Canada’s Marijuana Retail Landscape and Some of the Biggest Players Involved
VANCOUVER, British Columbia, Jan. 29, 2019 (GLOBE NEWSWIRE) -- Following the 3-month anniversary of marijuana’s legalization in Canada, analysts and consumers alike are wondering what’s next for Canada’s marijuana retail landscape.
Though the cannabis industry is arguably still in a stage of infancy, the coming months will likely be foundational in the creation of Canada’s legacy cannabis brands, as Canada’s marijuana retail sector begins to experience intensifying levels of competition.
Canada’s Marijuana Retail Landscape
If Canadian retail cannabis is a battle, then the theatre of war is Alberta.
Via The Calgary Herald:
“After more than three months of legalized cannabis, Alberta counts 36 per cent of the country’s legal pot shops.
Of the 183 licensed marijuana outlets open in all the provinces and territories as of earlier this week, 65 are located in Alberta, which comprises only about 12 per cent of the country’s population.”
Even Alberta’s very regulatory framework around cannabis has demanded nation-wide attention.
“. . . other provinces have come to [the Alberta Gaming and Liquor Commission] for advice on how to operate facets of their rollout . . .”
Imitation, as they say, is the sincerest form of flattery.
Not only is Alberta home to the bulk of Canada’s marijuana retail brands, but the regulatory body in charge of the province’s cannabis policy—the Alberta Gaming and Liquor Commission—is setting the tone for the future of legal cannabis products across all of Canada.
With a firm grasp on the importance of the Albertan cannabis market, let’s take a look at some of the biggest Canadian marijuana companies looking to disrupt the marijuana retail sector in 2019.
Westleaf Inc.: Set to Become One of the Largest Premium Cannabis Retailers in Canada
Successful branding comes down to creating an experience that truly resonates with consumers.
With private marijuana sales in Canada almost completely limited from online channels, it is the physical retail store experience—and the branding experiences that are contained within—that will drive the majority of marijuana sales.
Westleaf Inc. (TSX-V: WL), a vertically integrated cannabis company focused on innovative retail experiences and engaging cannabis brands, is one of the newest market entrants looking to dominate the cannabis retail sector.
Prairie Records, Westleaf’s innovative retail store brand, provides the brick and mortar “beachhead” through which Westleaf intends to achieve this dominance.
Prairie Records aims to create a premium marijuana retail experience by leveraging the instinctual tie between cannabis & music.
In addition to a growing portfolio of premium retail locations, Westleaf controls the processing, extraction, and cultivation of cannabis—making Westleaf one of the few truly vertically integrated cannabis companies.
Essentially, Westleaf controls the entire marijuana value chain.
Control over this value chain is vital. As the marijuana market continues to mature and the production capabilities of producers expands, additional supply will put downwards pressure on the cost per gram—meaning that only vertically integrated cannabis companies who control access to the end consumer (eg. Westleaf) will be be able to protect their profit margins.
What’s more—Westleaf is already working with some of the industry’s largest licensed producers. Through either strategic investments or development partnerships, Westleaf has attracted the support of Tilray, Delta 9 Cannabis, and Vivo Cannabis.
In terms of management expertise, Westleaf is in good hands. From proven marketing executives to former MJardin directors and billion-dollar asset managers, Westleaf has the guidance it needs to execute on its vision to become Canada’s leading cannabis retailer.
Just last week, Westleaf announced the acquisition of Canndara Canada Inc., a cannabis retail company with over fifty (50) prospective premium retail locations across Canada. Following Closing, expected by the end of this month, Westleaf will have one of the largest cannabis retail footprints under development in Western Canada
With C$27 million in cash and access to C$30 million in low cost, non-dilutive capital from ATB, Westleaf is well-positioned to meet its ambitious target of launching 50 premium retail stores in Canada by the end of 2020.
Canopy Growth Corp. (TSX: WEED) (NYSE: CGC), Canada’s largest cannabis company, knows full-well the importance of branding.
Back in July 2018, Canopy Growth Corp. announced the acquisition of Hiku Brands, the company behind industry-leading cannabis brands such as Tokyo Smoke.
Since then, Canopy’s market cap has swelled above C$23 billion – hitting yet another new high this week.
