MONCTON – Cannabis NB sold $9.7 million worth of legal pot for the quarter ending March 31, 2019, but still loses money overall, its unaudited year-end results show.

In-store sales accounted for $9.4 million, while online revenue was at $300,000. Overall, Cannabis NB posted a loss of $4.6 million for the quarter, down from a loss of $7.1 million the quarter before.

“I think that it’s been challenging this year,” Lara Wood, Cannabis NB’s general manager told reporters on Tuesday. “We certainly, way back last spring, expected to be launching earlier. We didn’t know that the supply issues were going to be as challenging as they are. We certainly didn’t expect to be profitable this year even back then, but we sort of weathered through a difficult first few months.”

“We’ve had a year of operations with only 22 weeks of sales, I think the numbers are pretty good and we’re on a good trajectory for improvements. So we’re pretty pleased with where we ended up.”

The $4.6 million loss was due to costs in the startup year, including hiring and training staff, system setups, and the short timeline for sales, Wood said.

“We don’t have enough runway on sales to recoup it all. But now, everything’s sort of stabilizing, we’re getting back to normal operations and that’s why you’re seeing that loss get smaller and the trajectory looks really good for next year,” Wood said.

For its first fiscal year, the crown corporation reported $18.6 million worth of sales and a year-end loss of $11.7 million. The sales figure is much lower than the $45 million of sales former CEO Brian Harriman had expected shortly prior to legalization. Wood said the shortfall is primarily due to supply challenges as the corporation still struggles to provide the right amount and range of products.

“We really didn’t anticipate them at this level. We knew it’s a new industry, new business. We knew there’d be some challenges but I think there’s been a number of issues – not just pure supply, but logistics issues as we get started with this new market that surprised us,” she said.

“What we’re seeing anecdotally from our customers is the demand is where we expected it to be. We just don’t have all the products in our portfolio in the right quantities to meet that demand right now. But again, we’re seeing slow but steady improvement, we’re adding new partners, we’re pretty excited about where the portfolio is going but we still have some work to do.”

In the beginning, Cannabis NB had wanted to offer 360 types of products but it’s only been able to offer 50, Wood said.

It’s hard to gauge when exactly supply will meet the needs of Cannabis NB’s customers, but the company is speaking with suppliers, including up-and-coming local ones, to partner with in the future, she said.

“A lot of our [licensed producers] will tell us it’s a plant. And so you know what’s in the ground but you don’t know what’s gonna be viable to package so there’s still some uncertainty in terms of that and a lot of them are expanding productions but again, a lot of that requires additional licensing and time, so I feel like we’ve gotten to a really good place in the last couple of months,” she said.

“We’ve been having conversations with other suppliers since last summer who are waiting for licensing. And it feels like a lot of them are coming online now and they’re getting comfortable that they have a sustainable supply. So I think by the fall, we’ll be at a better place than we are now and at Christmas we’ll be at a better place than that.”

Last quarter, around 85 per cent of the sales were of dry flowers, representing $8.3-million for the quarter and $1-million for the year. Extracts represented 12 per cent of sales for the quarter, seeds took up 0.2 per cent of sales and accessories accounted for 2.7 per cent.

Lessons From The First-Year

As edibles are expected to become legal this October, Wood said Cannabis NB is trying to stay ahead. But as regulations aren’t out yet and many producers still need to get licensing, the company’s concerned about the breadth of products that will be available then.

“We’re doing as much homework as we can. The stores are ready. The team is ready. We’re updating our training as soon as we know what products we’ll be able to get. All of that is ready. But we just need to see what’s actually gonna be available for October 17th,” she said.

Leading up to legalization last year, the provincial government decided to open 20 physical stores in 15 communities. Other provinces, like Ontario, chose to go the online route at least to start with.

Wood defended the decision to go brick-and-mortar, saying with public education and safety as part of Cannabis NB’s mandate, access to staff is important.

“We have the website and that’s fine, but the website doesn’t give you that one-on-one conversation that a lot of people are looking for. It doesn’t afford us the ability to do the education in the same way so we really wanted to have a network that anybody could access and choose over a black market supplier,” she said.

Only a few months into operations though, Cannabis NB faced supply shortages. It also laid off many of its employees and its CEO Brian Harriman announced his resignation in February. Now it has nearly 300 workers.

“We were thinking that that was the right team and that was the team that we needed at the beginning. But we had to be realistic as the operation normalized and right-sized the group. Right now we have exactly the team we need and that also covers edible launches and there’s plenty of room to grow within this team,” Wood said.

“We’re looking at a really good year next year and we’re excited about what’s to come and all of the stores are doing good [in terms of] traffic, and the teams are engaged, and the stores are right-sized for those communities in terms of the teams and what we offer. So we feel pretty good about where we are.”