
The Ontario government lost $42M selling cannabis in the last year - elmar
https://www.cbc.ca/1.5282994
======
theabsurdman
Fair or not, Canadians find this hilarious because Ontario premier Doug Ford
is reputed to have been a hash dealer in his younger years.
[https://www.theglobeandmail.com/news/toronto/globe-
investiga...](https://www.theglobeandmail.com/news/toronto/globe-
investigation-the-ford-familys-history-with-drug-dealing/article12153014/)

~~~
mymythisisthis
His brother, while mayor of Toronto, also smoked crack. They preach populism,
and when elected cancel as many public transit projects as they can.

~~~
blaser-waffle
Smoking crack is the tip (albeit a large tip) of the iceberg. He regularly
said crazy or ridiculous stuff, and was generally bombastic and buffoonish.

Mildly NSFW example:
[https://www.youtube.com/watch?v=H4siKr6qY8w](https://www.youtube.com/watch?v=H4siKr6qY8w)

------
slavik81
The Ontario government made $64M in sales, with $106M in expenses. By
comparison, the Alberta government made $77M in sales with $72M in
expenses[1].

What's not mentioned in the article is if there's tax revenue seperate from
the profits/losses of the government corporation. In Alberta, there were an
additional $30M in cannibis taxes not included in their $5M profit.

[1]: [https://calgaryherald.com/cannabis/cannabis-
business/provinc...](https://calgaryherald.com/cannabis/cannabis-
business/province-rakes-in-30-million-from-cannabis-tax-in-first-six-months-
of-legalization)

~~~
microcolonel
Carrying on a long tradition of Alberta having more defensible government in
most ways, and having books that are balanced despite the federal parasite of
equalization, and a largely natural-resource driven economy (which usually
produces extremely crappy government).

~~~
tsherr
Alberta is always happy to take help from the rest of Canada when they need
it, but when they are asked to contribute, they fall back on "let them freeze
to death in the dark".

Alberta lucked out by having oil and even with it, managed to spend everything
with very little to show for it.

Wait until renewables take off (especially in the auto sector). Then they'll
be singing the praises of equalization.

~~~
microcolonel
> _Wait until renewables take off (especially in the auto sector). Then they
> 'll be singing the praises of equalization._

Alberta has about 30% as much installed wind power generating capacity as
Ontario, and about 30% as much population.

Alberta is also better positioned for solar PV [0], and has more capacity (in
absolute terms) coming online in each of the next three years than Ontario,
and possibly as much or more installed already (hard to find good numbers),
_despite being only 30% the population_.

Somehow the oil province is also the renewables province, and the province of
good governance.

[0]: [https://energyhub.org/alberta/](https://energyhub.org/alberta/)

------
hogFeast
If you can't make money selling drugs then there is literally no hope.

~~~
cmer
With a quasi-monopoly nonetheless!

------
voisin
The government’s rollout has been nothing short of a debacle. First they limit
production and then because there is an expectation of a shortage (surprise
surprise) they create an absurd Kafkaesque lottery (in every sense of the
word, with unsophisticated winners with no experience raking in millions by
teaming up with large established international players) which doesn’t take
into account market demand and has now descended into lawsuits.

------
fraqed
There was a change in the provincial government prior to legalization that
probably contributed to this loss. The previous provincial Liberal government
had planned to sell cannabis through the provincially owned liquor stores. In
June 2018 they lost the election to the Conservatives, who in August 2018
decided not to sell cannabis in the government stores but through private
retailers[1]. However, as this was an unexpected change the first private
retailers wouldn’t be operational until April 2019 [2]. So from the time of
legalization, October 17, 2018 until April 1, 2019 the only way to legally
purchase cannabis in Ontario was online and by postal delivery.

[1]: [https://www.cbc.ca/news/canada/toronto/ontario-cannabis-
priv...](https://www.cbc.ca/news/canada/toronto/ontario-cannabis-private-
sales-1.4783630)

[2]: [https://www.cbc.ca/news/canada/toronto/ontario-cannabis-
open...](https://www.cbc.ca/news/canada/toronto/ontario-cannabis-opening-
day-1.5076935)

~~~
learningmore
This is why I read the comments to articles first. Thanks, @fraqed for adding
important context!

~~~
Scoundreller
It's still confusing. How expensive is it to setup a Shopify site and a third-
party logistics company to send out orders?

I guess the question is: how much of the loss is one-time capital costs, and
how much is ongoing.

Should Ontarians look forward to more losses, or to a more profitable system
overall?

~~~
gpm
Well, for one thing you have to make sure none of the data touches the US or
companies that might share data with US agencies (particularly cbp) to avoid
screwing over otherwise innocent people who like weed.

~~~
nasalgoat
That's fine because Shopify is Canadian.

