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HIGHLIGHTS
  1. National Access Cannabis to buy cannabis retailer New Leaf Emporium in Moose Jaw.
  2. Purchase brings NAC pot store tally to 22 in Western Canada.
  3. Deal likely marks beginning of retail consolidation - CCI

National Access Cannabis Corp. (NAC), Canada’s biggest recreational pot retail company in terms of outlet numbers, has swallowed an independently owned store in Saskatchewan, marking its second such purchase and a sign that consolidation has begun in the brick-and-mortar marijuana industry as larger companies expand their reach.

On Wednesday, NAC said its wholly owned subsidiary NAC Prairies Ltd. will buy New Leaf Emporium Inc. in Moose Jaw, Sask., for a total of $1.6-million, with $1.2-million in cash and the rest in common shares.

The purchase comes at a rocky time for the industry, hindered by a national supply shortage that caused Alberta Gaming, Liquor and Cannabis (AGLC) to temporarily stop issuing retail licences, while the Ontario government sharply reduced the number of initial licences it will issue to just 25 in the country’s biggest market though a lottery process that attracted around 17,000 applicants. Government stores in Quebec are only open just four days a week and New Brunswick recently laid off 60 workers from its government-run cannabis stores.

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In provinces like Alberta and Ontario, retailers aiming to open licensed stores have already secured leases, a financial burden that weighs more heavily on small company owners that have limited funds.

For the owners of New Leaf Emporium, however, the sale had nothing to do with tight supplies.

“Like any business, you’re always up to be sold for the right price. We were approached by numerous companies and looked at a lot of different offers,” said Alex Carleton, a New Leaf Emporium partner.

“We’re business owners with limited experience and limited relationships in the cannabis industry. NAC obviously brings a lot more to that.”

Following its September, 2018, purchase of Alberta retailer NewLeaf Cannabis, which at the time planned to open 25 locations after legalization, NAC approached New Leaf Emporium shortly after it received its licence in Saskatchewan.

“As a national retailer we were very interested in getting into every province we can, including Saskatchewan. We talked to different potential sellers and we really liked the Moose Jaw market,” said Mark Goliger, chief executive of NAC.

This purchase brings NAC’s number of open stores to 22, adding to the 14 NewLeaf outlets in Alberta and seven Meta Cannabis Supply Co. venues in Manitoba.

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NAC, which is not specifically targeting independent stores as it expands, aims to have a presence in Ontario, where it is talking with “more than one” lottery winner, Mr. Goliger said.

“I think this will be the beginning of consolidation,” said Karina Lahnakoski, vice-president of Quality and Regulatory for Cannabis Compliance Inc., referring to the cannabis industry.

“They’re looking to extend their tentacles into other markets and Saskatchewan is ripe for the picking.”

However, there will always be a place for the small retailers that have brand or niche elements that consumers want, Ms. Lahnakoski said, adding that it is now common place for small companies to be approached by larger ones in the cannabis industry.

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