N.B. has fewer cannabis stores, but higher revenue: Report

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OTTAWA • New Brunswick has among the fewest cannabis stores per person in the country, but is raking in more revenue from legal weed than most provinces.

A newly released review of the federal legislation that paved the way for the legal use and sale of cannabis provides a province-by-province comparison of the industry to date.

It shows New Brunswick’s current 26 stores equates to 3.7 shops per 100,000 population.

That number is third-lowest in the country, only behind Quebec, with 91 stores, or 1.2 per 100,000 people, and Prince Edward Island with four stores, or 2.8 per 100,000.

The number is highest in Alberta where there are 20.4 stores for every 100,000 Albertans, and in Saskatchewan where there are 15.5 stores for every 100,000 people.

But the data also shows that cannabis is much more lucrative to the New Brunswick government than elsewhere.

The provincial government recorded $16.5 million in revenue in the last fiscal year.

That ranks fifth among the country’s provinces, with larger provinces, including Ontario with $184.4 million, and Quebec with $75.7 million, ahead of it.

It also shows several provinces still not turning a profit, including Alberta, British Columbia and Saskatchewan.

The data comes ahead of New Brunswick’s expansion with nine private stores, including several that opened this summer, with Cannabis NB planning another round of requests for proposals to open even more stores next year.

Companies struggle

Federal legislation mandates a review of the Cannabis Act, which in 2018 set purchase and possession limits at 30 grams, while restricting youth access to marijuana and established safety requirements for growing, selling and transporting the substance.

A “What We Heard Report” following a public consultation lays out a series of concerns with the industry that the federal government will now need to consider.

Now, five years after Canada’s move to decriminalize the recreational use of cannabis, the report says companies in the legal market are struggling.

“One of the main messages from industry representatives was that, despite the growth of the legal cannabis market, companies across the supply chain are struggling to realize profits and maintain financial viability,” reads the report.

“Specifically, they noted that the hyper-competitive cannabis market for producers and retailers, combined with the various regulatory fees, distributor mark-ups and fees, and taxes are stifling companies of all sizes.”

The general call is to lower taxes on the industry, which would cut into government revenue.

“We heard numerous comments that, without immediate financial relief, companies will be forced to exit the market,” reads the report. “Some suggested that the result would be market consolidation, ultimately increasing prices, reducing product diversity, and driving consumers to the illicit market.”

That concern has been echoed by industry in New Brunswick.

“I think, overall, that the government is pretty happy, and the stats echo it,” said Moncton-based Organigram CEO Beena Goldenberg earlier this year. “The problem is that jobs are starting to be lost.

“We really have a problem with the financial viability of the sector. You have a lot of licenses that are closing down or are under pressure and it’s coming from a couple places.”

First Nations

The independent panel that authored the new report said it also heard from “many” First Nations organizations, leaders and representatives on the issue of jurisdiction.

“Nation governments took the view that the lack of express authority for First Nations governments is a shortcoming in the Act and asserted the need to align the legislation with United Nations Declaration on the Rights of Indigenous Peoples,” reads the report.

It notes that a Senate committee heard similar calls, recommending that the minister of Health introduce legislation to amend the Cannabis Act to permit First Nations to regulate the possession, sale and distribution of cannabis on their lands.

Under the act, the provinces and territories have authority over the distribution and sale of cannabis under provincial and territorial law.

It does not give authority to First Nations to issue licences to cultivate, process or sell cannabis.

The report finds that less than one per cent of the country’s legal cannabis retail stores – 24 of more than 3,300 – are operating on First Nations reserves.

Cannabis NB and the province have repeatedly condemned independent sellers on First Nations as illegal, but authorities have been reluctant to take any legal action.

That said, the Crown corporation said earlier this year it is “open and committed to having mutually beneficial discussions with First Nation communities and representatives regarding the legal recreational cannabis industry with the objective of continuously increasing access to safe, regulated products.”

Illegal market vs. health concerns

The report found there was “general agreement” that the main objectives of the cannabis framework should continue to be the protection of public health and public safety.

But there’s varying opinions on how to achieve that.

“Public health stakeholders were generally supportive of the precautionary approach – including the 10 milligram THC limit for edible cannabis products and restrictions on promotion of these products,” reads the report.

“There were some suggestions that further restrictions should be considered such as stricter age limits on who can possess, distribute, and buy cannabis, setting minimum pricing retailers can charge, and restrictions on selling flavoured products. “

In contrast, industry representatives suggested that elements of the precautionary approach “impede their ability to compete with the illicit market and thus risk sending consumers to the illicit market for unregulated products that may pose greater health harms.”

Industry believes that 10 milligram THC quantity for edible cannabis per package is too low and that a 30-gram public possession limit impedes consumers from purchasing a variety of products.

It adds that restrictions on promotion, packaging and labelling limit its availability to compete with the illicit market.

It also says “inconsistent enforcement, especially with respect to activities in the illicit market” is hindering the legal industry.

Statistics Canada data on household expenditures suggest that almost $8 billion was spent on cannabis in Canada last year, with roughly $5.1 billion of expenditures in the legal market, $2.4 billion in the illicit market, and $0.4 billion on cannabis for medical purposes.

Provinces, retail stores and government revenue

Ontario: 1,552 stores, $184.4 million

Quebec: 91 stores, $75.7 million

Nova Scotia: 45 stores, $28.6 million

Manitoba: 161 stores, $24.8 million

New Brunswick: 26 stores, $16.5 million

Newfoundland: 41 stores, $9.1 million

Prince Edward Island: 4 stores, $2.6 million

Alberta: 757 stores, -$4.4 million revenue

British Columbia: 465 stores, -$3.4 million revenue

Saskatchewan: 149 stores, -$3 million