CGC stock is in the red on Tuesday despite Canopy Growth Corp (TSX:WEED) (NYSE:CGC) announcing that it will open five new stores in Ontario throughout 2020.
Canopy Addresses Retail Visibility Issue
The announcement follows on from a similar communication in November that Canopy will be working with a total of ten recently announced Ontario license holders to open cannabis retail stores across the province under the company’s Tokyo Smoke brand. Of the five newly announced stores, two are located in Toronto, while Hamilton, Stoney Creek, and Ottawa will get one new store each. A lack of retail visibility has been one of the biggest issues facing the cannabis market, so the lack of movement in CGC stock today comes as somewhat of a surprise.
“With ten new stores set to open in the first half of this year, we are pleased with the momentum we’ve built and excited to bring the Tokyo Smoke experience to more Ontarians,” said Rade Kovacevic, President of Canopy Growth. “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.” CGC stock is currently trading for $19.85 in New York, down about 1.1% during intraday trading.
Once licensed, the number of Tokyo Smoke stores in Ontario will stand at 12, with two stores in Toronto and Oshawa already open for business. The new stores will be independently owned and operated and will receive support from Canopy’s retail team, bringing the company’s total retail presence in Canada to 37 with further openings expected later in the year.
Ontario Regulators to Broaden Retail Market
In what could be further good news for holders of CGC stock, the announcement has come on the same day that the Alcohol and Gaming Commission of Ontario (AGCO) has announced that it is taking the first steps to broaden the market for cannabis retail stores. The AGCO began accepting operator license applications from prospective retailers on January 6, 2020, followed by store authorization applications on March 2, 2020.
Strong Finish to 2019 for CGC Stock
Despite trading well off a February peak of $52, CGC stock finished 2019 strongly after announcing that David Klein will take over as CEO of the company from January 14. Klein previously served as CFO of Canopy Growth’s parent company Constellation Brands (NYSE:STZ) and will replace Mark Zeulin, who took over the position on an interim basis in July following the high-profile dismissal of the company’s founder and pot pioneer Bruce Linton.
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