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The SQDC reports net income of $94.9 million for fiscal 2022-2023

(Newswire) Montréal — For its fiscal year ended March 25, 2023, the Société québécoise du cannabis (SQDC) posted total sales of $601.9 million, compared with $600.5 million for the preceding fiscal year. The company reported net income of $94.9 million versus $75.7 million in fiscal 2021-2022. To this can be added the government revenues generated by its operation in the form of consumer and excise taxes, estimated at $193.8 million, with $137.8 million going to Québec and $56.0 million to the federal government. The SQDC’s total contribution to the Québec treasury is therefore $232.7 million.

The $94.9 million in net income and the Québec portion of the excise tax are remitted in full to the Ministère des Finances du Québec and reinvested primarily in cannabis-related prevention efforts and research and the fight against the adverse effects of psychoactive substances.

First plateau in its growth

After four years of sustained expansion of its sales network, the SQDC has now reached a plateau in its growth. From both a volume and a dollar standpoint, the company’s sales remained stable in comparison to the preceding fiscal year, this despite the addition of 10 new stores, bringing the number of points of sale in operation to 97 at March 25, 2023, and 98 today. In fiscal 2022-2023, the SQDC’s overall sales totalled $601.9 million, corresponding to 106,526 kg of cannabis, compared with $600.5 million and 106,448 kg in fiscal 2021-2022.

This situation is largely due to the labour dispute that has been ongoing in the organization since the beginning of the 2022-2023 fiscal year and that affects a quarter of the company’s stores. Specifically, 24 stores whose employees are represented by the Canadian Union of Public Employees (CUPE) are currently on strike, 22 of these stores since late May 2022. Currently run by their two managers, the affected stores have remained open albeit on a reduced schedule. All other SQDC stores are operating normally.

During the fiscal year, the company prepared its second strategic plan, which will be implemented over the next three years. It will enable the company to continue actively carrying out its mission of migrating consumers age 21 and older from the illicit market to the legal market while maintaining a focus on health protection.

Sales by network

The SQDC’s 97-store network, three of whose stores opened their doors in the last weeks of the fiscal year, generated sales of $567.8 million ($564.4 million in 2022, with an 87-store network). Volume sales in the store network totalled 100,254 kg of cannabis (100,026 kg in fiscal 2022). For their part, online sales on the SQDC.ca website reached $34.1 million ($36.2 million in 2022) with a total volume of 6,272 kg (6,462 kg in 2022).

The SQDC completed 13.9 million transactions in its stores and online in fiscal 2022-2023, with an average transaction price of $49.70, taxes included. The average sales price of one gram of cannabis sold was $6.48, taxes included, exactly the same price as for the preceding fiscal year. The SQDC sells dried cannabis products at prices ranging from $3.43 to $18.80 per gram.

New customer services

Last fiscal year, the company launched several new initiatives arising from its omnichannel retails strategy. The Pick Up in Store service was implemented across the network. A 90-minute delivery service was introduced in several of the province’s municipalities; by fiscal year-end, the regions of Saguenay-Lac-Saint-Jean, Québec, Lévis, Shawinigan, Trois-Rivières, Gatineau and Sherbrooke all had access to this new delivery method. The service will be extended to other regions next year. In April 2022, the company also added an online chat service and improved it later in the year. Now available during the regular opening hours of SQDC stores and on every page of the SQDC website, this service allows customers to chat in real time with sales network advisors and to receive guidance that, even remotely, helps them make informed choices.

A responsible approach

The SQDC continued its efforts to capture the illicit market by relying on responsible sales, an adapted advisory service, the commitment of its teams and a competitive offer. With volume sales of 106,526 kg of cannabis out of an estimated total annual market of 190,000 kg in Québec (187,000 kg in fiscal 2021-2022), the SQDC is currently thought to have captured around 56 per cent of the market. This figure is comparable to last year’s.

The company continued to build relationships of trust with local producers and suppliers to be able to carry products sought by customers. At present, 41 per cent of the kilograms sold at the SQDC bear the Québec Grown identifier, meaning they are mostly grown in Québec. In addition, 54 per cent of the licensed producers whose products are distributed by the company have their head office in Québec.

The SQDC maintained its in-store packaging recovery program. The recycled materials are used to create new goods that are also recyclable. This initiative is complementary to selective collection. The company also continued consulting and collaborating with the main players in the value chain to mobilize efforts to reduce the environmental impact of the containers and packaging for the cannabis products sold at the SQDC.

Labour relations

The SQDC and the union organizations concerned have held negotiations aimed at renewing the collective agreements of unionized store employees. An agreement with the Confédération des syndicats nationaux (CSN), representing the employees of 17 stores, was signed on July 27, 2022. Talks with the 26 stores represented by the Canadian Union of Public Employees (CUPE) are ongoing. It should be noted that the employees of 24 of these latter stores are on strike, 22 of the stores since May 2022. The strike-affected stores remain open but on a reduced schedule. The SQDC continues to hope for an agreement satisfactory to both parties.

The French-language version of the SQDC Annual Report 2023 and the French- and English-language versions of the SQDC Strategic Plan 2024-2026 are now available on SQDC.CA. The English-language version of the annual report will be available soon.