Tokyo Smoke to Close 29 Retail Locations
Tokyo Smoke to Close 29 Retail Locations Amid Restructuring Efforts. In a significant move within the cannabis retail industry, Tokyo Smoke, a well-known and award-winning cannabis retailer, has announced the closure of 29 of its retail locations across Canada. This decision is part of a broader restructuring plan aimed at stabilizing the company’s operations amidst challenging market conditions. Despite the closures, approximately 167 Tokyo Smoke locations will remain open, continuing to serve customers with no disruptions to the online business or loyalty program.
The restructuring comes after Tokyo Smoke obtained an Initial Order under the Companies’ Creditors Arrangement Act (CCAA) from the Ontario Superior Court of Justice. This legal framework is designed to allow the company to restructure its operations while managing its debts. Tokyo Smoke, which was acquired by OEG Retail Cannabis in September 2022—a company owned by the Edmonton Oilers hockey team’s owner—has faced increasing financial pressure due to a saturated cannabis market and falling product prices.
As part of its restructuring strategy, Tokyo Smoke is focusing on closing “underperforming locations” and negotiating lease amendments with landlords for its remaining stores. The company’s goal is to emerge from CCAA protection as a more streamlined and financially stable business. Tokyo Smoke’s retail operations, which include 61 corporate stores, 29 franchise stores, and 11 vacant properties, have been struggling with significant overhead costs. These financial challenges have resulted in substantial losses, with the company reporting a net loss of $29.3 million for the fiscal year ending June 30, 2024.
While the closures mark a challenging chapter for the company remains committed to its customers and employees. With over 500 employees across Canada, They aims to refocus its efforts on maintaining a sustainable and profitable business model. The next steps in the restructuring process will be determined at a comeback hearing scheduled for September 6, 2024, where the company will seek approval for its ongoing efforts to stabilize and strengthen its operations.
Tokyo Smoke’s decision to close these 29 locations underscores the tough conditions facing the cannabis retail sector. However, by taking these decisive actions, the company hopes to navigate these challenges and continue serving its loyal customer base across Canada.
