New Brunswick seeks private operator to take over retail cannabis

The New Brunswick government plans to hand over recreational cannabis sales to the private sector, according to the province’s finance minister.

Finance Minister Ernie Steeves announced on Thursday the provincial government has issued a request for proposals for a single, private operator to “undertake the operation, distribution and sales of recreational cannabis in New Brunswick.”

Cannabis NB, the provincially owned and operated cannabis distributor, has been a money-loser since the outset of legalization in October 2018.

“This is part of our efforts to energize the private sector, get our financial house in order and maximize the benefits for taxpayers and the government,” Steeves said.

Proponents interested in taking over cannabis sales will need to demonstrate experience in recreational sales, financial capacity to develop and sustain operations and “a viable plan” to combat the illegal market. They have until Jan. 10 to submit their proposals.

The proposals will be evaluated by a third-party fairness monitor. A new private operator could be announced as early as spring 2020, with a new delivery model later next year.

The provincial government would bring amendments to the New Brunswick Liquor Corporation Act in the fall.

Sustained losses

Although legal cannabis sales in New Brunswick showed some improvement over the summer, Cannabis NB, which has 20 stores across the province and also sells cannabis products online, continues to lose money.

At the end of October, Cannabis NB reported that sales in its second quarter, which covered 13 weeks ending Sept. 29, were $10.7 million.

That was a 17.6 per cent increase over first-quarter sales.    

The provincial Crown corporation has been in financial difficulty since it was launched last October, when marijuana became legal in Canada.

The government of New Brunswick has signalled it may want to change course with how cannabis is sold in the province. (Elizabeth Fraser/CBC)

Cannabis NB sales have been less than half the original projections, forcing layoffs and causing significant financial problems.

Cannabis NB was expected to break even but lost $12.5 million over its first six months and a further $2.2 million during the first quarter of this year.

The latest results increase losses to $16.2 million over its first 50 weeks.

Initially, Cannabis NB blamed a lack of supply for sales problems but, more recently, has pointed to illegal dispensaries it says are poaching customers.

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