The SQDC succeeds in capturing 53% of the illegal market by the end of its 2020-2021 fiscal year

Montreal, June 9, 2021 – By the end of its 2020-2021 fiscal year, the Société québécoise du cannabis (SQDC) had not only converted nearly 53% of the illegal cannabis market but done so only two and a half years after opening for business, beating the target set in its Strategic Plan 2020-2023. The company is thus fulfilling its mission of drawing users away from the underground cannabis market. The 53% figure is based on the annual demand for cannabis in Quebec, recently estimated at 173 metric tons by the Quebec Finance Department.

In addition, the SQDC continued expanding its store network, enabling it to generate total net income of $66.5 million, more than double last year’s figure. Made possible by the company’s operational efficiency and flexible business model, the entire amount is remitted to the Minister of Finance in the form of a dividend and reinvested primarily in cannabis-related prevention efforts and research and the fight against the adverse effects of psychoactive substances.

To that amount can be added consumer and excise tax revenues, estimated at $171.4 million ($121.8 million to Quebec and $49.6 million to Canada). All told, the SQDC transferred nearly $238 million to the two governments, with $188 million going to Quebec.

These results show that the SQDC’s Quebec model, focused on health protection, is advantageous for public health and safety besides being profitable for Quebec society.

Sales up and fair prices

In fiscal 2020-2021, the SQDC’s overall sales totalled $537.2 million or 91,529 kg of cannabis, compared with $311.6 million or 46,863 kg in the preceding fiscal year. Store network sales rose to $486.7 million or 82,873 kg of cannabis, while the SQDC’s transactional website generated sales of $50.5 million or 8,692 kg of cannabis.

The company completed 10.6 million transactions in stores and online, with an average transaction price of $58.41, taxes included. The average sales price of 1 g of cannabis (all products combined) was $6.74, taxes included, down 12% from than last year. As has been the case since its creation, the SQDC continues to offer the lowest average price in Canada.

The company’s procurement strategy, logistical choices and overall operational efficiency allow it to remain both profitable and competitive with the illegal market without offering prices that actually encourage use.

Sustained growth and responsible development

With a sales volume of 91,529 kg of cannabis out of a total annual Quebec market of 173,000 kg, the SQDC continued capturing a larger share – now around 53% - of the illegal market. This it has done by relying on responsible sales, an adapted advisory service and a competitive product offer. The company’s growth is closely linked to the opening of new stores, an important vector of its strategic plan. In fiscal 2020-2021, 25 new points of sale, distributed in several Quebec administrative regions, were opened, bringing to 66 the total number of SQDC stores currently in operation. It should be noted that the pandemic-related public health measures implemented during store construction kept the sites safe throughout the work.

Improvements were also made to the company’s website and online shopping experience in fiscal 2020-2021. These included same-day express delivery of orders. Initially limited to the Island of Montreal, the program was gradually extended to Laval and now also includes part of the South Shore. Currently, 70% of online orders placed in these areas are delivered using the new service.

Impact of COVID-19 on SQDC operations

Throughout the year, the SQDC adapted to the worldwide COVID-19 pandemic. During the spring 2020 lockdown, the company was one of the businesses designated by the government to remain open. As a result, it continued protecting the safety of its customers by providing a safe shopping environment fully compliant with public health guidelines and reducing the appeal of the illegal cannabis market. Despite the challenges, SQDC employees provided efficient service and offered responsible guidance to customers at all times.

The SQDC strengthened the sanitary measures already in place to protect its employees and customers. These included controlling customer traffic at store entrances, making mask-wearing and hand-sanitizing mandatory and installing plexiglass panels at checkout stations. The company also adjusted the maximum occupancy of its stores based on public health recommendations. In addition, the regional alert zones and curfew imposed by the Quebec government also forced teams to alter store opening hours to remain in compliance with the restrictions in effect. The teams showed great agility by adapting to each of the new guidelines within 24 hours.

In the coming fiscal year, the SQDC will continue expanding its store network and applying sound management practices to control costs across the company.

The French-language version of the Annual Report 2021 is now available on SQDC.ca. The English-language version will be available soon.

About the Société québécoise du cannabis (SQDC)

The SQDC is a government corporation mandated to distribute and sell cannabis in Quebec with a focus on protecting customers’ health and safety. The company is committed to offering quality products and informing and advising consumers on how to minimize the health impacts of cannabis. The long-term objective is to shrink the illegal cannabis market in Quebec. All of the SQDC’s profits are remitted to the Cannabis Prevention and Research Fund, which is managed by the Quebec Finance Department, and reinvested primarily in cannabis-related prevention and research. For more information, visit sqdc.ca.