Yet, currently, Canopy has no retail presence in Alberta. As of this report, Canopy operates 8 stores in Manitoba, 1 store in Saskatchewan, and 4 other stores in Newfoundland and Labrador through their Tweed and Tokyo Smoke retail brands.
In just a couple of weeks on Valentines Day, Canopy is expected to announce its financial results for the third quarter fiscal 2019 ended December 31, 2018. With continued growth in its share price, investors must believe them to be stronger than ever - we will know just how strong in a couple of weeks.
Alberta’s very own Aurora Cannabis (NYSE: ACB) (TSX: ACB) has a stake in 9 cannabis retail stores in Canada, all of which are located in Alberta. Aurora’s retail reach is comprised of 4 store locations under the brand name Canna Cabana (due to their C$10 million investment in marijuana retailer High Tide), and 5 stores under the brand name Nova Cannabis, which is the cannabis retailing arm of Alcanna Inc. (the Canadian liquor retailer behind brands such as Liquor Depot and Wine and Beyond).
As of August 2018, Aurora became one of Alcanna Inc.’s newest cornerstone investors.
Via Marijuana Business Daily:
“Alberta-based Aurora Cannabis reached a license agreement with Alcanna, the largest private-sector liquor retailer in Canada.
In February, Aurora paid 103.5 million Canadian dollars ($82.5 million) for a 19.9% ownership interest in Alcanna – then called Liquor Stores N.A.
The exclusive agreement allows Alcanna to open retail cannabis stores under the Aurora brand in provinces where private retail will be permitted.
Alcanna will build, own and operate the new cannabis stores, which will carry a suite of brands from licensed producers, including Aurora, MedReleaf and CanniMed.
Alcanna has started converting some of its 229 liquor stores to cannabis retail outlets.”
In addition to High Tide’s growing portfolio of retail marijuana brands, Aurora has access to a wide selection of convertible retail locations through Alcanna—meaning Aurora’s retail presence is all but guaranteed to increase, should they obtain the required permits to do so.
Just last week, Aurora closed its previously announced offering of 5.5% convertible senior notes due 2024 for gross proceeds of US$345 million (including US$45 million pursuant to the exercise of the initial purchasers’ over-allotment option). Aurora expects to use the net proceeds from the offering of the notes to support its Canadian and international expansion initiatives, for future acquisitions and for general corporate purposes, including working capital requirements to continue the Company’s accelerated growth.
We suspect that some of these proceeds will go toward increasing Aurora’s retail presence.
Fire and Flower
Fire & Flower Cannabis Co. is an independent cannabis retailer with a significant focus on the Alberta cannabis market. Fire & Flower currently operates 7 stores in Alberta and 2 more in Saskatchewan.
While Fire & Flower is a privately held company, it has received a number of investments from various leading marijuana producers, with aggregate investment totalling well over C$20 million to date. Some of Fire & Flowers most notable investors include Aphria Inc. and The Hydropothecary Corporation.
Fire and Flower recently announced reaching C$10 million in sales since October 17, 2018.
National Access Cannabis
National Access Cannabis (TSXV: META) is best known for its strategic alliance with Second Cup to convert Second Cup locations into National Access Cannabis branded cannabis stores.
But while investors continue to pine over the potential of CBD-infused coffee beverages, National Access Cannabis is also growing into one of Canada’s largest cannabis retailers.
National Access Cannabis operates 14 stores in Alberta and 1 in Saskatchewan through its acquisition of retail marijuana brand NewLeaf Cannabis and 8 stores in Manitoba under the brand Meta Cannabis Supply Co.
National Access Cannabis recently announced revenue of just under C$3.8 million in Q1 2019, an increase of nearly 766% in comparison to Q1 2018. It also generated over $10 million in cumulative sales since Legalization at an average gross margin of over 32%.
Growing Competition in Canada’s Marijuana Retail Sector
The retail cannabis sector in Canada is evolving. New, innovative market entrants such as Westleaf are challenging the Q2/Q3 2018 strategic investments of some of Canada’s biggest marijuana growers. Across the board, cannabis retail concepts are about to be put to the test—and it will be the concepts that most deeply resonate with Canadian consumers that will survive, thrive, and go on to eventually become Canadian legacy cannabis brands.
