Ontario government loses $42 million selling weed in the last year
Leave it to the Ontario government to lose money selling drugs.
The Ontario Cannabis Retail Corporation reportedly lost a whopping $42 million in the latest fiscal year, according to publicly released documents from the corporation.
Ontario’s expenses totalled a stunning $106 million, with pot revenues totalling only $64 million for the year.
Marijuana has been legalized since October of last year, with the sloppy rollout being criticized by many for their supply chain issues and marijuana shortages, a definite hurdle considering that sales were undoubtedly going to be sky-high.
The supply shortages meant the Ontario government had to cap the number of retail licences at 25, but the province has its eyes on increasing the number of legal pot outlets to 75 by October of 2019.
The Ontario Cannabis Store publicly announced last week that CEO Patrick Ford would be retiring. A replacement is being sought out.
An Ontario based cannabis producer, CannTrust Holdings Inc, has announced their intention to destroy $77 million worth of cannabis, according to the CBC.
Since the legalization of cannabis, CannTrust has been plagued with scandals. The most notable incident occurred on September 17th where the company had its license revoked by Health Canada for producing unlicensed pot.
As well as this, Health Canada froze a significant amount of CannTrust’s stock. The company previously estimated that the impact of this regulation had lost the producer $51 million.
Since then, CannTrust has been on a P.R. crusade in an attempt to repair their tarnished image. Firstly, they fired their CEO. Now, they are hoping that the destruction of $12 million worth of plants and $65 million worth of inventory will remedy their image in the eyes of Health Canada.
CannTrust plan to regain regulatory compliance also includes measures to recover cannabis that was not authorized by CannTrust’s license.
After this announcement, CannTrust’s shares rose 24 percent.
CannTrust will provide a detailed plan to Health Canada on or before Oct. 21.
According to financial statements released by the Ontario Cannabis Retail Corporation (OCRC), at least $10.2 million was spent on cannabis stores that were never opened.
Of this figure, $8.9 million was spent on equipment and renovation write-offs, while $1.2 million was spent on leases and subsequent lease terminations — these were likely connected to a failed store in Guelph which never materialized.
“They are basically writing off all the renovation expenses that they had incurred, and the equipment that they’d purchased for the stores,” says Brock University business professor Michael Armstrong.
“That’s $2 million per location, but there may be some other things in there in terms of stuff that they had in the headquarters, or stuff they had in the warehouse that was going to support the retail stores and now they don’t need that.”
According to an email from OCS spokesperson Daffyd Roderick to Global News, most of the $8.9 million came in the form of transitions between mandates for store fixtures to bolster a larger network. He says the OCS is now trying to recover the value of these assets.
Armstrong also questioned the types of things being written off, such as computers which are still completely functional and could be resold on the market quite easily. He believes the fast-paced nature of opening such a large distributor may be the cause of the OCS’s rapidly accumulating write off lists and quick abandonment of failed projects.
“That could represent maybe a hasty decision,” Armstrong says. “The OCS is a pretty new organization. It’s a little over a year old, so maybe it’s lack of experience, but it’s also not necessarily a priority.
“They’re busy trying to get their online sales working properly, they’re busy trying to get ready for the new government’s private-sector retailing, so ‘Let’s not waste time, let’s get rid of this stuff quickly rather than haggle over some pennies.”
At 2 a.m. on Saturday, a traffic stop just outside Toronto led to a police seizure of 426 pounds of marijuana worth roughly $1.9 million if sold on the blackmarket.
The rental van the two alleged suspects were driving on Highway 401 near Cobourg was
26-year-old Kiryl Andrushkevich of Oakville and 32-year-old Damaris Nataren Ortega of Toronto appeared in court on Sunday. They are currently facing several drug and trafficking charges.
According to a September 5 news release, Edmonton police have successfully conducted a joint operation to crack down on non-licensed sellers of cannabis in Edmonton.
The operation came as a result of an investigation launched in early 2019. From August 3 to 10, police carried out the operation which led to a seizure of approximately $1,500 in cannabis products that were being sold illegally from three separate businesses.
“A legal market is a safer market, and the EPS will continue to crack down on the illegal market,” says Cst. Dexx Williams, EPS Cannabis Liaison.
“With edibles coming soon, he added, “we want to remind all workers in the cannabis industry that if you’re selling any cannabis products without a licence, including those that contain CBD, businesses can be fined up to $50,000, and individual workers can face a fine of up to $10,000.”
Overall, eight businesses were fined a combined total of $48,000 for business licence and zoning bylaw offences by City of Edmonton municipal enforcement officers.