A few weeks back I wrote about Couche-Tard, (ATD.B) Owner of such brands as Mac’s, their logo is the red owl thingie. They were pretty miffed about the government’s potential plans to monopolize the weed trade.
Their worst nightmares came true last week with the new legislation. No retail sales, online distribution, etc. Well it’s not stopping Couche-Tard. They’re charting a new course to see if they can get a wedge in other provinces.
I can imagine a lot of jokes about buying a beed at a depanneur in Quebec and flying to Calgary to buy cannabis. Actually I can’t imagine any, but I am sure a hackier guy than I could.
In their recent second quarter earnings call, Brian Hannasch, the president of Couche-Tard lays out his strategy: (Translation mine:)
“We want to take advantage of this opportunity with one of the provinces, so we can prove we can be good partners.”
He added he’s also open to other point of sale concepts as well. Interesting, I could see a branded co-operated Private-Public-Partnership style deal flying in the western provinces, where this concept already has a lot of traction.
Le Soleil has a good rundown of the situation – with some nice facts about the company: (Translation mine:)
The company bought CST brands, the profits of which balance out the negative issues with their American markets
- They pulled in a net profit of $435.3m million USD, a 35% increase over the last period or 76 cents per share.
- Revenues have gone up 44% in the quarter going from $8.44 billion to $12.1 billion USD
- Whoof. All this is great, the champ is knocked around at home, but is ready to take the show on the road. But hang on just a tick. Look at this stock:
Do you see the pattern here? I’m looking at short city.
What ever else happens here with Couche-Tard, It’s going to get whacked any day now. Once the bloodbath is over, I’d go back in, they’re still big profitable players with a pretty good chance of making some strong lobbying moves.
Briefing notes:
A neat piece in Le Devoir talks about the potential for native reserves to profit from legal cannabis. Sales on reserve will be exempt from QST and GST. They will also have some more leeway on pricing.
This already happens with tobacco. Everyone on the South Shore of Montreal has a cigarette guy on the reserve. I think if a producer makes a good deal with the local bands, it would be a sweet partnership for both groups.
That’s it for now, I still have a nice analysis piece for you coming on the fallout from the new legislation, but I am trying to get some direct quotes that are too good to pass up.