MONTREAL, June 12, 2019 /CNW Telbec/ - In its first fiscal year, which began when the sale of recreational cannabis became legal on October 17, 2018, and ended on March 30, 2019, the Société québécoise du cannabis (SQDC) had sales totalling $71 million or 9.9 metric tons of cannabis.
- Sales in the store network totalled $57.6 million or 8 metric tons of cannabis. Some 1.3 million transactions were completed, with an average shopping cart (including taxes) of $51.07.
- For its part, the SQDC website generated $13.7 million in sales, corresponding to 1.9 metric tons of cannabis. Around 257,000 transactions were completed, with an average shopping cart (including taxes) of $61.06.
Soon after launching its store network, the SQDC decided to cut the stores' opening hours to four days a week in response to supply challenges faced by all provinces, irrespective of the business model (public, private or hybrid), number of selected producers or logistic model. At fiscal year-end, the stores were open five days a week, and they are now open all seven days. Despite the supply issues and its scaled-back expansion plan, the SQDC estimates, based on Statistics Canada data, that during its first months of operation, Quebec was the province with the highest sales in Canada in dollars as well as volume.
The SQDC generates value while fulfilling its health mission
The SQDC reported comprehensive income of $0, consisting of a $4.9 million loss, which was offset by a financial contribution from the Quebec government. Net expenses totalled $18.1 million and include non-recurring start-up costs on the order of $4.9 million. Excluding these costs, net expenses would have been $13.2 million and the SQDC would have ended its fiscal year with a balance of $0. In addition, government revenues from the company in the form of consumption and excise taxes totalled about $29.7 million.
Based on budget forecasts and producers' supply cycles, the SQDC expects to become profitable in the coming fiscal year. The Quebec government's 2019-2020 budget lists the SQDC's expected net earnings as $20 million. To that figure will once again be added expected government revenues of $89 million in the form of consumption and excise taxes.
In short, the company is generating value while maintaining its focus on education and health protection and gradually bringing users into the legal market. All profits will be reinvested in prevention and cannabis research.
The SQDC was founded on June 12, 2018. The following October 17, the sale of recreational cannabis became legal in Canada. The Quebec government mandated the SAQ to set up the SQDC, the better to ensure that cannabis would be distributed and sold with health protection in mind, the goal being to bring users into the legal cannabis market and to keep them there without actually encouraging cannabis use.
A major effort was made to create a new government corporation and have it up and running in less than a year in a new industry and while dealing with significant supply challenges. The SQDC successfully oversaw the implementation of its information systems and transactional website, found locations for, designed and built its first 12 stores, put in place the logistics necessary to manage delivery of online orders, signed agreements with suppliers, recruited and trained staff and created a customer relations centre.
Despite all these challenges, the SQDC ended its 2018-2019 fiscal year in financial balance (excluding non-recurring start-up costs).
The French version of the 2019 Annual Report is now available on SQDC.ca. The English version will be published soon.
About the Société québécoise du cannabis (SQDC)
The SQDC is a government corporation whose mission is to distribute and sell cannabis in Quebec with a focus on protecting its customers' health and safety. It is committed to offering quality products and to informing and advising consumers on how to minimize the health impacts of cannabis. The long-term objective is to shrink the cannabis black market in Quebec. All of the company's profits will be remitted to a fund for reinvestment, in particular in prevention and cannabis research. For more information, visit sqdc.ca.
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