Canopy Growth To Sell Canadian Retail Ops

Canopy Growth (TSX: WEED) announced on Tuesday that it has entered into agreements to divest its retail business across Canada. While no cost consideration was disclosed, the divesture involves the firms stores operating under the Tweed and Tokyo Smoke retail banners.

The cannabis firm is selling 23 Tokyo Smoke and Tweed store locations across Manitoba, Saskatchewan, and Newfoundland and Labrador to licensee partner OEG Retail Cannabis. The Tokyo Smoke brand will also be transferred to the latter, superseding the two companies’ franchise agreement.

The Ontario-based company bought Hiku Brands–which includes Tokyo Smoke–in 2018. While the acquisition was then originally pegged at $269 million, the final price tag was much closer to $600 million as a result of Canopy’s share price appreciating between the time of announcement and its close.

On the other hand, Canopy Growth is also selling to 420 Investments five of its retail locations in Alberta, which are expected to be rebranded under FOUR20’s retail banner.

In addition, the firm will continue to own and operate the Tweed brand, but its use for brick-and-mortar retail stores has been terminated, including Alimentation Couche-Tard’s license to use it for locations in Ontario.

The move, the company said, shows the focus on being “a premium brand-focused cannabis and consumer packaged goods (CPG) company” and leaving the retail footprint to “organizations that possess proven cannabis retail expertise.”

“We are taking the next critical step in advancing Canopy as a leading premium brand-focused CPG cannabis company while furthering the Company’s strategy of investing in product innovation and distribution to drive revenue growth in the Canadian recreational market,” said CEO David Klein.

Closings of the transactions are subject to regulatory approvals and other customary closing conditions.

The firm recently reported its Q1 2023 financials, which saw a $1.7 billion cannabis segment impairment.

Canopy Growth last traded at $4.04 on the TSX.

Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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