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HIGHLIGHTS
  1. AGLC’s cannabis segment revenue a $31-million loss in 2019-20
  2. Cannabis tax in Alberta raised $30-million last year, forecast at $70-million in 2019-20
  3. Alberta government plans to tax vaping products to reduce youth use

The Alberta government estimated it will lose $31-million in revenue from its cannabis operations this fiscal year and expects to report multimillion-dollar losses for the next three years, though tax from the newly legalized product is forecast to more than offset this, according to its Budget 2019.

Retail cannabis is privatized in the province but government agency Alberta Gaming, Liquor and Cannabis (AGLC) is the region’s sole wholesaler.

Alberta’s recreational cannabis sector has been the most successful in the country based on store numbers, with AGLC issuing more than 300 retail licences within the first year of legalization. Despite Alberta being Canada’s fourth-biggest province, it holds roughly 40 per cent of the country’s legal pot shops to date.

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But the provincial budget shows this is taking a financial toll on the agency.

Taxes from cannabis in Alberta were forecast at $30-million in the 2018-19 fiscal year and are forecast to more than double to $70-million this year and rise to $84-million by 2022-23. This will more than offset annual revenue losses.

“In 2018-19, net income was negative $34-million, and the forecast is for income to remain negative for the next four years, as set-up, administration and inventory costs exceed revenue,” the government said, noting that net income includes retailer fees and sales revenue, less costs for administration and purchasing inventory.

This follows similar results in Ontario, which is also the sole wholesaler for its region. It lost $42-million in its latest fiscal year, though it had positive revenues. The Ontario Cannabis Store has since launched consultations to get the private sector involved in the storage and distribution of cannabis.

AGLC’s cannabis revenue was forecast at a $31-million loss in 2019-2020, $34-million loss in 2020-21, $24-million loss in 2021-22, and $25-million loss in 2022-23. Meanwhile, AGLC was forecast to continue bringing in strong revenue in other categories with $1.4-billion expected from gaming and lottery in 2019-20 and $823-million from liquor.

The Municipal Cannabis Transition Program cost the provincial government $11-million in 2018-19 was discontinued.

The Alberta government also said it will tax vaping products to discourage youth from taking it up, with the focus largely on “tobacco, tobacco-like and vaping products.”

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