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OEG Retail Cannabis (OEGRC), which holds a portfolio of brands in sports and entertainment, retail cannabis, and hospitality, announced plans Sept. 27 to acquire dispensaries and the Tokyo Smoke brand from Canopy Growth Corporation.
The company will acquire 23 of Canopy’s Tweed and Tokyo Smoke stores in Manitoba, Saskatchewan, and Newfoundland and Labrador, according to the press release.
When the transaction closes, OEGRC will be the sole owner of the Tokyo Smoke brand and trademark, and all the Tweed dispensary locations acquired will be rebranded. The company will retain all current customer-facing retail employees at the stores, according to the announcement.
“We believe this is the start of something special for the retail cannabis industry,” OEG Inc. CEO Jürgen Schreiber said in a public statement. “With this acquisition, OEG Retail Cannabis and the Tokyo Smoke brand are positioned as outright leaders in Canadian retail cannabis, and we are committed to doing everything we can to lead in customer experience, product quality and safety for years to come as the country’s cannabis industry continues to evolve and mature.”
In Canopy’s announcement of the acquisition, it said the “decision supports the company’s strategic objectives including streamlining Canadian operations, achieving profitability, and advancing a premium brand-driven portfolio for consumers.”
OEGRC is an existing Canopy Growth licensee partner and currently owns and operates the company’s franchised Tokyo Smoke stores in Ontario, according to Canopy’s press release.
“OEG Retail Cannabis and Canopy Growth have been partners for many years now and we are committed to a smooth transition for employees and customers of the newly acquired stores as we await final regulatory approval in the coming months,” Schreiber said in a public statement. “This agreement is a prime example of the continued advancement of the Canadian cannabis industry, with each respective organization focusing on its strengths and expertise. For OEG Retail Cannabis, this includes significantly expanding its retail footprint nationally, leveraging a long history of retail excellence in Canada. For Canopy Growth, the focus is driving forward a leading premium-focused brand and product portfolio for consumers.”
Canopy has also entered into an agreement with 420 Investments Ltd. (FOUR20), which will acquire five of Canopy’s retail locations in Alberta. The dispensaries will be rebranded under FOUR20’s retail banner, and the in-store employees will continue in their current roles, according to the announcement.
Canopy will continue to own and operate its Tweed brand and announced that it has terminated a master license agreement with Alimentation Couche-Tard Inc. The agreement would have allowed Alimentation Couche-Tard to use the Tweed brand for brick-and-mortar retail stores operating in Ontario, according to the press release.
Canopy hopes to realize operational savings through these transactions that will bring it closer to the projected savings that were announced in April, when the company unveiled cost-cutting initiatives and layoffs.
Those initiatives, as outlined in a company press release, include:
Reducing the cost of goods sold (COGS) in Canopy’s Canadian cannabis business by lowering per-gram cultivation costs through increased cultivation-related efficiencies and facility improvements;Implementing a flexible manufacturing platform inclusive of contract manufacturing for certain product formats;Rightsizing indirect costs and generating efficiencies across the company’s supply chain and procurement;Aligning selling, general and administrative costs (SG&A) with short-term business expectations by reducing third-party professional fees and office costs; andFurther streamlining the organization to drive process-related efficiencies.
“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 in a public statement. “By realizing these agreements with organizations that possess proven cannabis retail expertise, we are providing continuity for consumers and team members. 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.”
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