Name change reflects Edmonton-based liquor retailer's ambition to dominate alcohol, cannabis markets

The name change of Liquor Stores N.A., which owns the Liquor Depot chain,to Alcannathis weekrepresents thecompany's intent to expand into the Canadian cannabis market alongside Aurora Cannabis, the second-largest cannabis grower in Canada.

"They're our business partner," James Burns, vice-chair and CEO ofAlcanna, toldCBCNews. "It gives us one of the top, most incredible-leading, fastest-growing cannabis producers in the world."

Alcanna a portmanteau of alcohol and cannabis reflects the company's vision of having two separate divisions of alcohol and cannabis, since legislation will likely barthe sale of the two in the same building.

Alcanna, the largest publicly traded alcohol retailer in North America,boasts a star-studded board of directors.

Chair Derek Burney is a former political strategist to Brian Mulroney's government and a former ambassador to the United States.

Board memberKaren Prentice,widow of former Alberta premier Jim Prentice,was an executive vice-president for Enmax and worked on the Alberta Securities Commission.

The decisionto diversify into the cannabis business wasa no-brainer for Burns.

He said in the U.S., where the company has stores in states that have legalized cannabis, they've seen liquor sales drop as much as 10 per cent.

"When a new product comes in that affects the product we sell, it made sense to us to be involved in the retail of that product as well," Burns said. "Same customer, in some senses."

'A natural fit': business prof

Kyle Murray, the vice-dean of the University of Alberta's school of business, said he'd be surprised if liquor retailers didn't invest in the cannabis market.

"It seems like such a natural fit," Murray said. "Their ability to grow their current business is fairly limited, [so] they have to look for new opportunities to grow."

Alcanna has25 years of experience working with the Alberta Gaming,Liquor and CannabisCommission and regulations around the sale of alcohol, whichMurray said willgive these companies a head start.

"I think what it is is just saying, 'Hey look, we have this competency we're the leader in retailing alcohol, and this new business seems like it's going to be a lot like alcohol so we'll probably be pretty good at that as well.' "

Murray said he's not worried the partnership will smothercompetition, because the two companies are relatively smallcompared to some of the largeretailers in Canada, like Canadian Tire.

What is more interesting, he said, is watching those large companies with experience in retail to see if they're going to jointhe cannabis business.

"There are lots of companies out there that are good retailers how many of them are going to want to get into the cannabis business? I think that's a pretty short list," he said.

Bigger companies with more capital have the ability to wait out the market and jump in if they think there's money to be made.

A company like Anheuser-Busch, for example, could acquire a company like Aurora for about two or three per cent of their market cap, Murray said.

• From liquor stores to pot shops: How 2 Alberta companies are planning to capitalize on cannabis

"There's a lot of risk there [for big companies] reputational risk and just unknowns in how big the market will be," he said. "It's not clear that they need to rush in."

Nonetheless,the current deal isa major move locally and one that Burns said can put Alberta on the map for both alcohol and cannabis sales.

"With us and Aurora together, as you say, one plus one equals three sometimes," Burns said. "We're proud Albertans and we think from our base in Edmonton we can take on the world."