Canadian cannabis retailer Fire & Flower has been unrelenting in implementing their rapid rollout strategy. On July 23rd the company announced via press release their 24th cannabis retail store license and, with it, the expansion of the brand’s reach into the Yukon Territory. Hot on the heels of acquiring their latest store license, it was announced yesterday that the company has entered into a subscription agreement with Alimentation Couche-Tard which, if exercised in full, could provide growth capital of over $380,000,000 to aid in further retail expansion and continued development of its Hifyre™ digital platform.
“With the phenomenal partner that we have in Couche-Tard, they have deep expertise on the retail side. They have an incredible network with over 16,000 stores in 26 countries,” says Nadia Vattovaz, CFO of Fire & Flower.
“We are a force to be reckoned with. That includes things like finding ways to rapidly scale in Canada – in markets that we’re able to do so – and to seize opportunities in the Canadian space as they come along. With incremental investment we’re able to do that at a faster pace.
“There are opportunities outside of Canada, both in the cannabis space, as well as potentially other opportunities, that we’re certainly going to be looking at. There’s no such thing for us in this relationship as ‘either/or.’ We’ll be looking at a multitude of ways to grow.”
The physical growth and expansion of the company is just one tier of a multi-faceted strategy which Fire & Flower will be continuing to implement. Another key to the strategy involves the Hifyre™ digital platform which serves to dictate preference and local experience by best connecting consumers with the products they desire most.
“Hifyre is what I would call ‘our diamond’ from a Retail 2.0 perspective. Because we are solely built for cannabis retail, we had the ability to create – from the ground up – a digital infrastructure that would address the needs as a new retailer,” says Vattovaz about the platform.
“When the Hifyre platform was created well over a year ago, it was really important that we saw what’s called The Attribution Issue; to understand who’s buying, what products, when they’re buying it, and where they’re buying it. The way we have built the infrastructure is such that all those elements are addressed in various aspects.”
Nadia continues, “What that allows us to do is to be able to provide information not only to ourselves, but to product creation companies – that could be the LPs, that’s also the consumer product companies – on what customers are looking for. They look to us to provide that guidance, and they’re very, very interested in getting that information, because they’re trying to figure their way through this new industry, especially with Legalization 2.0.
“We’ve had great interest in uptake on our offering, and it will only increase because every day I see new functionality coming out of the group. the Hifyre team is second to none, in my opinion, and they have a very specific roadmap. They are delivering new functionality on a quicker, regular basis, so we will be able to provide more and more informative data.”
The influx of capital from Alimentation Couche-Tard’s strategic investment will allow Fire & Flower to ramp up development of the digital platform; a move that will serve to benefit both parties substantially.
“Couche-Tard is very interested in this,” notes Vattovaz. “It really is important to remember that the Hifyre platform – although built with a cannabis retailer in mind – does not simply apply as cannabis retail. It can be leveraged in multiple industries. Our new partners at Couche-Tard, who are extremely successful and are the best of the best in terms of business leaders, are very interested in this proprietary platform for sure.”
Expansive, rapid growth will continue to be a driving force for Nadia Vattovaz and Fire & Flower, and with the wealth of knowledge and proven results already built-in to a massive company such as Alimentation Couche-Tard, a strong and lucrative future should be presenting itself on a very quick timescale. When looking at what’s next for Fire & Flower, Vattovaz had this to say:
“In retail, you’re always learning. With every location, with every customer interaction in various markets, we we continue to learn about what our customers are looking for. We continuously work with our vendors on how we can help them and how they can help us so that we can evolve the cannabis industry in Canada and beyond the gates of Canada in a meaningful way.”
Below are highlights of the transaction between Fire & Flower and Alimentation Couche-Tard from the press release:
- Couche-Tard will initially purchase $25,989,985.42 principal amount of convertible unsecured debentures (the “Debentures”) that are convertible into an aggregate of 24,289,706 Common Shares at a price of $1.07 per Common Share, representing a 9.9% ownership interest in Fire & Flower;
- Couche-Tard will concurrently receive three series’ of common share purchase warrants (the “Warrants”), which, if exercised in full, along with certain other investor rights, would subsequently increase Couche-Tard’s ownership interest to 50.1% on a fully-diluted basis (assuming the conversion in full of the Debentures) and provide more than $380,000,000 in growth capital to the Company;
- Fire & Flower will grant board nomination rights to Couche-Tard which escalate commensurate with the exercise of the Warrants and the increase in Couche-Tard’s ownership position; and
- Concurrent with the closing of the Transaction, the Company will uplist to the TSX.