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In a press release Thursday, Canopy pointed out that it could potentially take advantage of its Tokyo Smoke retail platform and its affiliated investment arm, Canopy Rivers Inc.

“As a cannabis business with multiple licenses and a variety of diverse subsidiaries, we feel we have a distinct advantage at this stage in the game,” Mark Zekulin, co-CEO of Canopy Growth, said in a statement.

Lower Margins

MenMen Enterprises Inc. is not a licensed producer but has a retail joint venture with Cronos Group Inc., which is. “We continue to explore our options in Canada and are in talks with our partners at Cronos Group,” Daniel Yi, a spokesman for MedMen, which has pot stores in California, said in an email. “We will seek clarification from the authorities and adapt our plans accordingly.”

The move is a “net negative” for the licensed producers because they’ll generate lower margins if they’re selling through third-party retailers rather than their own stores, said Bottomley. “This is definitely a step back from what most were expecting.”

In addition to lower margins, the licensed producers will also have to invest in a sales force, said Martin Landry, analyst at GMP Securities.

“It will create more work for LPs to travel to these stores, to create a sales force that will need to be onsite, make sure they educate the clerks in the stores about their products, make sure that the shelf placement is there, make sure that the point-of-sale promotions are working,” he said.

The province plans to have bricks-and-mortar stores open by April 1 and will operate an online-only sales model until then. It will begin accepting retail applications in December.

Ontario won’t cap the total number of licenses in the province but does plan to introduce ownership concentration limits.

Bloomberg.com