Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) has divested its retail operations as a way to streamline operations and increase its profits.
On Thursday, the cannabis firm announced it is divesting from its retail businesses across Canada and has reached an agreement with OEG Retail Cannabis –an existing licensee partner with Canopy that operates Tokyo Smoke– and 420 Investments Ltd. to acquire the shops.
The Tokyo Smoke shops in Ontario will be operated by OEG Retail Cannabis has acquired all of the company’s stores outside Alberta as well as the Tokyo Smoke-related intellectual property. Four20 has agreed to acquire five locations in Alberta that will be rebranded under the FOUR20 retail banner.
Upon completion of the OEGRC transaction, the company will acquire ownership of 23 Tokyo Smoke and Tweed stores across Manitoba, Saskatchewan and Newfoundland and Labrador. Any stores currently branded as Tweed will be renamed Tokyo Smoke.
The company says that operational savings through these transactions will result in 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 in April.
Canopy also announced that its agreement with Alimentation Couche-Tard Inc. on the use of the Tweed brand for retail stores in Ontario will be terminated.
“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,” Canopy CEO David Klein said.
“By realizing these agreements with organizations that possess proven cannabis retail expertise, we are providing continuity for consumers and team members,” Klein added.
“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.”