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kevingadd
From reading the article, this accounting seems misleading since a lot of the
expenses were initial setup/etc. Even if it continues losing money in the
future, it feels like it could be worth it since illegal cannabis increases
black market sales and illegal possession, and those things end up wasting law
enforcement and health service resources.

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burke
Yeah, because this number includes initial setup costs and any penalties for
backing out of contracts contingent on plans scrapped after the change in
government.

I’m way more interested in the next year.

------
mrep
Wow! You could buy an ounce of weed for 25$ on 4/20 this year in washington
state versus 360$ it cost for an ounce back in the midwest when I was in
college a few years ago when it was illegal and they managed to lose money.
Despite the differences between the US and Canada, that is insane.

------
RRRA
Strange how Québec's SQDC seems profitable...

~~~
neom
Crown corporations tend to do pretty well. LCBO provided $2.12 billion in
dividends to the Ontario government FY1718. That said, LCBO was established in
1927.

~~~
noarchy
It is probably worth mentioning that these particular crown corps are also
monopolies. They have no competition in hard liquor, and depending on details,
maybe even beer or wine (depends on the province). Some provinces have also
set up monopolies for cannabis retail.

~~~
Scoundreller
There's different ways of setting up these monopolies. In ON, the province has
a monopoly on distribution and retail sales of liquor.

In Alberta, the province has a monopoly on distribution, but lets (almost)
anyone set up their own liquor store. So the government can still get the
benefits of high prices, but without spending money on an expensive retail
network.

Ontario is (sorta) going with the Alberta model for cannabis, but being slow
and inefficient on private retail licenses.

------
gremlinsinc
Most businesses/startups can take 3-5 years to see a profit. A lot of their
losses is due to poor execution, but the product is literally a 'cash crop'...
Once they have systems in place and better management, it'll just keep
growing. 10 years from now I'd expect to see a huge windfall as an aggregate.

------
flycaliguy
With this recent vaping controversy, I think Canada’s methodical and slow
moving system has been a great success. These products use THC which is
tracked directly back to the seed. No mystery illness problems going to pop up
here.

~~~
blaser-waffle
Have there been mystery illnesses popping up in WA and CO? Biggest issues with
WA and CO, who've had legal weed the longest, isn't random sickness, but the
fact that their crazy-high retail tax rates mean it's more cost effective to
buy home-grown weed from local dealers.

Tracked, pure THC is a non-issue, IMO.

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kylnew
This data is based on less than 6 months of distribution in Ontario and
doesn’t give us an idea of what it’s been like since last March. I’ll be more
curious to hear about a full fiscal year before saying much else.

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digianarchist
They only opened stores in April.

~~~
Scoundreller
The government is only running the online shopping site. Retail stores are all
privately owned/operated, and the government is being slow on issuing
licenses.

~~~
rocky1138
Yeah, but honestly, I'm fine with us taking it slow enough to see if this
Cannabis thing rocks the social and health boat. I don't think it will, and I
love having one more choice of things to do while hanging out with friends but
it is kind of a global experiment, with other countries watching what happens
to us and Uruguay

------
9nGQluzmnq3M
Leave it to the government to manage to lose money in a market that's highly
profitable for private enterprise even without a monopoly...

Edit: OK, that was pretty snarky, but Ontario is the first place I'm aware of
that has a "single government-owned retailer" model, and also the first place
I'm aware of that has racked up losses of this magnitude in getting started.
Did Colorado's private retailers lose $100m collectively the first year they
were open? (And even if they did, was it taxpayer money that they lost?)

~~~
loceng
FTA: '"Cannabis legalization is a new venture for Ontario. There were
investments required for setting up a system that could achieve our objectives
— which is to protect youth and combat the illegal market. The OCRC's revenue
outlook reflected the initial costs for the development of this retail
system," Emily Hogeveen wrote in an emailed response.'

~~~
9nGQluzmnq3M
That's a convenient excuse, but I don't recall Colorado losing $100 million in
their first year of operations as the first legal market for cannabis
anywhere:

[https://www.colorado.gov/pacific/revenue/colorado-
marijuana-...](https://www.colorado.gov/pacific/revenue/colorado-marijuana-
tax-data)

~~~
UncleEntity
> That's a convenient excuse, but I don't recall Colorado losing $100 million
> in their first year of operations as the first legal market for cannabis
> anywhere:

I don't think _The State of Colorado_ sells people the pot but a bunch of
private businesses who all have individual profit/loss experiences. If one
corporation was granted a monopoly then you'd have a valid comparison.

~~~
Scoundreller
But that is the complaint: Ontario decided to go with tight control over
wholesaling and retail sales, instead of letting just about anyone set up a
retail store and using high taxes to make money.

