Fire & Flower grows by acquiring Friendly Stranger

The deal will make the cannabis retailer a leader both in Canada and the hotly contested Ontario market.
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Fire & Flower is set to become the biggest cannabis retail company in both Canada and Ontario with an acquisition of Friendly Stranger, one of the most established banners in the category.

The cannabis retailer has reached an agreement to acquire all issued and outstanding shares of Friendly Stranger, bringing its cannabis stores into the company and growing its network to 66 locations across Canada, making it the biggest in the country by store count.

The deal is expected to close before the end of the year, subject to all standard regulatory approvals.

In terms of store count, the acquisition would leapfrog Fire & Flower ahead of High Tide, which was set to become the largest cannabis retail network in Canada with its acquisition of Meta Growth, with 63 locations at the time the deal was announced. Meta Growth shareholders approved the proposed High Tide merger last week.

Besides growing its footprint at the national level, the deal will also give Fire & Flower the biggest store presence in Ontario. Friendly Stranger is expected to have 11 locations running, with another four awaiting approval, by the time the deal closes. Combined with Fire & Flower’s existing and planned locations for Ontario, that will give the company 18 stores in the province by the time the deal is expected to close, with another nine in the process of securing licensing.

Ontario is one of the bigger untapped opportunities for cannabis retailers. Despite being the most populous province in Canada, a limited rollout of retail licenses and a randomized lottery system has left its population underserved, but retail companies have been rushing to make up ground since the licensing process was opened up earlier this year. In October, Ontario opened its 200th store to serve a population of 15 million people (for comparison, Alberta has roughly 500 stores serving a population of 4.3 million people); however, the AGCO said in September that it planned to double the pace at which it was licensing new stores, and the number of open stores is up considerably from 114 in the summer.

Friendly Stranger is also the closest thing to a legacy brand that exists in the still-nascent cannabis retail space. Besides having first been founded as an accessories and culture shop in Toronto back in 1994, with a large flagship store on one of the city’s trendiest shopping strips, Friendly Stranger has also been a vocal advocate for cannabis-related issues over the years, from ending prohibition to making the post-legalization retail system more accessible.

Since legalization, Friendly Stranger has been pursuing licenses to sell cannabis in addition to accessories and expand its retail network across its home province. This year, it acquired consumption lounge Hotbox – which has run for nearly 20 years in Toronto’s Kensington Market neighbourhood – and family-owned accessories retailer Happy Dayz. Both retail banners were reopened as cannabis retailers over the summer and are included in the Fire & Flower acquisition. As part of its expansion plans, Friendly Stranger had been focused on ways it can give back to the communities it is entering.

Late last year, Fire & Flower got a strategic investment from convenience giant Alimentation Couche-Tard, which has been intended to help it pursue expansion opportunities in and outside of Canada as they emerge, though it has also resulted in things like piloting a co-location strategy.