Ontario to vet applicants for future pot shop licences
It appears that the boon legalizing cannabis would generate for Canadian government coffers isn't as high as once thought.
Thanks to a myriad of factors including limited supply and a shortage of physical retailers, several provinces are dialing back revenue projections on how much revenue legal cannabis was supposed to bring in.
On Thursday, Ontario slashed the revenue it would receive in its share of excise taxes from the federal government in the current fiscal year in half, to $17 million from last year's forecast. In fiscal 2019-2020, Ontario now expects to generate $80 million in cannabis-related revenue, down from $115 million it projected with its budget last year.
Similar declines have been detailed in several other provinces since the onset of legalization of recreational marijuana in October. Those revenue shortfalls come as legal cannabis sales have suffered from supply chain issues, less-than-expected supply and a still-flourishing black market which sells marijuana around one-third less than what is available on the legal market.
On Tuesday, BDS Analytics cut its estimates for the Canadian cannabis market with the research firm projecting spending to reach US$5.2 billion by 2024, down from $5.9 billion by 2022.
In British Columbia, the government no longer breaks out cannabis revenue as a separate line item, combining any cannabis-related figures with revenue from federal payments under what it calls Disaster Financial Assistance Arrangements.
B.C. expects those two categories to only generate $17 million in the current fiscal year, down from $70 million it previously anticipated.
Quebec now sees the Société québécoise du cannabis, the provincially-owned retailer and wholesaler of cannabis in the province, to generate just $20 million in fiscal 2019-20, down from $50 million it projected in last year's budget. Quebec sees cannabis-related revenue rising to $37 million in the fiscal 2020-21 year.
New Brunswick, which at 22 has the most cannabis stores per capita in Canada, now estimates its net revenue from cannabis to be zero in fiscal 2018-19, down from previous projections of $1.2 million. The Maritime province anticipates net revenue from cannabis to climb to $1.6 million next year.
Alberta, which hasn't released a fiscal budget this year and is in the middle of a provincial election campaign, estimated last year that cannabis would generate $26 million in 2018-19 and $80 million in 2019-20.
Manitoba and Prince Edward Island didn't provide revenue estimates for cannabis-related sales in their respective provinces. Saskatchewan estimates cannabis will bring in about $5 million in new revenue in fiscal 2019 but stated in last year's budget that it didn't incorporate any pot-revenue figures, as several factors made it "challenging to accurately forecast potential revenue."
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