David George-Cosh

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The head of Green Growth Brands Inc. (GGB.CD) sees the future of the cannabis retailer emboldened by the humble mall kiosk after announcing a partnership with Simon Property Group Inc. (SPG.N), one of the biggest U.S. retail developers, to open such stores in nearly 100 shopping centres south of the border. 

The deal comes amid a series of announcements from the Columbus, Ohio-based company as it faces an uphill battle in trying to convince shareholders of Aphria Inc. to accept its hostile takeover offer for the Canadian cannabis producer. 

"It's going to be an explosion across the country," said Peter Horvath, Green Growth chief executive officer, in a recent phone interview. "There'll be 100 million footsteps that will be exposed to CBD products by the end of the year." 

Green Growth’s kiosk rollout will take place in 95 U.S. shopping malls owned by Simon Property Group in 108 locations, Horvath said. The kiosks will offer about 40 different CBD-infused topical beauty products that will sell for US$19 to $29 an item, he added. The company plans to open 300 retail kiosks by the end of the year. 

"We're not making any health claims, not carrying vape pens or edibles or tinctures. These items are purely for topical use and it's not going to be interesting to the [U.S. Food and Drug Administration]," Horvath said. 

On Feb. 6 Aphria rejected Green Growth's hostile takeover bid of 1.5714 of its shares for each share of the Leamington, Ont.-based company, stating that the offer was significantly undervalued, inadequate and not in the interest of company's shareholders. 

A day after Aphria's rejection, Horvath told BNN Bloomberg that there's still time to make a deal to acquire the Canadian cannabis producer, but the company didn't have any immediate plans to change its bid. Horvath declined to provide details on Green Growth’s future plans for its Aphria offer, but noted the company still has the support of approximately 10 per cent of the Canadian company's shareholders. 

Green Growth's kiosk plans also come after it announced a partnership with Nanaimo, B.C.-based Tilray Inc. and Authentic Brands Group – the U.S. company behind brands such as Tapout, Aeropostale and Nine West – to produce a line of CBD-infused products under golfer Greg Norman's brand. It also acquired an Arizona cannabis dispensary for US$12.35 million on Jan. 31. 

Despite the recent announcements, Green Growth's shares closed down 2.1 per cent to $5.73 on the Canadian Securities Exchange on Friday. Although its shares are up 24.6 per cent since the beginning of the year, Green Growth's offer for Aphria is still at a 31 per cent discount to the Canadian producer's current share price.  

Simon Property Group reported fourth-quarter earnings on Feb. 1, posting US$1.46 billion in revenue and earnings per share of US$3.23, mostly in line with analyst expectations. The company's foray into opening kiosks selling CBD products comes amid a planned redevelopment of U.S. malls in the wake of anchor tenant Sears Holdings’ bankruptcy and as traditional bricks-and-mortar retail continues to struggle.

“We are constantly on the lookout for cutting-edge new concepts, like the GGB shops,” said John Rulli, president of Simon Malls, in a statement.

Green Growth has no immediate plans to open kiosks in Canada, but once regulations allow the sale of CBD products in the country, Horvath said there are between 15 to 25 malls he'd likely open shops in. 

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.