Canopy to Close Hershey Facility

Canopy Growth Corp will lay off 800 employees as part of a restructuring plan that includes closing the iconic Hershey Facility in Smith Falls, Ontario. The layoffs will impact 35 percent of its workforce and take place over the next few months. David Klein, Canopy Growth’s chief executive, said in a statement to the press: “We are transforming our Canadian business to an asset-light model and significantly reducing the overall size of our organization. These changes are difficult but necessary […]

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Investors Lose Billions with Canadian Cannabis 

Investors have lost billions investing in Canadian cannabis. That’s the latest data collected by the law firm Miller Thomson. Of the total 183 publicly traded licensed cannabis producers, they collectively lost $131 billion. Or, as one Redditor put it, High quality marijuana cost $7.69 per gram. It’s estimated that the average joint has 0.32 grams of marijuana in them. So one joint should be around $2.46. Therefore, $131 billion could purchase 53,252,032,520 joints. Canada’s population is 38.25 million. So each […]

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Yukon To Begin Private Online Cannabis Sales

In another victory for cannabis liberty, the Canadian territory of the Yukon will begin private cannabis sales. For four years, the Yukon Liquor Corporation has monopolized online cannabis sales. The Yukon government is also legalizing private-sector delivery. As of this announcement, the Yukon government will be entirely out of the cannabis business. The territory currently has six retailers, four in the capital of Whitehorse, one in Dawson City, and the other in Watson lake. Yukon has only one federally licensed […]

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Cannabis Inflation: Corporate Greed?

If cannabis prices rose significantly, would you blame inflation or corporate greed? Or are those two sides of the same coin? If inflation and corporate greed are two sides of the same coin, then it must be a pretty big coin. It’s as if you’re saying the United States is located in the Milky Way Galaxy. Technically, you’re not wrong. But there’s obviously more to it. Nearly every problem society faces is either a product of (or exacerbated by) the […]

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Uber Eats to Deliver Cannabis in Toronto

Leafy and Uber Eats have teamed up to deliver cannabis in Toronto. They announced the partnership on the fourth anniversary of cannabis legalization in Canada. Uber Eats is the first third-party delivery platform to deliver cannabis, but the devil is in the details. How it Works Like purchasing alcohol through Uber Eats, the consumer has to be 19 years old and show ID to the delivery driver. The delivery driver also has to verify the sobriety of the customer. Unfortunately, […]

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Canopy Growth Sells Its Canadian Retailers

Cannabis giant Canopy Growth Corporation announced Tuesday that it is divesting its retail business throughout Canada, a major concession for the company as it continues its drive toward profitability.

The company said that it reached an agreement with OEG Retail Cannabis, “an existing Canopy Growth licensee partner that currently owns and operates the Company’s franchised Tokyo Smoke stores in Ontario,” all 23 of Canopy Growth’s Tokyo Smoke and Tweed retail shops throughout the country.

David Klein, the CEO of Canopy Growth, said the move was the “next critical step in advancing Canopy as a leading premium brand-focused [consumer packaged goods] cannabis company while furthering the Company’s strategy of investing in product innovation and distribution to drive revenue growth in the Canadian recreational market.”

“By realizing these agreements with organizations that possess proven cannabis retail expertise, we are providing continuity for consumers and team members,” Klein said in a statement.

The company’s announcement, which came after the closing bell on Tuesday, means that Canopy Growth is waving the white flag on its acquisition of Tokyo Smoke in 2018.

Although the price of the deal was not disclosed, analysts said that Canopy Growth was likely getting much less than what it paid.

Jefferies analyst Owen Bennett called the divestment of the retail stores an example of “wasted capital,” as quoted by MarketWatch.

“Given deal terms were not disclosed, we do not imagine the multiple was attractive, especially alongside the fact that retail in Canada overall is struggling, and also given the deal more appears to be driven by getting costs off the P&L,” Bennett said in a research note on Wednesday, as quoted by MarketWatch.

“When considering Canopy paid C$250mn for Tokyo Smoke back in July 2018, and this deal also includes all the Tweed stores, this is another example of the wasted capital that was very common under old leadership,” Bennett said.

Under the agreement announced on Tuesday, OEG Retail Cannabis “has agreed to acquire all of Canopy Growth’s corporate stores outside of Alberta as well as all Tokyo Smoke-related intellectual property,” the press release said.

Canopy Growth said that it has “also reached an agreement (the “FOUR20 Transaction”) with 420 Investments Ltd. (“FOUR20”) pursuant to which FOUR20 has agreed to acquire the ownership of five retail locations in Alberta.”

“Through the best-in-class retail leadership that OEGRC and FOUR20 have demonstrated, they will continue to serve Canadian consumers with the high-quality in-store experiences that are essential for success in a new industry,” Klein said.

Canopy Growth said that “operational savings realized through these transactions are expected to result in Canopy’s projected selling, general, and administrative cost savings being closer to the high end of the annualized target range expected as part of the cost reduction actions announced on April 26, 2022.”

The company’s overview of the Tokyo Smoke transaction included the following notes: “upon completion of the OEGRC Transaction, OEGRC will acquire ownership of 23 Tokyo Smoke and Tweed store locations across Manitoba, Saskatchewan, and Newfoundland and Labrador”; “as part of the OEGRC Transaction, the Tokyo Smoke brand will be transferred to OEGRC and any purchased stores currently branded as Tweed will be rebranded”; and “the master franchise agreement between the Company and OEGRC pursuant to which OEGRC licenses the Tokyo Smoke brand in Ontario will be terminated on the closing of the OEGRC Transaction.”

It makes for a continuation of a wobbly year for Canopy Growth. As Reuters reported this week, the company earlier this year “extended its time frame to achieve profitability as fewer-than-expected retail stores and cheaper black market rates crimp sales at legal recreational companies.”

In April, the company announced that it was laying off more than 200 employees in a bid toward cutting costs.

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Reviewing the Cannabis Act

Justin Trudeau’s hashtag government is finally reviewing the Cannabis Act – a year late. They want to know: has cannabis legalization been successful? Not in the sense of whether it’s been working for those who buy, sell, and consume cannabis. No, according to the Liberal’s Cannabis Act, the review must focus on Indigenous people, home growing, and whether legalization has helped the children. After all, it was never about your right to your body. Post-COVID, it’s clear that freedom doesn’t […]

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Making Sense of the COVID Cannabis Surge 

How can we make sense of the COVID Cannabis surge? As reported previously, a pandemic-induced cannabis bubble has now burst. Total market cannabis sales are now in decline but what’s happened is a return to pre-pandemic market conditions. We can answer some pressing questions using real-time sales reporting from Headset Insight. Namely, did we see a more significant decline in transaction volume or transaction size? Which products fared best and worst during the last couple of years? And which customers […]

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Germany’s Legalization Plans

What are Germany’s legalization plans? Do they still plan on legalizing cannabis despite the obstacles ahead of them? There is uncertainty regarding natural gas supplies and European member state rules that forbid the importation of recreational cannabis. Nevertheless, Germany has committed to its legalization plans. Even going as far as California to meet with industry stakeholders and dispensary owners. Germany’s Legalization Plans Informed by California? German’s Health Committee visited Oakland last week to discuss “best practices” as part of Germany’s […]

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