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High Tide Welcomes Alberta';s Decision to Allow Private Label Cannabis Sales

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High Tide has expressed enthusiasm for Alberta Gaming Liquor and Cannabis' recent decision to allow private label cannabis sales. This regulatory change benefits High Tide's brands, Cabana Cannabis and newly acquired Queen of Bud, which are already present in Ontario, Manitoba, and Saskatchewan. High Tide anticipates expanding these brands into Alberta's market soon. CEO Raj Grover highlighted the move as a positive step following other favorable regulatory changes in Canadian provinces, aiming to enhance consumer choice and product differentiation while benefiting licensed producers by moving more biomass.

Positive
  • Alberta's decision allows private label cannabis sales, benefiting High Tide's Cabana Cannabis and Queen of Bud brands.
  • High Tide's recent acquisition of Queen of Bud is well-timed, aligning with new regulatory changes.
  • Favorable regulatory shifts in multiple Canadian provinces, including Ontario doubling retail store caps and Manitoba eliminating certain fees, support a growing legal cannabis sector.
  • High Tide is positioned to expand its market presence in Alberta, enhancing consumer choice and product differentiation.
Negative
  • Increased competition as other retailers can also leverage private label sales, potentially impacting High Tide's market share.

High Tide's entry into private label cannabis sales in Alberta marks a significant shift in the regulatory landscape. Previously, retailers were limited to selling only products from licensed producers. This change opens up new avenues for differentiation and margin improvements. Private label products often carry higher margins compared to branded counterparts, which can enhance profitability. Furthermore, the ability to control product offerings more tightly can align inventory with consumer preferences, potentially driving sales growth.

From a market positioning perspective, High Tide's existing brands, such as Cabana Cannabis Co. and Queen of Bud, can leverage established consumer trust and brand recognition. This immediate brand equity transfer is valuable in gaining market share quickly. Moreover, the timing of this regulatory shift coincides well with High Tide's recent acquisitions, indicating a strategic foresight that can bolster investor confidence.

However, competition will likely intensify as other retailers enter the private label space. The advantage for High Tide lies in its scale and early market entry, but sustaining this edge will require continuous innovation and market responsiveness. Investors should watch for quarterly sales data to gauge how effectively High Tide capitalizes on this opportunity.

From a financial standpoint, the announcement could translate into improved revenue streams and profitability for High Tide. Private label products typically have better profit margins, which can lead to enhanced gross margins for the company. Given the company's recent acquisition of Queen of Bud, this move is timely and strategically sound. The acquisition cost can be justified if the private label products perform well, leading to a better Return on Investment (ROI).

In the short term, investors might expect some volatility as the market adjusts to this new dynamic. However, in the long term, the potential for increased profitability and market share makes this a positive development. Monitoring quarterly earnings will be important to assess the impact of this regulatory change on the company's financial health.

It's also worth noting that the company might need to invest in marketing and distribution to ensure the success of its private label products. These costs should be factored into any financial projections. Nevertheless, the initial investment should pay off if the company can secure a significant market share in the private label segment.

The regulatory shift by Alberta Gaming Liquor and Cannabis (AGLC) to allow private label cannabis sales is a significant legal development. This change aligns Alberta with other Canadian provinces, indicating a broader national trend toward more flexible cannabis regulations. For stakeholders, this regulatory harmonization can reduce compliance costs and complexities, especially for companies operating in multiple provinces like High Tide.

From a compliance perspective, High Tide will need to ensure that its private label products meet all regulatory standards set by AGLC, which may include stringent quality control measures and accurate labeling. Failure to comply could result in penalties or product recalls, which could negatively impact the brand's reputation and financial standing.

Additionally, the move could spur innovation and competition within the industry, benefiting consumers through a wider variety of products. However, legal challenges could arise as new market entrants vie for position, potentially leading to disputes over intellectual property and branding. High Tide will need to navigate these legal waters carefully to maintain its market advantage.

The Company is Well Positioned to Take Advantage of Private Label Sales, Including Through its Newly Acquired Queen of Bud Brand Across Ontario, Manitoba, Saskatchewan and Alberta

CALGARY, AB, June 4, 2024 /PRNewswire/ - High Tide Inc. ("High Tide" or the "Company") (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA), the high-impact, retail-forward enterprise built to deliver real-world value across every component of cannabis, welcomed the announcement by Alberta Gaming Liquor and Cannabis' (AGLC) that it has amended its Retail Cannabis Store Handbook to allow private label cannabis sales. This is good news for High Tide's Cabana Cannabis Co. brand which is already in-market in Ontario, Manitoba and Saskatchewan, and for the newly acquired Queen of Bud brand, which is also available in Ontario. The Company looks forward to bringing both brands to Alberta consumers as soon as possible.

