Canadian cannabis chain High Tide Inc. (Nasdaq: HITI) (TSXV: HITI), which already has 163 stores scattered around five of the nation’s provinces, plans to add at least another 96 locations in Ontario alone over the next several years.
This comes after the Ontario provincial government raised the cap on dispensaries per company to 150 from 75.
“We ended fiscal 2023 with 52 stores in Ontario and have 54 today. With this key change, we now have the ability to add almost 100 stores, which should be a game changer for our operations and financial profile,” CEO Raj Grover said during the company’s latest earnings call on Tuesday. He estimated that getting to 150 would take two to three years.
Grover added that High Tide had been in “hypergrowth” mode for three years prior to 2023, but it deliberately slowed its pace last year after watching several of its competitors die off. The differentiating factor for High Tide, he said, has largely been the “discount club concept” with its Canna Cabana and ELITE paid memberships that has positioned the company for long-term success – and which has driven the nearly $10 million in free cash flow High Tide managed to generate over the last six months.
“Our model continues to stand out as the clear winner,” Grover boasted. “In the two years since we introduced our innovative discount club concept, our same store sales have risen a remarkable 110%. In contrast, total retail sales across Canada … were up only 28%.”
That has High Tide positioned for serious domestic growth, he said.
“Our expectation is to open 20 to 30 stores in calendar 2024 via a combination of organic builds and M&A while remaining free cash flow positive,” Grover said. “Our market share across the five provinces in which we have a presence was 10% for the quarter. Our long-term goal is to have 15% market in the markets where we operate.”
Although High Tide will be picky about where it opens up new cannabis shops, and won’t be simply gobbling up every distressed asset that comes its way, Grover made clear that expansion is a top priority for several years to come.
“There are still many cities where we don’t have a Canna Cabana. 2024 will be a year where we look to take action on such opportunities,” Grover said.
“We have good two to three years of runway ahead, maybe even more than three years in Canada alone. Then we’re talking about the German opportunity. We’re then going to be talking about the U.S. opportunity. So we’re going to need all the cash that we have.”