Cannabis NB has paid off all its debts and is pulling in a profit as a standalone business.
Lori Stickles, president and CEO of Cannabis NB (CNB) and NB Liquor (ANBL), confirmed the Crown corporation has paid off the original startup costs to fund its operation.
CNB, which experienced early losses in its fledgling months, had been paying off approximately $37-million in startup costs and a loan from ANBL using its excess cash from operations.
As of mid-February, Stickles said, Cannabis NB has paid back the full amount–which it’d been paying since 2020–and that all its profits are now flowing back to the province.
CNB hit profitability at the end of 2019, breaking a months-long streak of millions of dollars of losses. The launch of legal cannabis in New Brunswick began in October of 2018.
CNB’s early stumbles eventually led the province to open a request for proposals that received eight private bids, but privatization was abandoned about a year ago.
“That was a big moment for our team because, even during the RFP, the team stayed focused and wanted to see it through,” Stickles said.
“Even if the sale ultimately was going to happen, everyone was focused on becoming profitable before that happened and was focused on growing the business.”
CNB began as a subsidiary of ANBL, using money from its former parent company to get started, in 2018.
“Since ANBL had experience and resources, they were able to use some of their cash to get it going,” said Stickles.
“During that period of time, we needed cash flow to keep operations going and so the loan from ANBL funded operations during that period of loss until we could be profitable.”
Since 2019, the corporation has continued to be profitable, introducing new products into the market.
Stickles said sales have been improving since 2019, citing revenue seeing an almost 13-per-cent increase from the third quarter of 2021, from the third quarter of 2020.
And even that figure belies Cannabis NB’s success, she said, noting that in that same interval of time, the volume of sales increased even more.
“We continue to offer lower prices to move more product, so we are seeing steady sales growth, but we’re seeing some new, exciting products, too – which is attracting more customers and different types of customers,” she said.
“In the beginning, when we first opened, a lot of what we had for sale was kind of traditional dried flower and there’s been a lot of evolution. We have beverages now, creams, lip balms, teas, cake mixes – you name it,” Stickles said.
Stickles noted this growth in variety likely attracted new customers who’d have not patronized CNB before, and wouldn’t have bought traditional cannabis products.
Stickles cautiously attributed CNB’s success to the province’s legal cannabis sales drawing people away from grey and black-market cannabis.
“I believe that some of our success is people moving over from the grey and black markets. I think we’re starting to see more cannabis consumption coming from legal markets,” she said.
“There are still a lot of people still buying from the gray and illegal markets but we’re seeing the numbers move toward the legal.”
NEXT STEPS
Stickles said the next step is expansion, via the rolling out of additional points of purchase from private agents throughout New Brunswick.
“We’re looking to do a hybrid model, similar to the one we have on the alcohol side that includes corporate store and private agencies that sell the product,” said Stickles, alluding to CNB’s three on-site points of sale for New Brunswick cannabis producers through its farm gate program.
When asked if this would look similar to customers’ ability to buy alcohol from ANBL stores and grocery stores, Stickles said it’d be different because of the more sophisticated regulations around how cannabis is sold.
“These stores will be traditionally standalone dispensaries and cannabis stores,” she said.
Sam Macdonald is a Huddle Today Reporter in Moncton, and Acadia Broadcasting content sharing partner.
