Ontario's pot business posts $42M loss
Ontario said its government-owned cannabis business lost $42 million in the last fiscal year, while the province collected barely half the amount of excise taxes it estimated it would generate, in the latest symptoms of a shaky start to legalizing recreational pot in Canada’s most populous province.
The Ontario Cannabis Retail Corporation, a crown corporation that operates the Ontario Cannabis Store’s online retail business and sells wholesale cannabis to the province's private retail stores, generated $64 million in the fiscal 2018-2019 year, according to public accounts released on Friday.
However, expenses at the OCRC ballooned to $106 million in the twelve months ending Mar. 31, up from $6 million in fiscal 2017-2018 when the government commenced operations of its cannabis business.
Daffyd Roderick, a spokesperson for the OCS, said the agency wasn’t able to book wholesale revenue from selling into the first wave of physical retail stores in the latest fiscal year, which hurt the crown corporation’s bottom line.
“OCS expects continued revenue growth as the industry evolves and Ontario’s private retail store network expands to meet the needs of adult consumers across the province,” Roderick said in an email to BNN Bloomberg.
“Cannabis legalization is a new venture for Ontario,” Marc Pichette, a spokesperson for the province's finance ministry, told BNN Bloomberg in an email.
Developing the province’s retail framework — needed to effectively stamp out the black market — also led to some initial costs, he added.
Meanwhile, the Ontario government said Friday it generated $19 million in revenue from cannabis excise taxes in its last fiscal year, falling well short of the $35-million estimate presented in the most recent provincial budget.
Legal cannabis sales in Ontario have totalled $121 million since October, the second-largest amount in the country behind Alberta which has sold $124 million, according to Statistics Canada. However, sales of recreational cannabis in Ontario have been off to a sluggish start amid a lack of available bricks-and-mortar retail outlets, supply shortages, and various logistical issues.