The president and CEO of Cannabis NB says profitability is not likely this fiscal year and hopes the pot retailer can turn its first profit in 2020-2021.
“Out of transparency, and I was clear and consistent throughout this process, I do not see us being profitable this year,” said Patrick Parent, who took over the chief executive role in September.
“However, we have made improvements.”
Parent appeared before the Standing Committee on Crown Corporations Tuesday to answer MLA questions about Cannabis NB’s tumultuous first year of operation.
The crown corporation has lost about $15 million so far, as it missed all of its sales projections in the face of supply shortages and stiff competition from the black market.
Parent took aim at both issues, saying that the widespread supply issues experience after Oct. 17, 2018 pushed prices up, driving consumers to continue buying cheaper alternatives from the black market.
Parent said prices are becoming more competitive and the company is currently negotiating contracts with licenced producers, hoping to drive price points even lower, sparking demand from consumers.
Premier Blaine Higgs has spoken openly about the potential for privatizing the government-run stores and has said repeatedly that the government will not continue losing money on cannabis.
Parent refused to share his thoughts on the current model or speculate on what the government might do to change it in the coming months.
“I think ultimately it’s a decision that resides with government,” Parent said. “I mean, they’ll have to make the best business decision looking at all possible models. I can’t speak on their behalf.
“I’m sure they’ll do a proper analysis to deliver the best results for taxpayers. As far as I’m concerned, yes, we’re not going to be on the road to profitability necessarily this year, but we’re hoping we’ll make improvements and work inside of the bounds of whatever model is chosen for us.”
PC committee member Stewart Fairgrieve says Cannabis NB deserves time to turn things around, but that it’s unacceptable for the government to continue losing money on what many viewed as a potentially rich source of new revenue.
“I think it’s unfair to expect them to overnight come up with a plan that’s going to take them to profitability, but New Brunswick should not be losing money to the extent that they are with Cannabis NB,” he said.
Liberal MLA Andrew Harvey said the enforcement of illegal storefronts and the prices in government stores are two areas that need to be addressed moving forward, but expects that Parent can right the ship if given time to work under the current business model.
“Remember, this is about a year old, right? It’s a new industry, new product lines that are being sold and the model that was chosen, that Cannabis NB is using,” he said.
“I think you need some more time to let it unfold.