Prov­ince won’t turn a pot profit in next 4 years, bud­get shows

Edmonton Journal - - CITY - ALANNA SMITH al­ twit­­na_­smithh

Bring­ing le­gal­ized mar­i­juana to mar­ket has proven costly for Al­berta, with no sign it will turn a profit any­time soon.

The UCP bud­get, tabled on Thurs­day, projects that cannabis in­come will re­main neg­a­tive over the next four years, de­spite pre­vi­ous es­ti­mates it would make the prov­ince money by 2020.

Fol­low­ing a rev­enue loss of $34 mil­lion in 2018-19, fur­ther short­falls are ex­pected in each of the next four fis­cal years: $31 mil­lion in 2019-20; $34 mil­lion in 202021; $24 mil­lion in 2021-22 and $25 mil­lion in 2022-23.

The net in­come pro­jec­tions in­clude re­tailer fees and sales rev­enue, mi­nus ad­min­is­tra­tion and in­ven­tory costs, ac­cord­ing to bud­get doc­u­ments.

The pre­vi­ous NDP bud­get fore­cast Al­berta would lose $90 mil­lion over two years be­fore scrap­ing its way into the black with a net in­come of $37 mil­lion by 2020-21.

How­ever, the prov­ince said the up­dated num­bers re­flect weaker con­sump­tion than ini­tially pre­dicted fol­low­ing cannabis le­gal­iza­tion in Oc­to­ber 2018.

Cal­gary has more cannabis stores than any other city in Canada at 66, and 156 ad­di­tional lo­ca­tions have been ap­proved. Ed­mon­ton is sec­ond with 48.

Provincewi­de, the AGLC has green-lighted 306 re­tail out­lets, which is ex­pected to in­crease to more than 500 by 2021.

The Not­ley govern­ment bud­geted $26 mil­lion in cannabis tax rev­enue in 2018-19, with es­ti­mates that it would grow to $99 mil­lion by 2020-21 as the il­le­gal cannabis mar­ket shrinks and the le­gal mar­ket ex­pands.

New es­ti­mates place Al­berta’s cannabis tax fore­cast at $30 mil­lion in 2018-19, $70 mil­lion in 2019-20 and ris­ing to $84 mil­lion by 2022-23.

How­ever, af­ter a year of le­gal­iza­tion, it ap­pears the black mar­ket cannabis in­dus­try is still thriv­ing since it isn’t sub­ject to le­gal sec­tor de­mands.

The Al­berta, Gam­ing, Liquor and Cannabis Com­mis­sion (AGLC) is re­spon­si­ble for the reg­u­la­tion and on­line re­tail sales of cannabis.

Bud­get fig­ures show re­lated re­tail setup and ad­min­is­tra­tion costs are out­pac­ing po­ten­tial sales rev­enue.

AGLC spokes­woman Heather Hol­men said they’re not an­tic­i­pat­ing cannabis will gen­er­ate a profit from whole­sale sales to pri­vate re­tail­ers for a few years.

On the flip side, the prov­ince es­ti­mates al­co­hol-re­lated rev­enues are ex­pected to rise over time af­ter a slight de­crease in 2019-20 to $823 mil­lion from $860 mil­lion a year ear­lier. By 2022-23, the tar­get is $947 mil­lion.

Gam­ing and lot­tery rev­enue will take a slight hit from about $1.45 bil­lion in 2018-19 to $1.41 bil­lion in 2019-20, but in­crease to $1.48 bil­lion by 2022-23.

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