Canopy Growth Divests Canadian Retail Business

Cannabis company exits agreement with Alimentation Couche-Tard
Cannabis in Canada
Photograph: Shutterstock

SMITH FALLS, Ontario —  Alimentation Couche-Tard Inc. said it intends to maintain its commitment to cannabis retail as one of its partnerships ends. 

Canopy Growth Corp. is exiting some of its Canadian retail operations—including a partnership with the Laval, Quebec-based convenience-store operator.

We remain committed to being part of the cannabis retail landscape in Canada and being a responsible retailer of age-restricted products,’’ a Couche-Tard spokesperson said. We operate several co-located sites in Canada and through our strategic ownership in Fire & Flower, we continue to monitor changes in legislation across our North America markets and the evolving opportunities for improving the customer experience.’’

Canopy Growth said Wednesday that it had entered into agreements to divest its retail business across the country, which includes more than 20 stores operating under the Tweed and Tokyo Smoke retail banners. Couche-Tard  entered into a multiyear agreement with Canopy Growth in 2019 to sell marijuana at a Tweed-branded retail store in London, Ontario. That agreement, which included two stores, is now terminated. 

Couche-Tard still has a stake in the cannabis game as it is an investor in adult-use cannabis retailer Fire & Flower Holdings Corp., Toronto. 

  • Alimentation Couche-Tard Inc. Is No. 2 on CSP’s 2022 Top 202 list of biggest U.S. convenience-store chains by store count.

The OEG Retail Cannabis (OEGRC), an existing Canopy Growth licensee partner that owns and operates the company’s franchised Tokyo Smoke stores in Ontario, will acquire all of Canopy Growth’s corporate stores outside of Alberta as well as all Tokyo Smoke-related intellectual property. Tweed retail stores it acquires will be rebranded. 420 Investments Ltd. will also acquire five retail locations in Alberta. The closing of these deals is subject to regulatory approvals and other customary closing conditions.

“We are taking the next critical step in advancing Canopy as a leading premium brand-focused [consumer packaged goods] cannabis company while furthering the company’s strategy of investing in product innovation and distribution to drive revenue growth in the Canadian recreational market,’’ said David Klein, CEO of Canopy Growth. “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.”

Canopy Growth, Smith Falls, Ontario, will continue to own and operate the Tweed brand, including its portfolio of mainstream flower, pre-rolled and ready-to-enjoy options.

In the company’s first-quarter fiscal year 2023 earnings report, for the quarter ending on June 30, 2022, it said recreational net sales were down 28% compared to first-quarter 2022, largely driven from the rapid increase in third-party retail locations across provinces.

Couche-Tard’s 24-country global c-store network includes approximately 9,300 locations in North America, with more than 7,100 in the United States, primarily under the Circle K and Holiday Stationstores banners, and approximately 2,100 in Canada under the Circle K, Mac’s and Couche-Tard banners.

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