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Expanding your Business in North America

Recognized as the largest and the most lucrative cannabis market in the world, the United States might be relatively close geographically, but it can be a big leap for retailers looking to cross the border and find success.

Strategy, innovative technology solutions, and a whole heap of foresight have helped some Canadian retailers successfully start to establish themselves in the US market, while others wait for federal legalization to be announced before dipping their toe in cross-country retail.

Two of the biggest Canadian retailers, High Tide and Fire & Flower, have already entered the US market via two different routes, with other major retailers such as Spiritleaf putting plans on hold for now.

Diversification for Success

“Uncertainty around the timing of US federal legalization is the biggest challenge for the entire North American cannabis industry,” says Raj Grover, CEO of High Tide. “Fortunately for High Tide, thanks to our diversified cannabis ecosystem, we continue to increase our size and scale, and rapidly grow our revenues through ancillary cannabis business opportunities via international expansion.”

High Tide’s US strategy includes establishing CBD and consumption accessories businesses in America.

Diversification is a strategy that worked for High Tide pre-legalization in Canada too, focusing on building up the brand since 2009 and converting accessory shops to cannabis retailers when the time was right. High Tide’s US strategy includes establishing CBD and consumption accessories businesses in America and getting ready to launch a discount club concept through its Canna Cabana stores upon federal legalization in the US.

Using Technology to Build a Customer Base

Technology plays a key role in High Tide’s US and international expansion strategy, using sophisticated online platforms to move the business forward at a rapid pace in the US. “We lead the industry in drop ship and subscription-based online initiatives and consistently rank higher in organic search rankings for all our online business units,” says Grover.  “Through our mature and established e-commerce platforms, we now cater to over three million customers in our database with over 80% of these customers residing in the US.” These combined e-commerce platforms have received over 100 million site visits in 2020 and this has also helped the company to drastically increase revenues over the last three years from $8.7 million in fiscal 2018 to $181 million in fiscal 2021.

Fire & Flower
Courtesy of Fire & Flower

Other retailers are also banking on technology being a key differentiator for them in the US market. Fire & Flower announced in February 2021 that it had signed a licensing agreement with American Acres (now Fire & Flower US) to license its Fire & Flower brand, store operating system, and Hifyre™ technology platform for dispensaries in high-growth markets such as California, Arizona, and Nevada. In January 2022, amendments to the agreement provided Fire & Flower with a path to acquire corporate-owned cannabis retail stores in major markets in the US and deploy the Hifyre™ technology platform in the US. The platform focuses on digital and retail analytics to help predict buying behaviour.

Fire & Flower opened its first US store in Palm Springs in August 2021.

“The amendments to our strategic agreements with Fire & Flower US expand the ability for the Fire & Flower and HifyreTM brands to open in key markets ahead of federal permissibility of adult-use cannabis in the US,” says Trevor Fencott, CEO of Fire & Flower. “In addition, the technology, software, and support fees create an additional high margin revenue channel in our digital business segment. The amended strategic agreements, along with our relationship with the owner of Circle K, Alimentation Couche-Tard, will help position Fire & Flower to one day be a key player in the US cannabis industry, where the demand for incorporating technologically advanced systems has never been greater.”

Building up Brick and Mortar Stores

Licensing agreements bring a whole other opportunity to establish a brand in the US. Fire & Flower opened its first US store in Palm Springs in August 2021, following the licensing agreement with America Acres (now Fire & Flower US).

Courtesy of High Tide

High Tide plans on introducing America to its discount club concept through opening Canna Cabana stores. “With our newly acquired CBD businesses (FABCBD) last year we now have exposure to even more US-based customers who purchase consumption accessories and hemp-derived CBD products,” explains High Tide’s Grover. “This strategy has helped to position our company to commence online cannabis sales when federal legalization occurs in the US. This is a similar approach to how we converted our smoke shops in Canada into dispensaries. We are also looking to execute on bricks and mortar optionality with retail operators in the US prior to US federal legalization.”

Future Markets

High Tide is also looking beyond the US to Europe and has already acquired Blessed CBD. This new presence in the UK market has given the company the opportunity to enter Germany, which is one of the most lucrative markets in the EU, with the intention of moving into even more European countries this year, following the strategy of CBD-first while THC legalization is still under review.

Innovative Canadian retailers who are taking small steps now to establish themselves in the US market pre-federal legalization are getting themselves primed to make the leap easier as soon as change comes for the American market and the cannabis hotspot map gets redrawn once again.

Tags: Blessed CBD (1), Canna Cabana (22), cannabis e-commerce platforms (1), Cannabis Industry (180), Cannabis Retail (387), Circle K (10), Europe cannabis industry (1), Fire & Flower (50), High Tide (31), Raj Grover (30), US cannabis industry (1)