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First Plateau in SQDC Growth

The Société québécoise du cannabis (SQDC) reports sales of $601.9 million and a net income of $94.9 million for its fiscal year ending March 25, 2023. This is compared to sales of $600.5 million and a net income of $75.7 million in the previous fiscal year.

In fiscal 2022-2023, the SQDC sold 106,526 kg of cannabis compared with 106,448 kg in fiscal 2021-2022.

To this can be added the government revenues generated by its operation in the form of consumer and excise taxes, estimated at $193.8 million, with $137.8 million going to Quebec and $56.0 million to the federal government. The SQDC’s total contribution to the Quebec treasury is $232.7 million.

First Plateau In Its Growth

After four years of sustained expansion of its sales network, the SQDC has reached a plateau in its growth. From both a volume and a dollar standpoint, the company’s sales remained stable in comparison to the preceding fiscal year, despite the addition of 10 new stores. The total number of stores in operation was 97 on March 25, 2023, and 98 on June 2, 2023.

The SQDC says its growth plateau is largely due to the labour dispute that has been ongoing since the beginning of the fiscal year and affects a quarter of the company’s stores. In May, the strike passed its 1-year mark.

24 stores whose employees are represented by the Canadian Union of Public Employees (CUPE) are currently on strike. 22 of these stores have been on strike since late May 2022. The affected stores have remained open on a reduced schedule. It has been reported that talks with CUPE are still ongoing.

Sales by Network

The 97 SQDC stores generated sales of $567.8 million compared to $564.4 million in 2021-2022 with 87 stores.

Volume sales in the store network totalled 100,254 kg of cannabis (100,026 kg in fiscal 2022). Online sales on the website reached $34.1 million ($36.2 million in 2022) with a total volume of 6,272 kg (6,462 kg in 2022).

The SQDC completed 13.9 million transactions in its stores and online in fiscal 2022-2023, with an average transaction price of $49.70, taxes included. The average sales price of one gram of cannabis sold was $6.48, taxes included, exactly the same price as for the preceding fiscal year. The SQDC sells dried cannabis products at prices ranging from $3.43 to $18.80 per gram.

Pick Up In Store Service

Last fiscal year, the SQDC launched several customer service initiatives, including Pick Up In Store Service and an online chat service.

The Pick Up In Store service was implemented across the network. A 90-minute delivery service was introduced in several of the province’s municipalities; by fiscal year-end, the regions of Saguenay-Lac-Saint-Jean, Québec, Lévis, Shawinigan, Trois-Rivières, Gatineau and Sherbrooke all had access to this new delivery method. The service will be extended to other regions next year.

Captured 56% of Illicit Market

The SQDC continued its efforts to capture the illicit market. With volume sales of 106,526 kg of cannabis out of an estimated total annual market of 190,000 kg in Quebec (187,000 kg in fiscal 2021-2022), the SQDC is currently thought to have captured around 56% of the market. This figure is comparable to last year’s.

There is a focus on working with local producers and suppliers and selling local products. 41% of the kilograms sold at the SQDC bear the Quebec Grown identifier, meaning they are mostly grown in Quebec. In addition, 54% of the licensed producers whose products are distributed by the company have their head office in Quebec.

New SQDC Interim CEO Named

On June 15, 2023, the SQDC announced that Robert Dalcourt will be appointed interim president and CEO of the company as of June 26. This appointment follows the announcement of the departure of President Jacques Farcy.

Robert Dalcourt joined the SQDC in 2018, where he first held the position of Director, then that of Vice-President of the Finance Department.

The recruitment process for the next officer of the Company, overseen by the SQDC Board of Directors, will begin quickly.

Tags: excise tax (8), government-run cannabis store (4), Quebec cannabis (10), Société québécoise du cannabis (15), SQDC (28)