Alberta was the shining green light for weed sales, yet legalization was a financial bust

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Alberta has been celebrated as the country’s fastest-growing cannabis market as the nascent industry continues to climb out of the shadows and into the mainstream.

The Sunshine Province led the nation in sales in the first year of legalization and it continues to outpace every province in retail operations. Currently, there are more than 400 cannabis retail stores in Alberta, compared to less than 40 in Ontario.

Alberta has also attracted significant investment from some of the country’s largest licensed producers, including Aurora, which moved to Medicine Hat in 2018 with plans to build the world’s largest cannabis greenhouse.

Aurora, which laid off 500 workers in February, has since slowed construction at that site. The operation was once touted as having the potential to bring 600 jobs to Gas Town, but Medicine Hat Mayor Ted Clugston told the National Post earlier this month that 100 jobs is a more likely scenario.

And now, with the budget tabled by the province’s United Conservative Party government on Thursday, the bright light in Canada’s cannabis sector has dimmed.

Cheaper cannabis and fewer pot shops may help New Brunswick profit from cannabis.

Pot, it turns out, has been a money-losing proposition for the province.

Alberta is expecting to lose $26 million in the sector in the current fiscal year — and stay in the red for the next three years — as foundational investments in retail systems, administration and inventory continue to outpace revenue. In 2020-21, a loss of $36 million is expected.

Some relief is coming via a 20 per cent tax that will be applied to vaping products, including cannabis liquids. That tax is projected to raise $4 million in 2020-21, and rise to $8 million the following year. By 2022-23, the total cannabis tax revenue for the province is projected to be $84 million.

Those numbers are buoyed by the fact that the burgeoning industry is still finding its footing, and cannabis has fared better in Alberta than elsewhere in the country. Ontario lost $42 million in the first year of legalization. The province pinned those losses on supply issues and product shortages, though there is dispute about the accuracy of those reports.

To maintain their position as market leader, Alberta will need to continue to innovate and outpace the rest of the field. Edmonton could soon be the first city in the country to allow cannabis cafes, which would lead to more jobs, more businesses, more potential — a change the province would surely welcome.

This week Teck Resources also announced it was pulling the plug on its Frontier oil sand mining project, which was expected to bring $20 billion in investment to the province. Cannabis was once seen as an explosive opportunity to diversify the Albertan economy. The province will need to continue to be a leader on the file if those aspirations are to be realized.

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