Dear Members of the New Hampshire Commission to Study with the Purpose of Proposing Legislation, State-Controlled Sale of Cannabis and Cannabis Products:
Some of you support state retailing of cannabis, as I tend to do for my state of North Carolina. Some of you strike the balance differently and oppose state retailing. (Louisiana’s owning and selling cannabis – through the state’s two land grant universities – makes me think that federal illegality is not a practical problem. https://www.lsuagcenter.com/portals/administration/about-us/vice-president-dean-office/Medical%20Marijuana;http://www.suagcenter.com/news/4279.)
The Center for New Revenue, a North Carolina non-profit that I head up, is looking at how much revenue state sales might bring in for North Carolina – over and above taxes. As a cannabis policy researcher interested in government retailing, I wonder if you can correct any mistakes I am making in thinking about revenue from that “public option.”
Canadian provinces that sell marijuana themselves make net profits — 12 to 20 percent of sales as markets mature – plus taxes. Maybe I’m missing something; maybe this preliminary research can be corrected.
Here is what we’ve discovered so far from three Canadian provinces with provincial monopoly retailing [fonts were normal in my original]:
Quebec: “For its fiscal year ended March 25, 2023, the Société québécoise du cannabis (SQDC) posted total sales of $601.9 million, compared with $600.5 million for the preceding fiscal year. The company reported net income of $94.9 million versus $75.7 million 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 Québec and $56.0 million to the federal government. The SQDC’s total contribution to the Québec treasury is therefore $232.7 million. “ https://www.sqdc.ca/en-CA/about-the-sqdc/medias/2023/06/05/The-SQDC-reports-net-income-of-949-million-for-fiscal-20222023-#:~:text=The%20SQDC%20reports%20net%20income,for%20the%20preceding%20fiscal%20year. That’s 15 percent net profit, even before adding in tax revenue.
“Cannabis New Brunswick recently recorded profits of $4.8 million on $21.7 million in sales.” https://stratcann.com/insight/the-year-in-provincial-pot-politics/ So that’s 20 percent net profit. While “[t]he province received $10.9 million in cannabis duty for the 2021-2022 fiscal year alone,” https://globalnews.ca/news/9718124/nb-municipalities-seeking-share-cannabis-nb-revenues/, some of that “duty” (tax revenue) apparently went to the federal government.
In Prince Edward Island, for the fiscal year ended in March 2022, sales were $21.9 million, and profits were $2.6 million. https://cld.bz/hf7P3y/36/. That’s 12.4 percent net profit. That year, the province earned $2.6 million in excise tax revenue to match its profits. https://cld.bz/hf7P3y/7/. (As might be expected, early results showed a loss https://cld.bz/sV3inhu/36/. In the fiscal year ended in March 2019, sales were $76.9 million, and the loss was $0.5 million.)
In the fourth province with government monopoly retailing, the Nova Scotia Liquor Corporation doesn’t break out the profits of the cannabis category in its financial reporting, https://stratcann.com/insight/the-year-in-provincial-pot-politics/.
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That’s all very preliminary. To the extent any of you have the time and inclination to correct it, I’ll be grateful. You may have plowed this ground earlier and better than I have.
I have not found email addresses for John Bryfonski, Ryan Hale, Frank Knaack, and David Mara, so I am emailing only those of you whose addresses I could find. In full disclosure, I copy my New Hampshire friend of long standing Matt Simon, who opposes government retailing but whom I respect.
With highest regards and best wishes for your work,
The Center for New Revenue 