NB Cannabis privatization could lead to store closures: professor

Future of NB Cannabis stores questioned under private model
WATCH: Could privatizing cannabis sales in New Brunswick lead to the closure of many of the current Cannabis NB outlets? One Canadian business professor thinks so under the current regulations. Andrew Cromwell reports.

There’s a theory that the privatization of cannabis sales in New Brunswick could lead to the closure of many of the free standing Cannabis outlets.

Michael Armstrong, business professor at Brock University in St. Catherines, Ont., has been studying the business aspect of Canadian cannabis legalization.

He says the business model of a sole private operator and no change in regulation could spell bad news for the Cannabis NB outlets currently in operation.

READ MORE: New Brunswick moves to privatize Cannabis NB

“If you keep the current arrangement…the very logical business approach is to say OK we’ve got 20 stores, 15 of them are in markets that are way too small to support stores…we’re going to close them,” he said.

On Thursday, New Brunswick Finance Minister Ernie Steeves announced the province’s intention to seek out a sole operator for its cannabis sales business. Since then a lot of questions and concerns remain including dealing with the black market.

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READ MORE: Why New Brunswick loses money selling weed, and what the lessons are

Armstrong is an advocate of the Nova Scotia model of a store within a store concept.

“Almost all of their cannabis stores are actually just sections of their liquor stores,” said Armstrong. “That arrangement means that each of the cannabis stores don’t have to sell very much to cover their costs.”

On the health and safety front, the New Brunswick Medical Society hopes health will rule over profit with a switch to private ownership.

“The packaging is correct and the education of the public at stores where it’s being sold is accurate and being provided to the public in general,” said Society President Dr. Chris Goodyear.

READ MORE: No profit expected this year for Cannabis NB as ‘challenges’ of black market continue, CEO says

And there are, once again, concerns about black market sales.

“We want to make the product available in a safe form where people know what they’re getting and certainly we don’t want to cause over regulation to continue to drive people to the black market,” Goodyear explained.

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A decision on a private sector operator is expected by the spring.