deal
Not everyone is best pleased with Drake and Canopy Growth’s agreement to launch a cannabis production facility in Toronto. According to recent reports, one industry analyst who closely follows Canopy’s movements in the legal cannabis industry is less than impressed with the company’s latest move.
Analyst Andrew Carter works at Stifel – a brokerage and investment banking firm. He recently aired his opinion on the agreement between Drake and Canopy in a research note.
“We take a relatively dim view of the venture’s Canadian prospects in justifying the implied value ceded by Canopy,” said Carter. “Canadian cannabis brand development is difficult with restrictions specifically prohibiting utilizing celebrity names, and we believe Canopy is ceding a cash flow positive asset.
On the other hand, Carter believes that the long-term prospects could be promising for Canopy. The celebrity endorsement deal with Drake, he says, will amplify the Canadian company’s position in the U.S. market.
“But, we believe Canopy is creating another option to enhance its positioning for the U.S.” wrote Stifel’s analyst. “Canopy’s continued investment towards the larger global opportunity is a differentiating factor versus peers pursuing actions to ensure viability.”
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