Doug Ford’s decision to opt for pot sales in private stories was an expensive one — that move burned $8,989,770
Ontario’s plan to cash in on the green stuff is now in the red.
The Ontario Cannabis Retail Corp. (OCRC), a crown corporation that works with the Ontario Cannabis Store, reported a $42 million loss for the year ended March 31.
But the OCRC told the Financial Post it “made considerable foundational investments” to try and squash the black market and protect children.
Here’s how burning up led to the province getting burned.
In the green … by almost $20 million
The OCRC started with $63.8 million in revenue for the year ended Mar. 31, 2019, with about every eight in 10 sales coming from the online store.
It also had to spend $44 million on the cost of sales.
But that left a comfortable gross profit of $19.8 million
$61 million later … in the red
Then it waved goodbye to $61 million on selling, general expenses and administration — here’s what that means.
The OCRC spent $24.9 million on services shared with the LCBO like sharing the plant and equipment, $9.3 million to pay workers and $8.2 million for IT and processing e-commerce transactions.
Doug Ford’s decision to opt for pot sales in private stores instead of the 150 government-owned stores operated by the LCBO was an expensive one — that move burned $8.9 million.
Listed as an “impairment charge,” almost all of that money was used to fix up stores that never opened, while a small chunk was used to fix computers and equipment.
“Negotiations are in progress to settle claims with respect to termination of the contracts to build the store fixtures,” read the financial statements reported by the Financial Post.
Terminated leases swallowed up $983,004 and terminated contracts chewed through $1.4 million.
It also spent about $5 million on other expenses like occupancy costs, consulting services and insurance.
The entire $61 million bill was $6.8 million more for the almost four months before the most recent fiscal year, beginning with the birth of the OCRC at the end of 2017.
Money from the banks … and back to the banks.
Interest from the company’s bank balances produced $496,075, but it had to pay $1 million because of interest expenses on a loan from the province and the Ontario Financing Authority.
The loan meant the OCRC could borrow no more $150 million.
$64 million of that was already used by March 31.
Total damage — $42 million
The OCRC told the Financial Post it expects the Ontario Cannabis Store to make more money in the future and expand to meet the needs of customers. It added the store will work with the province to navigate any other “foundational investments.” Read the original story in Financial Post.
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Written by Bobby Hristova