Couche-Tard Expands Cannabis Strategic Partnership

LAVAL, Quebec — Alimentation Couche-Tard Inc. (ACT) is expanding its cannabis strategic partnership with Fire & Flower Holdings Corp.

The parent company of Circle K entered into a venture with Fire & Flower in 2019. As part of the partnership, ACT provides Fire & Flower with additional capital to further accelerate its expansion strategy.

In the latest investment, Fire & Flower entered into a loan agreement with 2707031 Ontario Inc., an indirectly wholly-owned subsidiary of ACT. As part of the deal, ACT will loan Fire & Flower a maximum aggregate amount of $30 million, which may be drawn into three separate tranches of $10 million. Subject to the terms of the agreement, the loan will accrue interest at a rate of 8 percent per annum, payable quarterly, and matures on Oct. 1, 2022.

Fire & Flower will use the money to further develop its consumer digital platform, as well as for general corporate purposes.

"Access to $30 million of non-dilutive debt financing is a strong show of support from our partner, Alimentation Couche-Tard. It also serves as a proof point on our alignment toward the future of cannabis retail. Through their leadership, network and expertise, we are accelerating the dynamics of the retail shopping experience and creating a consumer-centric marketplace that leverages technology and data-driven insights to deliver a personalized collection of products to consumers and reaches them wherever they are at," said Trevor Fencott, CEO of Fire & Flower.

"As we move forward in our development, we are excited to continue to leverage this relationship and further expand our co-located store program to deliver the most convenient shopping experience to our customers," he added. 

Retail Milestones

Circle K and Fire & Flower are expanding upon their pilot program, through which the latter opens cannabis retail stores adjacent to existing Circle K convenience stores located in new markets across Canada.

The first two co-located stores, in Calgary and Grand Prairie, Alberta, utilized ACT's existing lease footprint to build a small-scale Fire & Flower retail operation.

The expansion will bring new co-located retail stores to the Canadian provinces of Alberta, Saskatchewan and Manitoba. The agreement also allows for the opportunity to further expand the program into additional high-value markets, including Ontario and the United States.

"Alimentation Couche-Tard has been an invaluable partner to Fire & Flower as we built out Canada's largest retail network of legal cannabis products and services over the past two years. Our success in Canada, and now as we enter into the U.S., is directly attributable to the powerful consumer data and analytics technology that we have successfully employed in each of our stores through our Hifyre technology platform," said Fencott. "As we continue to build on our leadership position, we are leveraging our powerful consumer data, strategically working with our key partners to capture this data and, together, enhance our collective cannabis operations, allowing Fire & Flower to advance our 'asset-light' business model to further support our financial growth.

"As we continue to advance our relationship with Couche-Tard, we are driving a new level of service to our extensive operational footprint in Canada and beyond. We are able to leverage the power of Hifyre to allow these small co-located stores to run efficiently. The advanced analytics we provide allows stores to operate and manage inventory at maximum efficiency," he continued.

Earlier this month, Fire & Flower opened its 100th cannabis retail store in Scarborough, Ontario, making the company one of the largest cannabis retail chains in North America.

Digital & Rewards Milestones

Earlier this year, Fire & Flower's acquisitions of PotGuide and Wikileaf enhanced its Hifyre asset-light approach and provided a scalable entry point to capture new customers and Spark Perks members in both Canada and the U.S. 

Sparks Perks continues to aid the Hifyre IQ data and analytics platform in building a real-time understanding of cannabis consumer preferences and purchasing trends across North America to the benefit of Fire & Flower and its strategic partners.

Canadian customers of PotGuide and Wikileaf can now shop for cannabis products online. Products are available for purchase and fulfilled by the entire Fire & Flower, Friendly Stranger, Happy Dayz and Hotbox retail network.

Purchases are available to be delivered to customers in Ontario, Manitoba, British Columbia and Saskatchewan, and will soon be available for delivery in Alberta, or available for Fastlane "click-and-collect" at the retail stores.

The Spark Perks program recently reached a milestone of 360,000 members. On average, Spark Perks members spend 31 percent more per transaction than non-members, according to Fire & Flower. 

Members of the Spark Perks program receive exclusive benefits including Fastlane checkout, curbside pickup, rapid delivery where permitted, special deals, member-only events, and exclusive offers. Spark Perks is free to join and no cannabis purchase is required to enroll in the program.

"As we enter the next stage of growth in our company, we will build off these milestones and continue to innovate and deliver an experience that truly provides value to our customers," concluded Fencott.

Fire & Flower is a multi-banner cannabis retail operator that owns and operates the Fire & Flower, Friendly Stranger, Happy Dayz and Hotbox brands. Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc. and Friendly Stranger Holdings Corp. ACT holds greater than 10 percent of the outstanding voting securities of the company.