Marijuana stock Canopy Growth (NASDAQ:CGC) is up slightly in mid-afternoon trading after the company announced a widening of its retail footprint by bringing 10 new locations of its Tokyo Smoke dispensary throughout the key Canadian province of Ontario in 2020. It will effect this change through collaborations with local cannabis retail license holders.
Of the 10, four will be located in the province's most populous city, Toronto. One will be in the national capital of Ottawa. The remainder are in smaller municipalities. The company had previously announced the locations of five of the stores.
Currently, there are two branded Tokyo Smoke stores in all of Ontario -- one in Toronto and one in the city of Oshawa.
Canopy Growth's news comes on the heels of the Ontario government saying it would eliminate a strict limit on the total number of privately owned dispensaries allowed in the province. It also revealed other measures aimed at making it easier and quicker for retailers to open shop and for licensed producers to establish a retail outlet in their existing facilities (albeit subject to certain restrictions).
Ontario has been seen by many investors and cannabis pundits as an impediment to the success of the marijuana industry in Canada. Due to what some observers characterize as an unnecessarily cumbersome licensing process, as of last October, only 24 dispensaries were open throughout the province. This has fueled the black market for cannabis products, as obtaining such goods are often cheaper and easier for customers.
Canopy Growth mentioned the black market-fighting aspect of its move in its announcement of the 10 pending stores. "Increasing Tokyo Smoke's presence across the province will expand access to high-quality cannabis products and education, continuing to migrate cannabis sales from the illicit to the regulated market," the company said.
Tokyo Smoke was acquired by Canopy Growth in 2018 through a 269 million Canadian dollar ($207 million) purchase of the retailer's parent company, Hiku Brands.