Michael Armstrong, Associate Professor of Operations Research in Brock’s Goodman School of Business, wrote a piece recently published in The Conversation where he compared and contrasted the sale of legal cannabis in Ontario and Quebec.
“According to recently released financial statements, the Ontario Cannabis Store (OCS) earned $18.6 million during its 2019-20 financial year. That’s a welcome reversal from the previous year’s $42-million loss. But while OCS did better financially than its Alberta counterpart, it still lagged behind Québec’s Société québécoise du cannabis (SQDC).
And even though Canada marked the second anniversary of legalization this past weekend, both Ontario and Québec still lack enough stores to make legal products widely accessible, unlike in Alberta.
Three main improvements
The first reason for the turnaround was fewer write-offs. Between April 2018 and March 2019, OCS wrote off $12.6 million for retail store preparations it didn’t use. That was because the Ontario government reassigned storefront selling to the private sector. During 2019-20, by contrast, the OCS wrote down “only” $2.1 million of inventory, perhaps due to quality concerns.
The second reason was a longer selling period. Cannabis was legal throughout the recent year, versus only half of the previous one. So although OCS’s monthly retail sales dropped 35 per cent, its annual total grew from $57 million to $74 million.
The third and biggest reason was the opening of licensed stores. OCS sold $224 million of products wholesale to those stores, despite there being just 53 of them.”
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