OCS is the only company in Canada that keeps its sales data a secret

Published Sep 4, 2019 09:13 a.m. ET
iStock / Darren415

The Ontario Cannabis Stores (OCS) is a licensed dispensary in Canada. OCS falls under the Ministry of Finance, and it has a monopoly for recreational cannabis sales online in Ontario. OCS also supplies cannabis stocks to other private cannabis stores.

Even though OCS is publicly owned and managed by the province, it keeps its operation very private. It has not posted many details on its website, and only four announcements were reportedly made available to interested consumers.

Non- disclosure of Sales

Another notable issue is the stores’ sales data. Since the introduction of federal marijuana legalization, OCS hasn’t disclosed any concrete information about its performance in terms of sales. Critics contend that the OCS does not allow any details to pass to the public.  Some persons have also said that they have contacted the OCS office to find out whether the annual report will be available in 2019, but they have not gotten a positive response.

This delay of a sales report is unlike other provinces cannabis stores. The level of transparency from the OCS is unsatisfactory. A quarterly sales report was issued by both Nova Scotia and PEI, and Quebec made its annual sales report public in June, which has many inquiring minds questioning the reason for secrecy.

You may be wondering if we know anything at all about Ontario Cannabis Store. The truth is that the little we know about sale projections is provided by other sources such as Statistics Canada.  Based on information from Statistics Canada, we know that OCS sales decreased in October onward to March. With the increase of retailers that opened cannabis businesses in April, the sales have fluctuated ever since. The Ontario Ombudsman even seems interested and noted that last year, OCS had more complaints from customers than other provincial stores.

Implications of the Non-disclosure of sales

1. Business

There is an Ontario retail license lottery. Twenty applicants were chosen in January. Forty-four, more persons, will be selected in this month. This is a matter of concern because, without the relevant data, analyst and critics will not be able to determine whether the number of lotteries selected is suitable. There is a possibility that the number of applicants may need to be adjusted to include more persons. This is one of the implications of the OCS secrecy.
This sales data could help to make more accurate projections for more licensed to be issued to prospective owners. The government of Ontario blamed the limit of licenses on the shortage of cannabis products. This is not discarded as a possibility, but without any details on the cannabis stocks and sales, we cannot be sure that stock shortages are the only cause for the limited number of licenses.

2. Customers

The price for products usually depends on several factors. Consumers are charged more than the price OCS pays producers for their stocks. This is similar to the way how liquor agencies price their products, which leaves a little too much profit for one store to charge double what it pays for stocks. When compared to other provincial stores, Ontario charges more for its products. A gram of cannabis is $10 in Ontario while in Quebec it is $8. Ontario may be able to make a huge profit, but it is not competitive considering that the black market strives on affordability.

3. Prospective Business Owners

These prospective business owners would need to have a business plan that can be profitable. In order to enter the lottery, these business owners have to have $250000 as well as other creditworthiness. Their business would have to purchase stocks from OCS. Without the relevant data before the lottery, these business owners would have to wait until after they get the license to operate to find out OCS’ prices for stocks. This is unreliable and not wise for prospective business owners. It may even deter investors from providing businesses with funding.

By and large, we are not yet sure of the performance of OCS without the relevant data. We can only make speculations which is questionable when you consider the fact that this is a government-run agency which should imply transparency.

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