FSD Pharma Announces Strategic Investment in Huge Shops

Huge Shops has formed an alliance with Coffee Time's parent company, Chairman Brands, to establish a retail distribution network.

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December 20, 2018

TORONTO--(BUSINESS WIRE)--PRESS RELEASE--FSD Pharma Inc. has completed a strategic investment of $1.3 million or just under 9.9 percent in Huge Shops, a Toronto-based cannabis retailer. Huge Shops has a strategic alliance with Chairman’s Brands, parent company of Coffee Time, an operator of retail coffee shops with more than 75 locations in Canada and other locations worldwide.

As part of the investment, Huge Shops has the option to acquire a minimum of ten retail locations under Chairman’s umbrella of properties, and, subject to availability and further negotiation, purchase additional Coffee Time sites. Huge Shops has identified ten initial key locations across Ontario, which meet the company’s strategic objective to become a premiere recreational cannabis supplier. Under the province’s current model for recreational cannabis, Huge Shops will file expressions of interest with the Alcohol and Gaming Commission of Ontario (AGCO) in the five designated regions across Ontario in order to obtain one of the province’s first retail locations while strengthening its foothold in Canada’s largest market. Huge Shops stores will be branded and operated independently of Coffee Time shops, but the agreement provides access to the Coffee Time’s highly experienced retail management team and large commercial real estate portfolio.

FSD Pharma Executive Co-Chairman and Co-Founder Anthony Durkacz says, "Huge Shops’ strategic alliance with Chairman’s Brands enables the company the ability to quickly create a network, with a well-established consumer base, in key demographic areas throughout the province. FSD Pharma, through its investment in Huge Shops, will offer leading cannabis products to consumers in the province.”

As the province rolls out its private retail model, Huge Shops is planning rapid expansion in key markets throughout Ontario to meet its target of operating 75 locations pursuant to the company receiving its retail operator license.

Huge Shops President and Director Michael Potts says, “FSD’s investment and our partnership Chairman’s Brands will help us achieve our goal of rapidly reaching Ontario’s 14 million consumers, an estimated CAD $2.3 billion opportunity. The strategic alliance gives us an advantage by allowing us to avoid cumbersome leasing arrangements, a problem facing many competitors in our industry.”

Steve Michalopoulos, vice president of brand development at Chairman’s Brands, stated, "The legalization of cannabis in Canada presents tremendous opportunity for companies across a number of industries that have a retail footprint. We’ve been observing closely what’s been happening in the Cannabis space and what other brands have been doing within the coffee space. Aligning our coffee brand with Huge Shops presents opportunity to carefully evaluate our real estate network and potentially maximize the real estate to the benefit of all stakeholders. We were very careful to strategically align ourselves with a group that has the wherewithal and capability of building a sustainable long term business.”

The first retail shop is expected to open by April 1, 2019, pending receipt of a retail operator’s license.