Where New Brunswickers buy cannabis could change if PCs take over
PCs could be sworn into office by mid-November with a chance to change the cannabis retail model
Government and NB Liquor officials say it won't be difficult to change the way cannabis is sold in New Brunswick if a Progressive Conservative government wants to let the private sector enter the market.
They say the current design — 20 government-owned retail stores around the province — is "quite flexible" and could be changed.
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"We would be able to, given some time, shift gears, depending on what government decides to do," Nicole Picot, the deputy minister of finance, said at a technical briefing Monday.
"We have leases to consider. There are a number of different factors to consider. It would probably be a matter of months, I'd say, not days."
Cannabis becomes legal in Canada on Wednesday.
Each province decides own system
Different provinces have adopted different systems for regulating the legal sale of the drug, with New Brunswick's Liberal government opting for a chain of 20 stores operated by a subsidiary of NB Liquor.
The opposition Progressive Conservatives have called for a greater role for the private sector, predicting the government-run model will be a money loser.
Last month's election left both parties with no majority in the legislature. The Liberals will try to govern by winning a confidence vote in the legislature with the support of at least one of the smaller parties that won seats.
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If they fail, the PCs could be sworn into office by mid-November with a chance to change the cannabis retail model.
On the CBC political panel, PC MLA Ross Wetmore said the party wants to "expand" the retail system and will review existing contracts that have been signed to see what can be done.
"It could be locked-tight contracts that are signed and we can't do anything to get out of them," he said.
A 'tight, high-government-oversight model'
The province has signed leases for some of its retail stores and also has agreements with cannabis suppliers.
"We are essentially operating under a service contract with the Province of New Brunswick," said NB Liquor CEO Brian Harriman. "We are in essence a franchisee."
"If the province chose to add other retailers or to switch to a mixed or a private market, it's an option, but it's not something we can turn on overnight. It's certainly something that's possible."
Liberal Finance Minister Cathy Rogers said the government opted to start with "a tight, high-government-oversight model" because some U.S. states that legalized cannabis said it had been a mistake to start out "loosely."
"Their advice is they wouldn't do that again," Rogers said on the political panel.
Harriman was part of the task force that recommended a strict government-run model. He said it was best suited to match the federal government's mandate of shrinking the criminal cannabis market and protecting children.
"This was the model we felt best delivered on the mandate," he said.
PCs predict losses
PC Leader Blaine Higgs predicted repeatedly during the election campaign that the system would see taxpayers lose money on sales.
The province had projected $6 million in tax revenue and $1.2 million in store profits in the 2018-19 fiscal year when legalization was set for July 1.
But when delays to passing federal legislation pushed the legalization date to this week — meaning sales for a smaller part of the fiscal year — the projections shrank.
Might near breaking even
Tax revenue is now expected to be $3.6 million. The figure for store profits was not available Monday but Finance Department spokesperson Sarah Bustard said overall, the impact on the provincial budget would be neutral this year.
Harriman said because it's a new market, the corporation won't really be able to forecast its sales revenue until the stores open.
"Until that happens, we don't know," he said.
But with start-up costs, including the construction of stores, on the books this year, "It's a very strongly educated guess that we would maybe not break even but be close to that by the end of the year."
Harriman said that he expects the stores will turn a profit for the government in fiscal 2019-2020.