Consolidation Underway Among Retail Marijuana Businesse

Retail marijuana stores are still relatively new in Canada, but already consolidation is happening.

Seven months after the first Saskatchewan recreational cannabis stores opened, major cannabis companies are moving to consolidate their grip on the local market.

Of the 29 marijuana stores currently operating in the western province, at least 10 have either been sold to a major company or absorbed into a larger brand or franchise, according to the Saskatchewan government, which issues cannabis permits.

In the major cities of Saskatoon and Regina, half of the operating stores now fly the banner of either “Prairie Records” — the store brand belonging to Calgary-based Westleaf Inc. (TSX:LEAF)— or “Tweed,” the retail imprimatur of Canopy Growth Corporation (TSX:WEED), an Ontario-based leader in Canada's cannabis industry.

Retail operators who sold their store and license to the larger companies said they were offered good money to sell, and added that they felt pressure to give up their store as the bigger companies are taking over the local market. Several retail operators also said they wanted to sell as the black market for marijuana continues to thrive in Saskatchewan and they had doubts about the viability of retail sales of the recreational drug.

The provincial government in Saskatchewan says it is monitoring the marijuana industry in the province with a view to ensuring that it remains competitive and that consumers do not get gauged by companies selling marijuana, cannabis and hemp products.