Tuesday, September 10, 2019

Government needs to clarify Cannabis NB finances and priorities

A recent interview with Finance Minister Ernie Steeves regarding Cannabis NB has raised some concerns about the way in which the finances of the Crown Corporation are being reported.
During the interview on CBC’s Information Morning, the Minister was discussing possible options on how the sale of Cannabis could be changed or altered in the province.
The Minister referred to Cannabis NB losses of $7.2 million in the last quarter, however, Seguin stated Brock University professor Michael Armstrong clarified it actually wasn’t a loss, but rather sales didn’t meet projections. The Minister agreed with this statement.
This is an important distinction. Armstrong was interviewed on the same program the previous morning and made the following statement.
“The $7.2 [million] is not actually a loss. That $7.2 [million] is from the government budgeting at the beginning of the year,” Armstrong said. “They picked out a number and said, ‘Ok, here’s how much we think we will bring in in cannabis from sales taxes, excise taxes and profits from CNB.”
Earlier in the interview Armstrong called the sales forecasting a “guestimate” by all provinces as this is a brand new business and no one really knew what sales or models would work best.
Steeves also said government would have to “cough up” $7.2 million to cover Cannabis NB. However, that is because government budgeted potential revenues too high. Given the struggles on the supply side across the country, perhaps this budgetary estimate is partly to blame.
Changes for Cannabis NB seem inevitable and there are models mentioned by Steeves that could help it turn a profit and produce more revenue for our province. To cut bait now would only lock in losses for this endeavor and, as Armstrong commented, the province needs to be clear with its directive to Cannabis NB in order for the Crown Corporation to reach government’s expectations.