Delay in legal weed throws off provincial budget projection

New Brunswick’s finance minister says cannabis revenue projections in her January budget will be thrown off because of a delay in Ottawa to legalizing the drug.

Finance minister says federal delay will hurt provincial pocketbook

A delay in legalizing cannabis will lead to lower-than-projected revenues for the province, says Finance Minister Cathy Rogers. (David Donnelly/CBC)

New Brunswick's finance minister says cannabis revenue projections in her January budget will be thrown off because of a delay in Ottawa to legalizing the drug.

Cathy Rogers says it remains to be seen how far below the projected $7.2 million the revenue will actually be.

"Since there will be a delay, we know that for each month that there is a delay, it will have some impact on our projected revenue," she said Tuesday.

"If it's a short-term delay, the impact won't be significant."

The Gallant government had been aiming to open retail cannabis stores at the start of July, when legalization was expected to take effect across the country.

But the Trudeau government agreed last month to let the Senate spend more time studying and debating the legislation. Passage of the bill is now expected around June 7 with royal assent to follow.

Province ready for July weed

Rogers says the province would be ready to sell legal cannabis in July, regardless of when the legalization bill receives royal assent. (Pat Richard/CBC)

Federal Health Minister and Moncton MP Ginette Petitpas-Taylor said last month that after royal assent, the provinces would "need eight to 12 weeks to get ready for the start-up" of retail sales.

Rogers disputed that. Even with the Senate taking longer to study and pass the bill, "we would be ready for July and we've been saying that all along," she said.

But she agreed that if the stores open only in August, the province's revenue projections will be thrown off.

Rogers's January budget forecast $6 million in excise tax revenue from cannabis in the 2018-19 fiscal year and $1.2 million profits from retail stores. Both figures were based on July openings and nine months of sales within the fiscal year.

Rogers said it's likely the Crown corporation that will run the stores will be able to reduce some but not all expenses if openings are delayed.

"There are some things for which we have some control. We can delay hiring of staff. But there are some things we won't be able to have much impact on."

Opposition questions original revenue

Opposition Progressive Conservative MLA Bruce Fitch questions the legitimacy of the original projected revenue. (CBC)

Opposition Progressive Conservative MLA Bruce Fitch said the likely difference in revenue is a tiny amount relative to the provincial budget, but he said he believes the $7.2 million projection was pulled from the air.

"I think they've just taken a guess," he said. "The guess could be way understated, it could be overstated. It's very hard for me to predict."

He said it's more likely the Liberals understated the projections to avoid falling short on revenue.

"If they overstated them, there'll definitely be a real gap," he said.

Rogers said Tuesday the province will kick in $250,000 to a cannabis education fund to help pay for awareness campaigns that will warn young people away from marijuana. The cannabis producers supplying the province's stores will contribute $1 million to the fund.

About the Author

Jacques Poitras

Provincial Affairs reporter

Jacques Poitras has been CBC's provincial affairs reporter in New Brunswick since 2000. Raised in Moncton, he also produces the CBC political podcast Spin Reduxit.