Join today and have your say! It’s FREE!
We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}

Join today with :

or

By providing my email, I consent to receiving investment related electronic messages from Stockhouse.
Sign in with existing account
Please Try Again
{{ error }}

Sign In With :

or

Password Hint : {{passwordHint}}
Forgot Password?
Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Poised to be THE Winner in Canadian Cannabis Retail

Dave Jackson Dave Jackson, Stockhouse
1 Comment| April 18, 2019


Click to enlargeFor both the rookie and experienced investor jumping into the nascent retail cannabis pool the choices may appear mystifying and mindboggling. The fact so many are start-ups with little or no retail experience, limited capital, the diversity of hard valuation, and vast array of business models offer a variety of options but also immense financial risk. Many of the early movers are clearly overhyped and overvalued and are perilously positioned with lack of capital liquidity, heavy lease commitments on locations that don’t have licenses and may not get them for months or longer, and weak existing revenue streams.
 
So where is the smart money going a third of the way into 2019? According to recently published articles in global research house The Greenfund and news & information platform New Cannabis Ventures, companies with “extensive knowledge of regulated industries, a massive footprint and reach throughout Canada, and the significant access to capital they currently possess” are the ones offering real value and opportunity in the crowded retail cannabis space.
 
Enter Alcanna Inc. (T.CLIQ, OTC: LQSIF, Forum) – Canada’s largest private retailer of adult beverages, and one of the top three in North America, with 236 liquor retail stores and counting. Alcanna is the ONLY player in cannabis retail that hits all those buttons. Their liquor retail footprint covers all sectors – large‐format / category‐killers, convenience‐format, and discount‐focused stores. The Company offers beer, wine, and spirits items under the brand names Wine & Beyond, Liquor Depot, Ace Discount Liquor, and Brown Jug and is currently operating retail stores spread across Alberta, British Columbia, and Alaska. With expected revenues in excess of $700-million-per-year, 20-million-plus transactions processed annually, 2,200 employees, and a market cap of just shy of $200 million at press time, this is no small-time player entering the cannabis marketplace. Alcanna has retail operations in both Canada and the USA and is comfortable and capable of operating in multiple jurisdictions.
 
The Company lifted off into retail cannabis with a bang on October 17, 2018, launching five retail cannabis stores with a multi‐year growth plan to open more than 100 stores in Alberta and Ontario in the coming two years. A lofty goal to be sure, but with the Company’s nearly 240 high-revenue-generating liquor stores to date, Alcanna has proven they have the chops to scale out and amp up their retail cannabis operations to such a large degree, as soon as supply and licenses are available again. But Alcanna is unique amongst cannabis retailers because it has the size and balance sheet to be able to wait until whenever that time comes.

 
The Nova Cannabis Brand
 
The Company opened five store locations in Alberta under the Nova Cannabis banner to coincide with October 17, 2018 legalization. Due to Alcanna’s superior real estate and experienced retail team, Nova Cannabis stores have significantly outperformed reported sales by other cannabis retailers.
 
Alcanna has leases in prime AAA locations for the remaining 32 locations (no single company can currently hold more than 37 licenses in Alberta) and is building them out now in anticipation of licenses being issued again in the coming months.
 
Alcanna has used its 25 years of real estate experience and excellent relationships with both national and regional landlords to target convenient locations (i.e. shopping centres and grocery-anchored sites) along with a presence in trendy, urban areas to help establish the brand.

Click to enlarge 

On April 20 – 4/20! Nova Cannabis will host the grand Opening of its new store at 499 Queen Street West in Toronto, in the heart of the trendy Queen West district. It will be just the third legal cannabis retailer to open in Toronto and one of only five until December 13, 2019 at the earliest, according to Ontario legislation.
 
Alcanna worked with an Ontario lottery winner to open the state-of-the-art 3000 square foot Nova Cannabis-licensed retail store which has been redesigned to accommodate high sales volumes. It will be a distinct departure from any other cannabis retailer. Alcanna had its Nova Cannabis store ready to open for April 1st, but was delayed in getting final Alcohol and Gaming Commission of Ontario (AGCO) license approvals.
 
The Company says they’ve learned valuable lessons from Alberta’s retail rollout – and especially the two weeks after October 17th – and are prepared for such a high-volume location as 499 Queen Street West.
 
 
Investors Corner: Q4 2019 Results
 
Alcanna posted very strong returns for the fourth quarter of 2018, reporting Canadian same-store sales growth of 7.4% and U.S. same-store sales growth of 6.0%. This was the Company’s best quarter of same-store sales growth in six years.
 
James Burns, CEO of Alcanna, commented on the robust revenue numbers for the quarter:
 
“Alcanna continues to do exactly what we said we would do. The Board and management set out in 2018 to change Alcanna from a declining business anchored in the past to a dynamic growth-oriented company. Our objectives were – and continue to be – to recapture lost market share, expand and re-invent our preferred label program, enter the discount segment of the Alberta liquor retail industry, launch an entirely new cannabis retail business, and invest significantly in our existing and new locations and in our people to position the company for significant medium to long-term shareholder value enhancement.”
 
 
Strategic Plan is Fully Funded

 
(Click image to enlarge)


The Aurora Deal
 
In February 2017, Aurora Cannabis Inc. announced a strategic investment of $138 million to acquire 25% of Alcanna, with a view to establishing a leading brand of cannabis retail outlets. This forward-thinking relationship combines Aurora's brand leadership, high-quality products, customer care, and scientific innovations with Alcanna’s well-established retailing infrastructure and expertise. Over the past 25 years, Alcanna has established an exemplary track-record of responsibly retailing controlled substances in retail environments that require strict compliance with government regulations.

 
Meet the Team

(Click image to enlarge)
  
   
 
 
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.



Interested in these industries and sectors?

Receive investor kits and email updates from Stockhouse and directly from these companies.

Healthcare
Technology
Metals & Mining
Technology
Industrials

Interested in these industries and sectors?

You are already a member! Please enter your password to sign in.

Comments

No comments yet. Be first to comment!

Leave a Comment

You must be logged in to access this feature.


×

StockTalk
Get our FREE StockTalk Investor Guides by sector as they are released!

Stay on top of sector specific news, get industry leaders insights and our best content, delivered to your email.

You are already a member! Please enter your password to sign in.