Responsibility for the sale of cannabis in New Brunswick will remain with the government.
The minister of finance announced Friday that Cannabis NB will not be sold, after a lengthy Request for Proposals (RFP) process that saw eight bidders come forward looking to take over the business.
Premier Blaine Higgs said the decision was made at a cabinet meeting on Thursday. The RFP process played out away from the cabinet table, Higgs says, only being brought for discussion in the last week.
“This process was a very independent one, so we just in the last week or so got to know … what were the options,” Higgs told reporters on Friday.
“Then we had the discussion with the team and decided at this point we either go or no go and the decision was that we will maintain the status quo.”
Back in November of 2019, when finance minister Ernie Steeves first announced the RFP, the government suggested they had a responsibility to taxpayers to field offers from the private sector.
“The best approach for New Brunswick taxpayers and government is to turn to the private sector,” Steeves said at the time.
It was an easy case to make. The Crown corporation lost almost $12.5 million in its first fiscal year, which covered just five months.
Business for the pot retailer has since turned around. After Patrick Parent took over as CEO in the fall of 2019, he made cutting costs a priority, and renegotiated supplier contracts to allow Cannabis NB to offer product at a price point attractive to the average black market consumer.
Parent resigned as CEO earlier this year to take a position in the private sector, but his tenure saw a marked improvement in fiscal outcomes. Profits for this fiscal year are projected at over $10 million and in Tuesday’s budget, the government is projecting $11 million in profits for 2021-2022. That’s on top of the $7 million the province is expected to rake in on Cannabis duties.
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Higgs has, at times, expressed concerns that the profits are a pandemic related bump and says the sustainability of current sales will be closely watched. Profitability was one of the reasons given for the delay in the process, which was initially supposed to wrap up in the spring of 2020.
Higgs did call the current model an “expensive retail model,” and took aim at some of the leases signed for the physical locations.
“They were not established because of market conditions, they were established because of political conditions,” Higgs said.
The Crown corporation was set up under the Liberal government of former premier Brian Gallant. The current interim leader of the party, Roger Melanson, wouldn’t say if the caucus felt vindicated by the decision to keep the model, but said he’s happy the government opted to stick with the status quo.
Melanson, and the Liberal caucus at large, has long preached patience with the government run retailer.
“We told them so,” Melanson said. “We’ve been very consistent on the cannabis file from the beginning. Any business that becomes profitable takes up to five years. It took Cannabis NB what, two and a half years?”
Along with the revenue created by the Crown corporation, Melanson says keeping cannabis retail in house is important from a public health and safety aspect as well.
“Not only from an operations point of view, and generating profits that go into social programs, but also from a regulations point of view,” Melanson said.
“It is safer for consumers that decide to consumer, but it’s also very much safer for our kids, our younger generation, that this product doesn’t get into their hands.”
Other parties are not as pleased with the decision. People’s Alliance leader Kris Austin says he’s happy the government didn’t opt to turn a public monopoly into a private one, but would prefer to see them get out of the cannabis business altogether.
“The government has bigger things to worry about than retailing beer and weed,” Austin said.
Austin also supports turning over alcohol sales to a multi-vendor private model.
Green MLA Kevin Arseneau said keeping Cannabis NB is the right choice, but said he wants to see workers unionized, just like their counterparts at ANBL.
-With files from Alexander Quon.