"I am thrilled to see the AGLC take action to join other Canadian provinces in allowing private label cannabis sales after years of advocacy from High Tide and other industry partners. This news, which follows Alberta's earlier decision to allow cannabis pop-ups at adults-only festivals and tradeshows, Ontario's decision to double its retail cannabis store cap per entity and Manitoba's recent moves to eliminate the provincial SRF and pause new controlled access licenses, is evidence of growing regulatory tailwinds. It also demonstrates that Canadian provinces are beginning to recognize the importance of creating regulatory environments that support a healthy and growing legal cannabis sector," said Raj Grover, Founder and Chief Executive Officer of High Tide.

"While Canna Cabana's size and scale will allow it to benefit from this announcement, other retailers will also be able to take advantage of private label sales, thus improving consumer choice and product differentiation within the legal cannabis sector. Licensed producers will also benefit by being able to move biomass and improve sales on their end. This decision makes our recent acquisition of Queen of Bud even more timely. I can't wait to see both our Queen of Bud and Cabana Cannabis Co. products on Alberta shelves in the near future," added Mr. Grover.

ABOUT HIGH TIDE

High Tide, Inc. is the leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world's most powerful plant and is the second-largest cannabis retailer in North America by store count1. High Tide (HITI) is uniquely-built around the cannabis consumer, with wholly-diversified and fully-integrated operations across all components of cannabis, including:

Bricks & Mortar Retail: Canna Cabana™ is the largest non-franchised cannabis retail chain in Canada, with 172 current locations spanning British Columbia, Alberta, Saskatchewan, Manitoba and Ontario and growing. In 2021, Canna Cabana became the first cannabis discount club retailer in North America.

Retail Innovation: Fastendr™ is a unique and fully automated technology that integrates retail kiosks and smart lockers to facilitate a better buying experience through browsing, ordering and pickup.

E-commerce Platforms: High Tide operates a suite of leading accessory sites across the world, including Grasscity.com, Smokecartel.com, Dailyhighclub.com, and Dankstop.com.

Brands: High Tide's industry-leading and consumer-facing brand roster includes Queen of Bud, Cabana Cannabis Co, Daily High Club, Vodka Glass, Puff Puff Pass, Dopezilla, Atomik, Silipipe, Evolution and more.

CBD: High Tide continues to cultivate the possibilities of consumer CBD through Nuleafnaturals.com, FABCBD.com, blessedcbd.de and blessedcbd.co.uk.

Wholesale Distribution: High Tide keeps that cannabis category stocked with wholesale solutions via Valiant™.

Licensing: High Tide continues to push cannabis culture forward through fresh partnerships and license agreements under the Famous Brandz™ name.

High Tide consistently moves ahead of the currents, having been named one of Canada's Top Growing Companies in 2021, 2022 and 2023 by the Globe and Mail's Report on Business Magazine, and was named as one of the top 10 performing diversified industries stocks in both the 2022 and 2024 TSX Venture 50. High Tide was also ranked number one in the retail category on the Financial Times list of Americas' Fastest Growing Companies for 2023. To discover the full impact of High Tide, visit www.hightideinc.com. For investment performance, don't miss the High Tide profile pages on SEDAR+ and EDGAR.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

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1 As reported by ATB Capital Markets based on store counts as of February 8, 2024

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release may contain "forward-looking information" and "forward-looking statements within the meaning of applicable securities legislation. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. The forward-looking statements herein include, but are not limited to, statements regarding: the ability of the Company to bring our brands to Alberta on the timeline herein, and the future success of such initiatives. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. Although the Company believes that the expectations reflected in these statements are reasonable, such statements are based on expectations, factors, and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including but not limited to the risk factors discussed under the heading "Non-Exhaustive List of Risk Factors" in Schedule A to our current annual information form, and elsewhere in this press release, as such factors may be further updated from time to time in our periodic filings, available at www.sedarplus.ca and www.sec.gov, which factors are incorporated herein by reference. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement and reflect the Company's expectations as of the date hereof and are subject to change thereafter. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results, or otherwise, or to explain any material difference between subsequent actual events and such forward-looking information, except as required by applicable law.

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SOURCE High Tide Inc.

FAQ

What recent change did Alberta make regarding cannabis sales?

Alberta Gaming Liquor and Cannabis now allows private label cannabis sales.

How will High Tide benefit from Alberta's regulatory change?

High Tide plans to expand its Cabana Cannabis and Queen of Bud brands into Alberta, improving consumer choice and product differentiation.

What impact does Ontario's regulatory change have on High Tide?

Ontario's decision to double the retail cannabis store cap per entity provides growth opportunities for High Tide.

How does Manitoba's regulatory decision affect High Tide?

Manitoba's move to eliminate the provincial SRF and pause new controlled access licenses supports a healthier legal cannabis market, benefiting High Tide.

What is High Tide's stock symbol?

High Tide's stock symbol is HITI.

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