Ontario Cannabis Store Rakes in $234 Million Profits: Taxpayers Left Empty-Handed

The Ontario Cannabis Store (OCS) has emerged as the most profitable provincial cannabis agency in Canada, boasting four consecutive years of profitability in recreational cannabis sales. However, unlike other agencies, OCS has not distributed dividends to Ontario’s government despite accumulating a significant profit of $459 million by the end of the last fiscal year.

In contrast to its counterparts in Quebec, New Brunswick, and Prince Edward Island, OCS operates mainly as a wholesaler, supplying products to over 1,700 private sector stores in Ontario. Although it doesn't possess physical retail outlets, OCS generated $234 million in profit, surpassing other provincial agencies.

The disparity in profit is mostly due to population sizes and pricing strategies. Ontario's per-resident agency profit was $15.22, higher than Quebec's $10.83 but lower than Prince Edward Island's $17.12 or New Brunswick's $22.32.

OCS's retail prices were notably higher—75% above the wholesale prices paid to producers—compared to markups in other provinces, impacting industry and consumers. Despite its profitability, OCS did not allocate dividends to the Ontario government, unlike agencies in Quebec and Prince Edward Island, which allocated 100% of their profits.

To address this anomaly, Ontario's government faces a choice: to utilize OCS profits for public services or minimize financial constraints on the cannabis industry. They could adopt the approach of treating OCS as a revenue-generating asset, utilizing earnings for addiction treatments, social justice programs, or medical cannabis research and development. Alternatively, they might reduce financial burdens on the industry by minimizing markups and refraining from profiting on certain sales.

The government’s decision-making regarding OCS's profits will shape its cannabis policy. While some provinces already adopt models that minimize financial burdens on the industry, Ontario's governing Progressive Conservatives are at a crossroads. They could opt for a progressive approach by leveraging OCS profits for public benefit or choose a conservative stance by reducing financial impositions on the industry. Regardless of their choice, the current situation of accumulating unused profits at OCS begs for a decisive resolution.

Ultimately, the trajectory of OCS's profits and their utilization remains a pivotal aspect of Ontario's cannabis policy, necessitating a prudent decision from the government to ensure optimal utilization or reduced imposition on the cannabis industry.