Ontario lost $42 million selling cannabis last year

According to official documents released last Friday, the’Ontario Cannabis Retail Corp. (OCRC), Ontario’s cannabis regulatory authority, lost $42 million during the last fiscal year while operating cannabis sales within the Ontario Cannabis Store (OCS), its network of brick-and-mortar and online stores.

Sales actually generated $64 million in fiscal year 2018–2019 (ending March 31), but the OCRC’s expenses rose to $106 million, compared with $6 million for fiscal year 2017–2018, when the government began operating its cannabis business.

Daffyd Roderick, a spokesperson for OCS, stated that the agency was unable to account for revenue from cannabis sales to retail stores during the last fiscal year, which automatically negatively impacts its results.

«OCS expects continued revenue growth as the industry evolves and Ontario's network of private retail stores expands to meet the needs of adult consumers in the province,» Roderick said in an email sent to BNN Bloomberg.

«The legalization of cannabis is a new venture for Ontario,» said Marc Pichette, a spokesperson for the provincial Ministry of Finance. He added that developing the province’s retail framework also entailed initial costs.

At the same time, the Ontario government announced on Friday that it had generated $19 million in revenue from the cannabis excise tax during its last fiscal year—well below the $35 million estimate presented in the latest provincial budget.

Legal cannabis sales in Ontario have totaled $121 million since October, the second-highest amount in the country behind Alberta, which reported $124 million, according to Statistics Canada. However, recreational cannabis sales in Ontario are off to a slow start due to a lack of available brick-and-mortar retail locations, supply shortages, and various logistical issues.

Ontario has limited the number of retail outlets to 25 due to existing shortages, and plans to gradually increase that number to 75 by October. However, the licensing process has been put on hold. The lottery intended to determine the recipients of the licenses In fact, it was unable to contact the winners, whose prizes were subsequently invalidated. The Ontario courts are scheduled to hear the case before September 25.

Ontario isn’t the only province losing money by selling cannabis. Quebec lost $5 million during the same fiscal year. Both provinces initially opted for a public distribution system.