Cannabis retailer Fire & Flower granted creditor protection after ‘significant net losses’

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Image of a Fire & Flower store

A line wrapped around Fire & Flower, a retail cannabis chain in Edmonton and one of six stores that opened in the municipality on the first day of legal recreational sales. (Photo by Kelsey McMillan)

Fire & Flower Holdings and its cannabis subsidiaries have received an initial order for creditor protection from a Canadian court after raking up significant net losses of more than 200 million Canadian dollars ($150 million) since 2018.

The Toronto-based company said it was granted the order by the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA), allowing it to maintain the status quo and consult with stakeholders with a view to continuing operations.

To that end, the court approved Fire & Flower’s debtor-in-possession loan of CA$9.8 million from an affiliate of Alimentation Couche-Tard, a large Canadian operator of convenience stores, which owns a stake in the cannabis retailer.

In a news release, Fire & Flower said creditor protection allows the company to work with the monitor – FTI Consulting Canada – to streamline its operations and conduct a court-supervised sales process to obtain a going concern for its operations and maximize the value of its assets.

The debtor-in-possession loan is expected to fund its operations during this process.

Fire & Flower is only the latest in a flood of Canadian cannabis companies turning to Canada’s corporate insolvency law.

Between Jan. 1 and Dec. 22, 2022, 14 of the 35 CCAA filings in Canada involved companies operating in the cannabis space in one way or another.

Fire & Flower has more than 90 corporate-owned stores in its network.

The company had approximately 618 full-time employees and 806 part-time employees as of the end of 2022.

Last week, Fire & Flower said it was “reviewing strategic options including financing options,” as the company requires more funding to continue doing business.

In a May 15 regulatory filing, Fire & Flower management stated that its ability to continue as a going concern depended on “increasing revenues, improving profitability and cash flows, availability of funding from debt, warrants and other capital market alternatives.”

After the review, the directors of the company determined “that it was is in the best interests of the company to file an application for creditor protection under the CCAA,” per the news release.

In a factum submitted to the court, Fire & Flower said its “significant net losses” largely stemmed from the cannabis retail operations.

Fire & Flower cited:

  • Increased competition and operating costs.
  • Margin pressure.

“Regulatory restrictions suffered by the companies and the cannabis industry generally have collectively contributed to significantly lower revenues and higher costs than what the applicants expected their cannabis retail stores would face,” according to the company’s filing.

Fire & Flower said it has lost money every year since 2018.

In the fiscal years ended Jan. 29, 2022, and Dec. 31, 2022, respectively, Fire & Flower and its subsidiaries lost $45.4 million and $83.4 million.

Fire & Flower’s net losses also include:

  • More than CA$25.2 million for the fiscal year ended Feb. 2, 2019.
  • More than CA$35.6 million for fiscal 2020.
  • More than CA$17.5 million for fiscal 2021.

For the quarter ended March 31, 2023, the company said it had a net loss of roughly CA$8.7 million.

In its filing, Fire & Flower said its cash position continually deteriorated over the course of the past two years.

As of Jan. 30, 2021, the company and its subsidiaries had CA$30.6 million in cash. One year later, that total had fallen to CA$19.8 million.

As of March 31, 2023, Fire & Flower and its subsidiaries had CA$8.2 million in cash and more than CA$50.8 million in current liabilities.

“That position only deteriorated further since then,” according to the filing.

Some of the other subsidiaries named in the court order were:

Fire & Flower shares trade as FAF on the Toronto Stock Exchange.

Matt Lamers can be reached at