New Brunswick’s Crown-owned cannabis retailer is recording a big financial loss in its first year of operation.
Unaudited year-end results released Tuesday show Cannabis NB lost $11.7 million.
The agency says sales of legal cannabis for the fourth quarter were $9.7 million, resulting in a year-end total of $18.6 million.
General manager Lara Wood says the government knew there would be challenges, but is confident that objectives — including reducing the illicit market and creating public awareness — are being met.
Well-documented supply shortages, howeverm among other things, have posed a problem for business she said.
“But I think there’s been a number of issues, not just pure supply, but logistics issues as we got started with this new market that surprised us.”
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The price point has been scrutinized since legalization, with many suggesting the black market’s cheaper prices will continue to allow the illicit sales to thrive.
But Dr. Michael Armstrong, an associate professor with the Goodman School of Business at Brock University, says the cost of legal cannabis is less of an issue while the supply challenges persist.
“Right now, product supply is so low that there’s no shortage of customers who are willing to pay that premium,” he says.
“There’s some segment of the market, who really wants the legal product because it’s it’s tested or because they’re packaged or labelled and they know what’s inside.”
Wood disputes the argument that price points have made Cannabis NB non-competitive.
“We’ve heard a lot about price points, but some of the products that actually sell out the fastest here are the premium price points,” she said.
Armstrong says with increased supply, more costs will be recovered by the corporation.
He says the number of Cannabis NB stores adds more to the company’s costs, but says it should pay off in the long-run.
Last October, former Cannabis NB president Brian Harriman said with overhead and start-up costs, he hoped the 20 stores would at least break even in their first fiscal year.
As the parent company, NB Liquor will consolidate Cannabis NB’s results into its year-end results.
— With files from Callum Smith