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04/20/2022

Couche-Tard to increase stake in cannabis retailer Fire & Flower

C-store giant teamed up with the Canadian cannabis retailer in 2019 to help accelerate its expansion strategy.
Michelle Warren
Editor, Convenience Store News Canada
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logos of ACT brands and Fire & Flower

Alimentation Couche-Tard is increasing its ownership of Canadian cannabis retailer Fire & Flower Holdings Corp. through the exercise of warrants.

Fire & Flower Holdings Corp., a cannabis consumer retail and technology platform, announced today that 2707031 Ontario Inc., an indirect wholly-owned subsidiary of Alimentation Couche-Tard Inc., has confirmed its intention to exercise warrants to acquire 8,288,067 common shares of Fire & Flower.

In turn, ACT's ownership of common shares of Fire & Flower will more than double to 35.32% from 14.49%.

In July 2019, Couche-Tard announced its strategic investment in Fire & Flower with a mandate to provide the Canadian cannabis retailer with additional capital to further accelerate its expansion strategy. Couche-Tard invested approximately $26 million in the form of unsecured convertible debentures to obtain a 9.9% ownership interest in Fire & Flower on a fully diluted basis.

Since then, Fire & Flower has opened more than 100 corporate stores in its network. The multi-banner cannabis retail operator owns and operates the Fire & Flower, Friendly Stranger, Happy Dayz and Hotbox brands. Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc. and Friendly Stranger Holdings Corp., licensed cannabis retailers that own and operate cannabis retail stores in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and the Yukon territory.

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fire and flower store sign

Fire & Flower continues to build on its operational partnership with Alimentation Couche-Tard and in fall 2021 announced plans to open new Fire & Flower cannabis retail stores adjacent to existing Circle K stores in new markets across Canada, including Alberta, Saskatchewan and Manitoba. In a release at the time, Fire & Flower said the "enhanced agreement also allows for the opportunity to further expand the program into additional high-value markets including Ontario and the United States."

The initial Circle K co-located store pilot program launched in Alberta in July 2020 with a store each in Calgary and Grand Prairie. The plan utilized ACT's existing lease footprint to build a co-located, small-scale Fire & Flower retail operation that the companies said "delivers strong economies of scale for both companies due to the opportunity to incorporate Fire & Flower's industry-leading Hifyre technology and analytics platform."

Earlier this month, Fire & Flower announced that its wholly-owned subsidiary, Open Fields Distribution, has entered into a one-year cannabis distribution agreement with Manitoba Liquor & Lotteries to offer distribution of recreational cannabis products from licensed producers to retailers in the province of Manitoba at the direction of the MBLL. Open Fields also offers wholesale and distribution services in Saskatchewan.

Fire & Flower will release its financial and operational results for the quarter and fiscal year ended January 29, 2022 before financial markets open on April 26, 2022.

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