Approximately a year ago, the Ontario Cannabis Retail Corporation (OCRC) took out a loan from the Ontario Financing Authority to the tune of $150 million. This significant chunk of change was in order to fund 40 government-owned-and-operated stores that were planned for the first year of legalization.
The loan would have required significantly more funds to come on December 31st, 2019 as the goal was to expand to 150 locations across Ontario by 2020.
Then, the Ontario Liberal government fell and Kathleen Wynne was replaced by Doug Ford who was in favour of a private store model. The government store plan was quickly scrapped, despite the fact that by March 31st 2018, $25 million had already been drawn from the funds. It was recently discovered that the loan agreement is still active, even though the old retail model it was intended for is no longer an option.
This news comes at a time when the retail division run by the OCRC, the Ontario Cannabis Store (OCS), is expected to lose $25 million dollars in the first year that recreational cannabis has been legal, regardless of the fact that they had a monopoly on sales for the first six months and still control all online transactions.
The OCS also entered into 4 different 5-year lease agreements that were intended to be the first few government-run stores at the outset of recreational legalization. These stores will never become a reality.
“The OCS currently has a loan agreement with the Ontario Financing Authority,” said an OCS Spokesperson when contacted by Cannabis Retailer. “Information regarding the OCS’ financial arrangements with the OFA will be available as part of the OCS’ year-end financial statements, which are made publicly available in its annual report.”
A $6.8 million net loss was reported by the OCS for the period of December 12, 2017 to March 31, 2018. The Ontario government expects a profit of $10 million in 2019-20, projects $25 million in profit for 2020-21 and $40 million the year after.
It has been reported that sales in Canada’s largest province have been terrible thus far, partially due to a delay in brick-and-mortar stores opening April 1, 2019 instead of October 17, 2018, which was the official day of legalization across the country.