On Thursday, Canopy Growth Corp (TSX:WEED)(NYSE:CGC) announced that it will be working with Alimentation Couche-Tard Inc (TSX:ATD.B) on a cannabis store in London, Ontario. The two companies entered into a multi-year agreement and will help support the operator of the London store, who was one of the lottery winners that was able to obtain a license to setup a pot shop in the province.
Given the tight restrictions around pot producers owning retail locations in Ontario, it seems as though Canopy Growth may have found a way around the issue. While it’s not clear from the release what kind of agreement is in place between Couche-Tard, Canopy Growth and the store’s operator, it definitely appears to be one of an advising relationship per the grower’s statement:
We are proud to be working with a leading global company like Alimentation Couche-Tard to advise and assist in bringing a trusted cannabis brand to the people of London, Ontario. Our brand is synonymous with having informed staff who can help consumers find the right option for them, whether they are a new or an experienced consumer
– Mark Zekulin, Co-CEO of Canopy Growth
The store will operate under the Tweed brand and is expected to open in April. Couche-Tard’s CEO on the deal:
Alimentation Couche-Tard is excited about taking a leadership role in the development of cannabis retailing excellence in this major Canadian market. We believe the Ontario Cannabis Store and private retailers will co-exist under a tightly regulated framework with common goals to protect public health and safety,
– Brian Hannasch, CEO of Alimentation Couche-Tard
Why does this matter?
This is an interesting partnership between Canopy Growth and Couche-Tard, as the latter had previously expressed interest in getting involved in the industry and possibly selling pot at its convenience stores. Couche-Tard, which runs convenience stores across the world and has around 10,000 locations just in North America, has a wealth of experience when it comes to the world of retail.
Known for its popular Mac’s stores in North America, Couche-Tard has built up a strong brand and has proven it knows how to grow internationally.
For Canopy Growth, it’s a big win for the company as it adds yet more knowledge and expertise that it can tap into. While this agreement is for one store, this could unlock more opportunities down the road for these two companies, and that could give Canopy Growth a big advantage over its peers, especially in markets where it will have more control over retail.
Not only are pot companies trying to grow in terms of licenses and capacity around the world, but we’re also seeing companies build up their resources through strategic partnerships as well. While there’s nothing to say this is an exclusive partnership, it still gives Canopy Growth access to a lot of retail expertise.
And with the pot producer recently announcing plans to expand into the U.S., it’s going to need every advantage that it can get in what’s sure to be a very competitive industry with many companies vying for market share.