After nearly 10 months of having legal cannabis in Canada, the lawmakers are wondering if they should rework parts of the system as it has seriously underperformed in certain provinces.
Canada’s recreational system hasn’t been really the moneymaker many analysts expected it to be. In fact, most of the provinces are still operating with a loss.
Everyone knew there would be significant growing pains in this industry, but some provinces are doing the exact opposite of growing.
This brought up questions such as the one Finance Minister Ernie Steeves dared to ask – should some parts of the recreational cannabis system be reworked?
Most recently, the SQDC came under fire for underperforming in the first fiscal year, however, that’s not unique to Quebec’s cannabis authority.
Of course, we can’t judge the book by its cover, but what if the first few pages are terrible as well?
The disaster in New Brunswick
After 10 months of poor sales, Cannabis NB reported a staggering loss of $11.7 million CAD in the first fiscal year.
Many will say this was to be expected, as there were serious financial investments made in the first year, as well as the fact that nobody expected things to go smoothly from the opening.
In the days before Oct 17th, the former president and CEO of Cannabis NB, Brian Harriman, had predicted sales of $45 million during the first fiscal year.
The reality is this – Cannabis NB made only $18.6 million in total sales in the first fiscal year, which is nearly three times less than what the former CEO predicted.
Finance Minister Ernie Steeves mentioned that he’s been pondering the idea of privatizing Cannabis NB, somewhat similar to the model applied in Saskatchewan.
“Do we keep the model we have and maybe cut down on the number of the lowest-producing stores, do we privatize the model, or do we find an expert in the business and say, ‘You know what, manage this for us?’ Those are three options, there may be more,” Steeves said.
Quebec needs more stores
While New Brunswick might be losing money due to the low number of sales and customers, Quebec, on the other hand, desperately needs more retail locations and an online system for buying recreational cannabis.
Both Quebec and Nova Scotia decided to open 12 stores each in October, yet they have a huge difference in the population. Quebec is the 2nd most populous province with over 8 million people, while Nova Scotia has under a million residents.
However, Quebec’s stores had to keep their doors closed to the public more often than open, as they faced serious supply problems.
The SQDC might not be doing the best job at selling cannabis, but it’s also not the worst provincial cannabis authority in Canada.
It reported $71 million in total revenue during its first fiscal year, which is impressive – but it also posted a near $5 million loss which will be covered by the province’s taxpayers.
Who’s the winner in the first year?
Without a grain of doubt – Alberta.
We already talked about how Alberta outplayed all other provinces and is working hard at keeping it that way.
The AGLC recorded a profit of $4.7 million, and the province received $30 million CAD in cannabis taxes.
Alberta also has hundreds of private retail stores competing against each other all over the province, and it follows a semi-private provincial model – which means that Minister Ernie Steeves may have a good point in calling for privatization.