Cannabis sales in Newfoundland are up 30% over Q2 of the prior year.
Newfoundland and Labrador Liquor Corporation (NLC) announced its second quarter performance of fiscal year 2024 ending September 30, 2023. NLC reported net earnings for the quarter of $58.3 million, which is consistent with Q2 of fiscal year 2023. Last quarter, NLC reported net earnings for the quarter of $47.6 million.
Cannabis sales through licensed cannabis retailers (LCRs) totalled $23.1 million in Q2, an increase of 30.3% over Q2 of the prior year. Total retail cannabis sales in Q2, including online sales, were $23.2 million.
The dividend paid by NLC to the provincial government totalled $59.0 million for the quarter, $1.5 million lower than Q2 of the prior year. The dividend is lower in Q2 of this year due to the timing of payments.
Sluggish Market
“Market conditions in the second quarter were stronger than in the first quarter, however, given the broader economic conditions, the market remained sluggish,” says Bruce Keating, NLC President and CEO. “With the impact that inflation rates and interest rates are having on consumer disposable income, conditions may continue to be softer, yet we are cautiously optimistic.”
Category Growth
Cannabis NL category growth was driven by vape, ground/milled, and whole flower products. Cannabis vape products, which launched in Q3 last year, sold $3.1 million in Q2 this year and represented 13.4% of sales.
Cannabis NL listed 37 products through local cannabis producers during Q2. Four new licensed cannabis retailers opened in Baie Verte, Glovertown, Portugal Cove-St. Philips, and Springdale. As of the end of Q2 there were 47 stores in the province compared to 39 one year prior.
In NLC’s 2023-2026 Business Plan the organization says it wants to achieve a targeted increase of 10 licensed cannabis retailers by April 6, 2024.
Compliance and Enforcement
In Q2, NLC conducted 932 inspections on liquor establishments and cannabis retailers. This 11% decrease compared to last year is due to a change in availability of human resources in the department. It is expected to balance out in the coming months.
The Regulatory Enforcement team did not seize any illicit cannabis products during Q2, which NLC sees as a sign that the illicit market has significantly decreased and their strong enforcement and investigatory plans are effective.