Consolidation in cannabis industry continues

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High Tide Inc. has agreed to purchase nine stores from insolvent retailer Choom Holdings Inc. in a further consolidation of the cannabis business. Choom had entered restructuring proceedings under the federal Companies’ Creditors Arrangement Act in late April, and the court recently approved Choom’s proposed sale of stores to High Tide.

In its initial court materials, Choom identified three causes for its insolvency: restrictions on business arising from the COVID-19 pandemic; oversaturation in the cannabis retail market; and some loss-leading competitors, particularly in Alberta. Among other challenges, Choom faced the carrying costs of 12 stores which had been permanently closed or never opened.

The challenges imposed by COVID-19 exposed weakness in many industries.  Businesses facing such challenges need informed, effective advice to navigate through the difficulties.

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