Retailer Alcanna is spinning off its cannabis division as it targets consumers looking for cheaper weed. The Edmonton-based operator of more than 270 liquor and cannabis stores will merge its marijuana outlets with YSS Corp. in a new company called Nova Cannabis Inc. with 53 retail locations in Alberta, Saskatchewan, and Ontario.
The publicly traded offshoot will rebrand 80% of locations as Value Buds to attract the cost-conscious customers it estimates are 70% of the recreational market. It’s a shift in strategy from what the CEO of the new company calls the focus on the “Apple store of cannabis retailing” when the industry first launched.
"This new offering, new Nova Cannabis, is really laser-focused on a segment of the marketplace that's proven to exist — and that's the value-conscious consumer," Darren Karasiuk, a former Aurora Cannabis chief commercial officer, told BNN Bloomberg.
Karasiuk, an Alcanna board member since 2019, told New Cannabis Ventures the spinoff is following the same strategy used to capture the discount alcohol market with brands Wine and Beyond, Liquor Depot, and Ace Liquor.
An initial $25 million equity offering was raised to $40 million on strong investor demand. Alcanna will hold a 63% share of the new company.
The deal comes as Aurora Cannabis laid off an undisclosed number of sales staff after choosing Great North Distributors to be its representative for Canadian recreational marijuana retailing. Great Northern was launched in 2018 by Texas-based liquor distributor Southern Glazer’s Wine & Spirits as Canada’s first national sales broker for legalized adult-use cannabis.
Aurora also announced a deal to raise $125 million in a sale of shares to a syndicate of underwriters led by BMO Capital Markets and ATB Capital Markets.