While there wasn’t a whole lot of good to come out of the pandemic, the social distancing restrictions did have a positive impact for some. The Société Québécoise du Cannabis (SQDC) estimates it has now captured 53% of the total cannabis market, in part due to ballooning online cannabis orders. This has put a record number back into the Treasury’s coffers, keeping everyone happy all around.
In Canada, the treasury is increasingly being fueled by the euphoria of legal cannabis. And that’s only growing with the pandemic’s uplifting effect on legal cannabis that’s still in competition with the black market. Naturally, the Société Québécoise du Cannabis (SQDC) had a breakneck pandemic year.
The SQDC’s financial results for the 2020-2021 fiscal year indicate that it paid the Quebec government a net profit of $66 million, plus $122 million in taxes for a total of $188 million. Ottawa was not left out, receiving close to $50 million in tax revenues.
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The SQDC’s Record Beating Performance
These results are roughly double those of last year, when the Crown cannabis corporation paid $26 million in dividends and $66 million in taxes for a total of $92 million to Quebec, with $27 million in federal taxes.
The SQDC’s performance also demonstrates that the pandemic has proven to be an unexpected tool to compete with the black market. It estimates that it captured 53% of the illicit market in the past year, compared to 30% in the previous year. These figures are based on estimates of total consumption by the federal government and the Quebec Ministry of Finance.
Pandemic Prompts Cannabis Migration
The constraints imposed by sanitary measures and the designation of the SQDC as an essential service thus seem to have pushed more consumers towards the SQDC at the expense of illegal suppliers.
One indicator of the pandemic’s influence is the meteoric growth in online sales, which doubled to 50.5 million for 8.7 metric tons, up from 27.5 million for nearly 4 metric tons the previous year. The Company also believes it has achieved a price competitive with the black market with an average of $6.74 per gram, down 12% from 2019-20.
Overall, SQDC sold 91.5 metric tons of cannabis in 2020-2021 for revenue of 537 million, nearly double the 47 tons for 311 million in revenue the previous year.
SQDC continued its aggressive expansion during the year, establishing 25 new branches, including some in previously unserved areas, bringing the total network to 66 outlets. In addition, a dozen new suppliers were added and Quebec producers now supply nearly 40% of SQDC’s inventory.
$1.2 Billion In Alcohol Profits
For its part, La Société des alcools du Québec (SAQ) ended its 2020-2021 fiscal year on March 27 with a net profit of 1.2 billion, down 6.4 million or 0.5% from the previous year. Sales were up 2.9% to nearly 3.6 billion. “For a ninth consecutive year, the SAQ will pay out more than $1 billion to Quebecers. Government revenues reached $2.4 billion, up $33.3 million (1.4%), of which $1.93 billion went to the Quebec treasury and $477.4 million to the federal government. “
The network’s sales hovered around 3.2 billion, an increase of 60.7 million or 1.9%.
“The impact of the pandemic, particularly related to the reduction in restaurant and bar activity, generated a shift in sales from licensees to the branch and agency network. This, combined with other impacts of the pandemic such as the imposition of travel restrictions outside Québec, contributed to an increase in consumer sales of $361.1 million and largely explains the decrease in licensee sales of $321.9 million,” explains the Crown corporation.
Online sales increased by 130.7% to $96.9 million and accounted for 3.3% of customer sales.
SQDC Now Has 53% Of Total Cannabis Market
The SQDC now estimates that it has captured 53% of the total cannabis market as a result of the COVID-19 pandemic. The constraints imposed by the health measures and the designation of the SQDC as an essential service thus seem to have pushed more consumers towards the SQDC at the expense of illegal suppliers.
(Featured image by Jason Hafso via Unsplash)
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First published in LeDevoir, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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Arturo Garcia started out as a political writer for a local newspaper in Peru, before covering big-league sports for national broadsheets. Eventually he began writing about innovative tech and business trends, which let him travel all over North and South America. Currently he is exploring the world of Bitcoin and cannabis, two hot commodities which he believes are poised to change history.