Tokyo Smoke is closing 29 stores as the company is restructuring under the Companies’ Creditors Arrangement Act. The company has secured financing and will continue operation of approximately 167 medical and recreational locations across Ontario, Manitoba, Saskatchewan and Newfoundland and Labrador as well as its online business. The brand currently has 61 retail locations.
Unfortunately, there have been a lot of store closures as retailers find they cannot compete in this highly competitive environment. In May 2022, not even four years after legalization, Choom Holdings sought creditor protection and ended up closing its 17 stores.
One of the largest chains, with 80 stores, to seek creditor protection back in May 2023 was Fire & Flower, which ended up being purchased by FIKA Cannabis.
In January 2024, Trees Corporation closed 13 stores and since then there have been many other independent stores that have been forced to close as they are unable to compete with lower priced chains and the illicit market which is still thriving.
Illicit Market Thriving
A study that Cannabis Retailer commissioned in May 2024 surveyed 9,473 Canadian cannabis users and one in four respondents reported purchasing cannabis from unauthorized, unlicensed dealers in the past three months.
The survey showed that illicit cannabis purchases also increase as respondents get younger. Gen Z leads with 36% of respondents purchasing cannabis from unauthorized sources in the past three months. Millennials follow at 28%, with Gen X at 20% and baby boomers at 18%.
Ontario Market Difficult
In Ontario, 508 stores have had their cannabis retail licenses cancelled with the AGCO as of August 30, 2024. Markets like Toronto and Hamilton, in particular, are extremely competitive as there is an oversaturation of stores in those cities. However, after almost six years of legalization, it is not unexpected that the market will begin to correct itself, so we can expect to see more store closures.