Dive Brief:
- Alimentation Couche-Tard no longer has an ownership stake in Canadian cannabis company Fire & Flower Holdings, according to Couche-Tard’s second-quarter 2024 earnings report released on Wednesday.
- Couche-Tard experienced millions in losses in fiscal 2024 resulting from Fire & Flower’s bankruptcy, and unsuccessfully bid for its assets during an August auction. Its ownership in the cannabis company — which was more than 35% at one point — is now “nil,” according to Couche-Tard’s earnings report.
- This ends a four-year partnership between the two companies, which promised to bring cannabis dispensaries to the convenience store space.
Dive Insight:
When Fire & Flower filed for bankruptcy in June, Couche-Tard not only gave over $7 million in debtor-in-possession (DIP) financing to fund the proceedings, but became a “stalking horse bidder” as the auction approached.
Couche-Tard was not the winning bidder during the auction. In September, Fire & Flower went to the successful bidder, Couche-Tard’s DIP financing was returned and its ownership in the cannabis company was officially canceled, according to its earnings report.
Although the $7.2 million in DIP financing was returned, Couche-Tard still experienced millions in losses amid Fire & Flower’s bankruptcy. Its earnings report notes that during the second quarter and first half-year of fiscal 2024, it saw losses of $2 million and $3.5 million, respectively.
Couche-Tard’s partnership with Fire & Flower began in 2019, when the convenience retailer made a $19 million investment to co-locate Fire & Flower stores with Circle K’s. By late 2022, the companies had seven such sites in Canada, and revealed plans to reach 10 by the end of 2023.
Couche-Tard still hopes to co-located Circle K stores with cannabis dispensaries. In the U.S., the retailer made an agreement in October 2022 to co-locate 10 Green Thumb Industries Rise Express cannabis dispensaries adjacent to Circle K convenience stores in Florida. Those stores were supposed to debut in 2023, but the deal is still awaiting government approval and is currently in litigation.
Laval, Quebec-based Couche-Tard operates more than 5,700 c-stores in the U.S. It is the second-largest c-store company in North America behind 7-Eleven.