The original post can be found here, full of pictures and links: https://mugglehead.com/the-state-of-canadas-marijuana-retail-landscape/
Directors of Mugglehead own shares of Westleaf (WL) at the time of this writing.
Mugglehead.com is a digital publisher dedicated to cannabis news, investments, culture, and science, owned by Mugglehead Media Corp. We publish original content, including video, interviews and articles. Because many of the companies and trends we cover are related to investments and stocks within the cannabis industry, please review our disclaimer and forward-looking statements below.
Original content created by Mugglehead Media Corp. © 2019 is protected by copyright laws.
We have lots in store for 2019 so be sure to check us out!
Visit us at https://mugglehead.com daily for all things cannabis-related.
Disclaimer and Forward-Looking Statements
Mugglehead Media Corp. and Mugglehead.com (collectively, Mugglehead) is a news and media publisher dedicated to cannabis. It is not registered as an investment adviser, broker-dealer or other financial or securities professional with any financial or securities regulatory authority. You understand that no content published by Mugglehead constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Mugglehead does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned on this Site.
It is not intended to provide tax, legal, insurance or investment advice, and nothing on the Site should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy or sell any security. None of the content we publish is provided with a view to inviting, inducing or encouraging any person to make any kind of investment decision. You are solely responsible for determining whether any investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation. You should also consult a licensed professional, such as a financial advisor or broker-dealer, when dealing in any securities or making any investment decisions. We do not guarantee that any of the companies mentioned on Mugglehead.com or any of our newsletters or content will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect.
This news release is not an offer to sell or a solicitation of an offer to buy any securities or commodities. To the extent that anything in this press release may be deemed to be investment advice or a recommendation in connection with a particular company or security, such information is impersonal and is not tailored to the needs of any specific person.
You understand that an investment in any security is subject to a number of risks, and that discussions of any security published on the Site will not contain a list or description of relevant risk factors. In addition, some of the securities about which content is published by us have a low market capitalization, insufficient public float and/or are thinly traded. Such securities are subject to more risk than securities of larger companies, including greater volatility, lower liquidity and less publicly available information. Content we publish may have an effect on the price of such securities.
From time to time, Mugglehead (on behalf of itself and any partner, director, officer or insider of Mugglehead) may have a financial or other interest in the party or parties featured on the Site, within the meaning of National Instrument 31-103 - Registration Requirements, Exemptions, and Ongoing Registrant Obligations, published by the Canadian Securities Administrators, as a result of ownership of securities in, compensation received or receivable from or other financial arrangement with such party or parties featured in this press release. We will disclose if we have a position in any such party or parties, as at the date of publication of this press release; however, we may not update this disclosure after such date. Directors of Mugglehead own shares of Westleaf (WL) at the time of this writing.
In addition to historical information, this press release may contain forward-looking statements, including statements with respect to third parties regarding product plans, future growth, market opportunities, strategic initiatives, industry positioning, customer acquisition, the amount of recurring revenue and revenue growth. In addition, when used on the Site, the words ″will,″ ″expects,″ ″could,″ ″would,″ ″may,″ ″anticipates,″ ″intends,″ ″plans,″ ″believes,″ ″seeks,″ ″targets,″ ″estimates,″ ″looks for,″ ″looks to,″ ″continues″ and similar expressions, as well as statements regarding a third party’s focus for the future, are generally intended to identify forward-looking statements. Each of the forward-looking statements we make in this press release involves risks and uncertainties that may cause actual results to differ materially from these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those disclosed by the companies featured in this release in their public securities filings. You should carefully review the risks described therein. You should not place undue reliance on these forward-looking statements, which speak only as of the date such statement was published. Mugglehead undertakes no obligation to publicly release any updates or revisions to the forward-looking statements or reflect events or circumstances after the date of their publication, except as required by law.
From time to time, reference may be made in this press release to prior articles or opinions we have published. These references may be selective, may reference only a portion of an article or opinion, and are likely not to be current. As market information changes continuously, previously published information and data, and any references thereto, may not be current and should not be relied upon.
If you ever have any questions or concerns about our business or publications, we encourage you to contact us.
Contact: muggle (at) mugglehead.com