The Ontario Cannabis Store (OCS) reported a staggering profit of $184.4 million for its fiscal year ending March 31, 2022! That is a 162.68% increase in profit over last fiscal year’s figure of $70.2 million.
Making this much profit is one more reason for all OCS’s partners to get upset. The industry as well as the Auditor General of Ontario have been demanding a review of pricing so that licensed producers and retailers have larger margins and an opportunity to make money. Right now, that privilege for profits seems to rest solely with the OCS!
Shortly following the release of this year’s financial statements, the OCS announced a review of its pricing policy. Let’s hope they’re quick with it before more companies go out of business!
Industry Calling for Change
The entire cannabis industry has been lobbying the OCS for a long time to not only review its markup but to get out of the role of sole wholesaler and distributor in BC. Consulting firm EY analyzed the OCS’s pricing and reported that government taxes and provincial mark-ups represent 46.6% of the price of a basket of legal cannabis products, which leaves very little for the producers and retailers. George Smitherman, CEO of the Cannabis Council of Canada says, “As government coffers swell with a bevy of direct and indirect taxes and fees, they’ve lost recognition for the licensed producers and retailers that are fighting it out for market share with an entrenched illicit market.”
Changing Revenue Streams
Revenue for this fiscal year was $1.18 billion, with a cost of sale of $914.5 million for a gross margin of $266.3 million. Last fiscal year, revenue was $651.7 million with a gross margin of $146 million.
Wholesale revenue grew 113.62% to $1.11 billion as 935 new stores opened during that fiscal year.
However, sales from the OCS’s online channel dropped 45.32% to $72.69 million as the government allowed private retailers to sell online during the pandemic.
It is important to note that the figures above do not take into account the excise duties that OCS will be collecting as well.
See the complete financial statements for OCS’s 2022 fiscal year.