Dive Brief:
- Alimentation Couche-Tard’s primary cannabis partner in Canada, Fire & Flower Holdings Corp., has filed for bankruptcy protection and is seeking a sale, according to a Tuesday announcement.
- Couche-Tard, which owns more than 35% of the cannabis company, has agreed to give $7.3 million in debtor-in-possession (DIP) financing to fund Fire & Flower’s proceedings under the Companies' Creditors Arrangement Act, along with other short-term expenses during this period, according to the announcement.
- This comes about six weeks after Couche-Tard and Fire & Flower expanded their master licensing agreement, giving the cannabis retailer exclusive rights to negotiate with Couche-Tard regarding new retail cannabis businesses and franchise arrangements in Canada.
Dive Insight:
Fire & Flower first revealed it was pursuing additional financing to fund its operations in mid-May, and hired a financial advisor to assist with reviewing strategic options about a week later.
After “careful consideration of all available alternatives” and consulting with its advisors, Fire & Flower’s directors determined that filing an application for credit protection under the CCAA was in the best interest of the company, according to Tuesday’s announcement.
Fire & Flower will now conduct a court-supervised sales process to maximize the value of its assets, according to the announcement. It is working with advisory firm FTI Consulting Canada and the Ontario Superior Court of Justice.
A Couche-Tard subsidiary known as 2707031 Ontario Inc. has provided the DIP loan, according to the announcement. Couche-Tard’s spokesperson declined to comment on the matter.
Fire & Flower’s management team and board of directors — which includes Couche-Tard Senior Vice President of Operations Suzanne Poirier — will remain in place at this time.
The companies’ partnership began in 2019 when Couche-Tard made a $19 million investment in Fire & Flower to open co-located stores between the cannabis retailer and Circle K. By late 2022, the companies had seven such sites in Canada, and revealed plans to reach 10 by the end of 2023.
In the U.S., Couche-Tard made an agreement in October to co-locate 10 Green Thumb Industries Rise Express cannabis dispensaries adjacent to Circle K convenience stores in Florida. The stores were supposed to debut in 2023, but the deal is still awaiting government approval and is currently in litigation.
