After four years of existence, the Société québécoise du cannabis (SQDC) has plateaued, with 58% of market share stolen from the black market. An unacceptable status quo in the eyes of its CEO.
“It's a very good first result, but we still have a long way to go,” admits Jacques Farcy, who is at the head of the youngest Crown corporation in Quebec for 12 months.
He agreed to provide an update on the “important milestone for Quebecers” which is the fourth anniversary of the legalization of cannabis – Justin Trudeau's law came into force on October 17, 2018.
< p>His message? “We have to continue our development, the status quo is certainly not an option. »
It must be said that Jacques Farcy manages a funny little thing. The SQDC is a commercial enterprise that cannot – and does not want – to stimulate its sales.
The sandbox that Quebec has designed for him is limited by public health issues. But he has to pursue his mission, which is to capture the cannabis black market.
The CEO is confident that he will get there, even if he recognizes that the curve is “capping”. We were talking about 30% the first year, 50% in 2021 and 58% today.
A lot of work to do
“It is not a model that was chosen by the SQDC. We have already evolved a lot in four years, although the mission is very clear and we are supervised, ”he says.
Everything is in the way of accomplishing the mission and that is where the next few years will be decisive.
The CEO is aware that the 450 products offered in stores are not highlighted.
“There are customers who don't yet know we're selling hash, because it's not obvious when you walk into a branch,” he gives as an example.
The SQDC must therefore “be better” at explaining the types of products it sells so that customers “are able to find their way” through its offer.
Better than the black market
In short, the “easy to capture” market shares have already been captured. It is a more difficult part of the evolution of the SQDC which is about to begin.
“We are going to need finer strategies”, admits Jacques Farcy.
Still, the SQDC “is not there to make money”. Public health sits on the board and the training for advisors is designed by the Ministry of Health.
“Cannabis is a special product, its social acceptability in Quebec has progressed, but there is still a lot a long way to go”, explains the CEO.
Now that the product is accessible thanks to a network of 90 – soon 100 – branches, phase 2 will be to “make it clear” that the SQDC has a “better deal” than the black market. And it is not won at all.
The SQDC after 4 years
187,000 kg Total consumption of dried cannabis in Quebec from March 2021 to March 2022, according to the Quebec Cannabis Survey< /p>
109,351 kg Annual sales of cannabis by the SQDC for the same period, i.e. 58.5% of the total
$6.31 Average price per gram of cannabis at the SQDC, taxes included
$75.7 M Profits from the SQDC in 2021-2022, money that goes to the fund to finance prevention, research and the fight against cannabis-related harm
Front of a branch of the SQDC in Montreal.
THE SUCCESS OF BRANCHES
The measured approach to the number of branches is a success, says the CEO of the SQDC. “At first, everyone said it didn't make sense, that there wouldn't be enough branches in Quebec. Today, everyone understands the benefit of not having one on every street corner,” he says. There are currently 90, a number that will increase to 98 shortly. “Our customers are able to have affordable quality products,” he says. He argues that while many retailers would like to rely on such a distribution network, its modest size makes it possible to avoid economic instability.
MARKET SHARE TO WIN
The SQDC currently captures 58% of the cannabis market in Quebec, while the objective for 2022 was 66%. Here's how she could get more customers.
BEET AND CAULIFLOWER
The state-owned company is limited in the range of edible products it can offer, “because the law prohibits certain types of edible products which are very attractive”, insists CEO Jacques Farcy. If some customers want to be able to buy products like candy, for example, the SQDC has found “a way out”: beets, figs and cauliflower infused with cannabis. “I agree that's not what you think of when you think of edibles,” says Farcy. For now, the SQDC has not convinced anyone with its offer.
For large consumers, the black market continues to offer volume discounts, admits CEO Jacques Farcy. The black market continues “to be particularly aggressive in terms of business strategies”. The SQDC does not want to go there, because “it could lead to excesses”. The state-owned company “wants to be competitive with the black market”, but does not want to “be cheaper than the black market”.
SMALL PRODUCERS OF HERE
It is more profitable for a small producer to sell elsewhere in Canada or in the world than at the SQDC, maintains Maxime Guérin, from Mindicanna. If we want to diversify the supply of Quebec products, we will have to relax the rules, he pleads. Because for the moment, it is easy to lose your place on the shelves if you are not able to supply the 90 branches yourself, which is quite a logistical challenge.
< h3>And the local suppliers in all this?
The SQDC will never hide it: it is not there to stimulate the market and accelerate sales, but to respond to a need.
If a cannabis producer has an “overly commercial” vision, he is not in the same logic as the state-owned company, recalls its CEO, Jacques Farcy.
Difficult, under these conditions , to create an ecosystem of Quebec producers who have a chance to carve out a place for themselves in the market.
“The CAQ government and Public Health have got it into their heads that cannabis, it's tobacco, and that we were going to apply the same rules everywhere, “argues Pierre Leclerc, director of the Quebec Association of the cannabis industry (AQIC).
” An aberration”
The former political employee in Quebec recalls that, for the moment, all Quebec ministries have the directive to apply the rules of the World Health Organization in the fight against to smoking to the cannabis industry.
“It is a complete aberration. We cannot talk to Quebec, we are not entitled to any state aid, it encourages the stigmatization of our products and it excludes us from traditional bank financing,” he says.
It is certain “that the industry cannot progress and that we cannot fight the illegal market”, he adds.
At the SQDC, we are witnessing this debate in staying on the sidelines.
“I need a healthy industry if I want to be able to carry out my mission”, Jacques Farcy simply says.
He recognizes, that said, the difficulties through which the cannabis industry goes.
“Obviously from a citizen's point of view, I recognize that it It's a shame we aren't more open to that in Quebec,” he says.
He remains positive: the cannabis industry in Quebec will eventually convince the authorities that it makes sense . For the moment, this is not the case.
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Katrine Johns has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Gal Post, Katrine Johns worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my email@example.com 1-800-268-7128