The tide is rising in Ontario.
Alberta-based High Tide Inc. has its sights set on Canada’s most populous province, announcing this week that it has acquired part or all of two Canna Cabana stores in Hamilton and Sudbury.
The stores received their licences through the first (now abolished) lottery system that the Ontario government relied on shortly after cannabis legalization in Canada.
Canna Cabana is a retail concept designed by High Park that the company used to help independent operators across the country get their cannabis stores up and running. It partnered with the two Canna Cabana locations (and a third in Toronto) last year to assist in opening and operation efforts ahead of this week’s acquisitions.
The province’s decision in December to end its retail lottery system in favour of an open allocation model has companies shuffling to gain access to a lucrative market any way they can. As of April, Ontario is to begin authorizing new stores at a rate of 20 per month, with the aim of having 250 stores operational by the end of 2020.
“High Tide is excited to add the Hamilton store to its corporately owned portfolio of stores, with its large and loyal customer base and top-tier financial performance,” said Raj Grover, president and CEO of the company. “Over the coming year, we look forward to growing our presence in the Ontario market and reaching the maximum of 10 stores per operator as quickly as possible,” Grover said.
The Hamilton location, which has been open since last April, has generated roughly $14 million in gross sales since then, according to Deep Dive. High Tide paid $2.1 million in cash in addition to 4,761,904 in common shares of the company to fully acquire the store.
For the Sudbury location, which has grossed $6.4 million since opening last April, High Tide handed over around $1.06 million worth of common shares for a 50 per cent stake in the operation.
“This transaction is High Tide’s second step towards acquiring its ownership interests in all three Canna Cabana stores in Ontario,” Grover said of the Sudbury deal. “There is no better time to continue strengthening our presence in the country’s largest consumer market,” he added.
Ontario currently has about two dozen cannabis retail stores for 14 million people, with another approximately 50 authorized licences expected to be operational by spring. In comparison Alberta, a province with a population of 4 million people, has opened and supported 300-plus privately owned stores.
Estimates suggest Ontario’s cannabis market could support 1,000 retail stores and create 14,000 jobs in the retail sector alone. It seems clear Ontario’s lacklustre retail footprint over the first year of legalization has underserved the market, done little to stop illicit actors from profiting and represents a lost opportunity for industry growth and tax revenue.