Cannabis retail chain Tokyo Smoke has completed its restructuring process and exited from Companies’ Creditors Arrangement Act (CCAA) protection following final approval from the Ontario Superior Court of Justice.
The company says the majority of its retail locations were unaffected by the restructuring, and there will be no disruption or change to its online business or its loyalty program. Initially, Tokyo Smoke said it planned to close “underperforming locations” while also beginning discussions with landlords to obtain consensual lease amendments for its remaining store locations.
At the time, the company listed 61 corporate stores, 29 franchise stores, and 11 vacant stores for a total of 101 in the monitor report, as well as 474 employees. Five of its corporate stores, comprising 37 employees, are unionized. Stores have been located in Ontario, Saskatchewan, Manitoba, and Newfoundland and Labrador.
As of November 26, Tokyo Smoke successfully restructured and executed lease amending agreements for approximately 25 of the 101 stores originally operated as of its CCAA filing. The company was not able to reach consensual lease amendments for six underperforming stores and issued notice of disclaimers of the retail store leases. The company expects the restructured business will include approximately 57 go-forward store locations.
The iconic Tokyo Smoke store at 333 Yonge Street in downtown Toronto is now reportedly going to be a One Plant Cannabis store.
Approximately 107 store-level and eight corporate employees were let go due to these closures, leaving approximately 328 employees across the retail stores and head office as of November 26.
A principal element of the company’s restructuring plan was to seek consensual lease amendments for stores, which it expected to remain part of the business going forward.
One of the main goals of those rent negotiations was to achieve rent reductions that would allow remaining locations to be cash flow positive, to obtain acceptable length of lease terms, or to close store locations that do not achieve the desired level of profitability.
Leadership at Tokyo Smoke had said the “significant overhead costs” required to manage its approximately 100 retail locations resulted in material and recurring losses, helping to drive the company’s financial challenges.
Tokyo Smoke started the restructuring process in August by filing for creditor protection. That process included a sale process approved by the court whereby TS Investments Inc., the sole shareholder of Tokyo Smoke’s parent company, led a stalking horse bid and was declared the successful bidder in September 2024.
The stalking horse transaction included a purchase price of approximately $77 million.
In a press release on August 29, the company says it is now emerging from this process stronger and “better positioned to continue providing premium products and service to its customers over the long-term—while continuing to provide jobs to hundreds of dedicated employees across Canada.”
