Coming off its first profitable quarter since cannabis was legalized in Canada, the CEO of the Crown corporation in charge of cannabis sales in New Brunswick said the business expects to post a profit this fiscal year.
Cannabis NB’s fourth-quarter results for 2019-2020 showed a $500,000 profit, with yearly losses coming in at $4.3 million.
Patrick Parent, president and CEO of ANBL and Cannabis NB, expects the upward trend to continue with a profit of about $1 million in the first quarter of this fiscal year.
“We’ve been profitable for seven-consecutive months now and while the quarter is not officially closed, and I can’t speak to specifics, I’m confident we will likely turn a profit of $1 million for Q1 alone, which is a substantial turnaround versus last year,” Parent said.
In its first fiscal year, covering just five months, Cannabis NB lost $12.5 million.
The losses prompted the provincial government to look at privatizing cannabis sales in the province and issued a request for proposals in November.
“The best approach for New Brunswick taxpayers and government is to turn to the private sector,” said finance minister Ernie Steeves when the RFP was announced.
The province received eight bids from interested parties in the private sector and said last week a decision on whether or not to move ahead with privatization is on track for later this summer.
“Like many activities, the COVID-19 pandemic has had an impact on the RFP evaluation work over the past few weeks,” said department of finance spokesperson Vicky Deschênes in an email statement.
The turnaround in Cannabis NB’s fiscal situation coincided with the arrival of Parent, who took over from outgoing Brian Harriman.
Parent says his priority coming in was to stem the losses and move towards profitability, which involved cutting some operational expenses, but most importantly, lowering the price point for consumers.
“We first needed to renegotiate pricing with suppliers. Price points were at a place that we could not pass those savings on to consumers,” Parent said.
Parent says this allowed Cannabis NB to begin offering prices that are truly competitive with the black market and among the cheapest legal prices in the country, including a $100 ounce of dried flower.
Now that the Crown corporation is no longer a fiscal liability, the decision on whether or not to sell becomes more complicated. But according to one expert, that’s not necessarily the most important question the province needs to ask itself.
“Is this a business they want to be in?” said Shelley Rinehart, the head of the MBA program at UNB Saint John.