Exclusive: Second Cup reveals partnership with marijuana firm to turn cafés into cannabis shops

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Canada’s second largest coffee distributor announced Thursday that they will be diversifying by entering the cannabis retail market.

Second Cup has entered into a strategic alliance with National Access Cannabis Corp (NAC) to operate NAC branded recreational marijuana dispensaries in Canada.

NAC is a health-care company that works with patients to get them access to the medical marijuana they need. They currently have nine locations in six provinces: three in Calgary and one in Victoria, Saskatoon, Winnipeg, Toronto, Ottawa and Halifax.

The plan is for NAC to apply for retail licenses to dispense the products in locations where Second Cup is already present. The dispensaries will be implemented in select Second Cup locations in Western Canada first and likely expand to Eastern Canada where they are legally able to do so.

Canada is on track for legalization this summer but is giving control to the individual provinces over how and where it can be sold. Some provinces, such as Ontario, will have government controlled retail spots, but other provinces such as British Columbia, Alberta and Manitoba plan to allow some private retailers the ability to sell in some form.

 “With exceptional quality real estate located across Canada, our alliance with Second Cup will offer consumers access to quality cannabis products and the superior service in the comfortable setting they’ve come to expect from NAC,” said Mark Goliger, Chief Executive Officer of National Access Cannabis. “This relationship allows us to quickly expand our footprint in proven high-traffic retail locations across Canada. With an initial focus on Western Canada, we’ll look to work with Second Cup to license select storefronts, utilizing our proven business model to deliver secure, safe, and responsible access.”

It’s certainly an exciting step forward for NAC and the legal cannabis industry, but the strategic alliance is likely to benefit Second Cup who has been experiencing a decline in sales, and in constant competition with Tim Horton’s, Starbucks and McDonalds.

In the period between 2012 and 2016 alone, Second Cup closed 62 unprofitable locations across Canada. The company’s sales have plateaued and declined since. The NAC partnership is a way for Second Cup to leverage their existing real estate and increase value for their shareholders.

“NAC has developed a strong reputation as a leading operator in the cannabis industry. This strategic relationship provides Second Cup with a great opportunity to leverage our select real estate assets to increase value for shareholders and franchisee partners. At the same time, we remain focused on growing our Second Cup brand and sales through continued product innovation and expanding our network across Canada,” said Garry Macdonald, Second Cup’s President and CEO.

NAC has issued to Second Cup warrants to purchase an aggregate of 5,000,000 common shares of the company which have an exercise price of $0.91 per share and will expire April 12, 2023.

Coffee and cannabis have long been known to complement each other’s stimulating properties, so perhaps we’ll see some cannabis-infused menu items at Second Cup in the not-so-distant future.

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