Canadian cannabis retailer Tokyo Smoke has announced a restructuring plan that includes the closure of 29 stores across the country. The move comes as the company seeks creditor protection under the Companies’ Creditors Arrangement Act (CCAA), signalling a strategic shift in response to evolving market conditions.
The decision to shutter nearly three dozen locations is part of a broader effort by Tokyo Smoke to align its operations with the current state of the Canadian cannabis market. Industry insiders have long noted the challenges facing retailers in this sector, including market saturation and declining product prices. Tokyo Smoke’s restructuring appears to be a direct response to these pressures, with the company citing “significant” changes in both market dynamics and regulatory conditions as primary factors driving the decision.
Despite the closures, Tokyo Smoke will maintain a substantial presence in the Canadian market. The company plans to keep 167 locations operational across four provinces: Ontario, Manitoba, Saskatchewan, and Newfoundland and Labrador. The retention of stores suggests a targeted approach to streamlining operations while preserving the brand’s core market presence.
The restructuring comes less than two years after a significant change in Tokyo Smoke’s ownership. In September 2022, OEG Retail Cannabis, a company affiliated with the owner of the Edmonton Oilers hockey team, acquired the Tokyo Smoke brand from cannabis industry giant Canopy Growth Corp. The transition in ownership coincided with a period of intensifying competition and market challenges within the Canadian cannabis retail sector.
Tokyo Smoke’s journey in the Canadian cannabis landscape has been marked by several notable milestones since its founding in 2015 by father-son duo Lorne and Alan Gertner. The brand quickly gained recognition, earning the “Brand of the Year” award at the 2017 Canadian Cannabis Awards. Its growth trajectory included strategic acquisitions and partnerships, such as the merger with DOJA Cannabis in 2017 to form Hiku Brands Company Ltd., which was subsequently acquired by Canopy Growth in 2018.
The company’s innovative approach to cannabis retail was further demonstrated in November 2021 when Tokyo Smoke partnered with UberEats to offer cannabis order pick-up services through the popular food delivery app. The move showcased the brand’s commitment to leveraging technology and convenience to enhance the customer experience.
Good riddance.