TORONTO, Nov. 6, 2020 /CNW/ – Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) (“FFHC” or the “Company”) wishes to provide additional information in respect of the events and circumstances that led to the withdrawal of certain forward-looking information contained in the Company’s prior disclosure. Prior to the Company’s filing of its management discussion and analysis for the thirteen and twenty-six weeks ended August 1, 2020 (the “Q2 MD&A”), the Company’s public disclosure included forward-looking information that the Company projected it would have 78 operating stores by the end of its fiscal 2020 year and be cash flow positive by the second half of its fiscal 2020 year (the “FLI”).
In the Q2 MD&A, the Company disclosed that its projected store count would be less than the number previously included in the FLI and that it does not intend to provide future forward-looking information with respect to its anticipated number of operating stores. In withdrawing the FLI, the Company considered a number of events and circumstances, including the following:
Construction on certain of the Company’s anticipated Ontario stores commenced in February 2020 with expected completion in April 2020. As a result of COVID-19 related construction delays, construction of the first stores were not completed until May and June 2020. Additionally, commencing in June 2020, the Company received revised licensing timelines from the Alcohol and Gaming Commission of Ontario that indicated that the licensing of certain stores would be delayed beyond the Company’s original forecast.
In Saskatchewan, the Company’s previous projection of store counts was informed by the province’s announcement in October 2019 that it would commence open licensing by September 2020. The Company assumed that municipalities in Saskatchewan would develop a regulatory framework for cannabis retailers that would allow retailers (like the Company) to construct retail cannabis stores and be ready for operations by the time the open licensing process commenced. By July 2020, municipal regulatory regimes in the province were still in development, resulting in delays in the opening of cannabis retail stores in certain municipalities where the Company had forecasted having stores open prior to the end of its fiscal 2020 year.
In Manitoba, the Company expected that the timeline to obtain the necessary permits and licences and to secure the requisite real estate to commence operations would be similar to timelines in other provinces. However, the Company experienced delays from the applicable regulatory bodies with respect to the granting of certain licences and permits. Additionally, the Company determined that the commercial real estate market in Manitoba was different than what the Company had experienced in other jurisdictions, particularly with respect to the negotiation of leases which could be terminated by the Company on a shorter notice period in the event of licensing delays. Accordingly, the Company decided to delay the entering into of certain leases until there was greater certainty with respect to the licensing of stores in Manitoba.
In British Columbia, the Company experienced a longer than expected delay in receiving permits to construct certain stores in Vancouver. Although the Company received approval in principle for two Vancouver stores in July 2020, the Company experienced further delays in obtaining building permits for such locations. As a result of the experience with the applicable regulatory bodies in British Columbia, the Company determined that regulatory approval would take longer than initially anticipated.
As the Company’s cash flow is impacted by the number of operating retail stores, the delays to the opening of additional retail cannabis stores motivated the Company to withdraw the FLI with respect to timing of when the Company anticipates being cash flow positive.
Upon completion of the Company’s previously announced proposed acquisition of Friendly Stranger Holdings Corp., the Company is expected to have 66 licensed cannabis retail stores operating across Canada and an additional 9 stores formally admitted to the queue for licensing in Ontario. The Company is targeting further growth of licensed cannabis stores through additional pending applications for retail store licences in Manitoba, Saskatchewan, Alberta and British Columbia.
This press release is being issued at the request of the Ontario Securities Commission and in connection with a continuous disclosure review of the Company.
About Fire & Flower
Fire & Flower is a leading purpose-built, independent adult-use cannabis retailer poised to capture significant Canadian market share. The Company guides consumers through the complex world of cannabis through education-focused, best-in-class retailing while the HifyreTM digital platform and SparkTM program connect cannabis consumers with the latest cannabis products and deliver cutting edge insights into evolving consumer behaviours. The Company’s leadership team combines extensive experience in the cannabis industry with strong capabilities in retail operations.
Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc., a licensed cannabis retailer that owns cannabis retail store licences in the provinces of Alberta, Saskatchewan, Manitoba and Ontario and the Yukon territory.
Through its strategic investment with Alimentation Couche-Tard Inc., the Company has set its sights on the global expansion as new cannabis markets emerge.
More information on Fire & Flower can be found at www.fireandflower.com.