Second Cup Coffee Co. (TSX: SCU), otherwise known as the largest Canadian coffee company (since Timmies was bought by Burger King), is getting into cannabis.
The company announced Friday it is rebranding itself as Aegis Brands Inc., which will own and operate Second Cup, but will also be branching into sectors the company says its knows best, like food service, coffee and cannabis.
Second Cup’s 246 cafes, of which 30 are company owned but franchise run, are not expected to be effected by these changes.
“We created Aegis with the vision of building a portfolio of amazing brands that can grow and flourish with access to our resources and expertise,” said president and CEO of Second Cup Steven Pelton in a statement.
“We are committed to letting each company under the Aegis Brands umbrella operate as an independent brand, and to working with them to provide shared expertise — and shared services — to help them thrive,” he added.
Back in April 2018 Second Cup paired up with Canada’s largest publicly traded recreational cannabis retailer National Access Cannabis Corp. (TSXV: META) to build a network of Aegis-owned, NAC-branded recreational cannabis dispensaries. NAC owns and operates 25 NewLeaf Cannabis stores in Alberta, nine Meta Cannabis Supply Co. stores in Manitoba and one Meta store in Saskatchewan.
Of the 35 retail locations 33 are open and operational and NAC said it plans to open five more locations by the end of the year, according to an October statement. NAC reported over $60 million in sales since legalization with cumulative gross margins of 32 per cent.
The company is working to secure Health Canada licenses to open cannabis retail stores in two of the company’s Calgary locations and will next be “aggressively” pursuing pot shops in Ontario, where Second Cup’s brand has the largest footprint, according to the company’s third quarterly report for the period ended Sept. 28, 2019.
Pelton will assume the role of CEO of Aegis Brands and will maintain his role of president of Second Cup.
The name and company changes hinge on majority shareholder approval at the next annual general meeting May 2020 as well as TSX approval. These changes will not effect its existing shares except other than potential ticker name changes, the company said.
Today’s announcement dropped Second Cup’s stock by 1.43 per cent and jumped NAC’s stock up by 6.38 per cent.