Oct 9, 2020
Alcanna to pull Canopy products due to expansion approach
Alcanna Inc.'s pot shops will stop selling cannabis products made by Canopy Growth Corp. amid Canopy’s rapid retail expansion into Western Canada, according to a company executive.
Marcie Kiziak, the head of Alcanna's cannabis retail division, told BNN Bloomberg that its pot stores will stop selling Canopy's wide range of products including dried flower, pre-rolls, vapes, and infused drinks following recent moves onto its home turf.
Canopy said in August it plans to open 10 new stores in Alberta under its Tweed and Tokyo Smoke banners.
"The problem is having a [licensed producer] open stores in our backyard, especially in areas where we're struggling to get a foothold," Kiziak said during a phone interview. "[Canopy] has chosen to locate some stores in smaller bedroom communities that don't make a lot of sense to me."
Kiziak said that Canopy represented about 10 per cent of Alcanna's cannabis store sales. Alcanna owns and operates 32 pot stores in Alberta under the Nova Cannabis and Deep Discount Cannabis brands, and one Nova store in Ontario. The company said it made $15.6 million in cannabis store revenue in its second quarter.
While the revenue hit to Canopy may not appear to be immediately significant, Alcanna's move to end sales of the company's products marks a shot across the bow to retailers operating in Canada's still-nascent, yet highly competitive cannabis industry.
While there are more than 1,100 pot stores open across Canada, roughly half of them reside in Alberta that has seen some retailers close up shop as a result of placing outlets near each other or overestimating demand in some regions.
"I can get behind a [Canopy-owned] flagship store but I can't get around my head of a [licensed producer] opening stores in an already saturated market where it's difficult enough to get a foothold in the province," Kiziak said.
A Canopy spokesperson told BNN Bloomberg in an email that the "strategic placement" of its Tweed and Tokyo Smoke should help strengthen the cannabis industry's overall growth.
"We have a strong portfolio of products and a pipeline of innovation that we know consumers will be looking for in any store they shop in," the spokesperson said.
In a separate announcement on Friday, Alcanna said it expects cannabis sales in its third quarter will be about 23 per cent higher than the same period last year, while gross margins should come in around 33 per cent.
