Article by Laura Kane, Vancouver Sun
British Columbia sold less legal cannabis than any province other than Prince Edward Island in the first nine months of legalization, and officials blame supply shortages and a slow rollout of retail stores.
Statistics Canada data shows B.C. sold $19.5 million worth of legal pot from October 2018 through June 2019. The only province that sold less was P.E.I., which took in $10.7 million with only a fraction of B.C.’s population.
In its annual report, the B.C. Liquor Distribution Branch said problems with supply and slower than anticipated provincial and municipal approvals resulted in the province’s cannabis industry evolving at a slower rate.
“Managing inventory levels in an environment of product shortages and unknown customer demand is very challenging,” the branch said. “The LDB is currently building inventory levels in anticipation of future public and private retail stores.”
Alberta has sold the most legal pot, raking in $123.7 million from its dozens of licensed stores. Ontario, which only began opening brick-and-mortar shops in April, sold $121.6 million while Quebec sold $119.2 million.
Saskatchewan and Manitoba sold $38.2 million and $32.2 million respectively. The Atlantic provinces also sold more than B.C., with Nova Scotia raking in $47.9 million and New Brunswick nabbing $25.9 million.
B.C.’s liquor distribution branch said in its report that Statistics Canada estimates $2.2 billion worth of cannabis was sold in the fourth quarter of last year across the country, but 65 per cent of it was purchased illegally.
The branch report said its strategy on pricing is focused on being competitive with the illegal market. There were 212,000 retail transactions through store and online sales, with an average transaction value of $74.38, in the first six months of legalization.
When edibles are introduced, the industry will need to adapt again, it said.
Branch CEO Blain Lawson said it had a $2-million revenue shortfall this year, due mostly to the upfront costs of adding the distribution and retail sale of cannabis to its operations.
The national supply shortage has held back legal sales across the country, but B.C. was slow to open stores and it also has the strongest black and grey market in Canada, said Michael Armstrong, an associate business professor at Brock University in St. Catharines, Ont.
Vancouver and Victoria granted business licences to illegal dispensaries in the years prior to national legalization, and some of those shops have remained open despite not being authorized under the new regime, he noted.
“If there are hardly any stores, yeah, some people will go to the government website, but most people … if they’re already getting good service, they’ll just keep going to their grey market or black market retailer,” he said.
He said price and quality are the two biggest factors in a cannabis consumer’s decision of where to shop. Price isn’t playing a big role yet because the product shortage means legal stores sell out no matter what, he said.