Why is cannabis so expensive in some provinces? Don’t ask Statistics Canada

By Michael J. Armstrong, Associate professor of operations research, Goodman School of Business, Brock University

THE CANADIAN PRESS

This article was originally published on The Conversation, an independent and nonprofit source of news, analysis and commentary from academic experts. Disclosure information is available on the original site.

___

Author: Michael J. Armstrong, Associate professor of operations research, Goodman School of Business, Brock University

To evaluate cannabis legalization’s progress and success, Canadians need good information about legal product sales.

Unfortunately, most provincial cannabis agencies keep results overly secret. And some publicly available estimates lack precision.

One example of cannabis agency secrecy made the news last week. An investigation found cannabis oil prices vary “wildly” between provinces.

Inter-provincial price differences exceeded 50 per cent for half the products surveyed. The report couldn’t explain the “fishy” differences.

Newfoundland and Ontario price higher

But it’s no secret that legal pot costs more in, say, Ontario than Quebec. Ontario’s cannabis agency marks-up prices by triple what Quebec’s more profitable agency does.

We can see this by analyzing their 2018-19 financial statements. Quebec’s retail revenues averaged 23 per cent above what it paid producers. By contrast, Ontario’s markups averaged around 77 per cent.

The corresponding figures were 38 per cent in Prince Edward Island, 55 per cent in New Brunswick and 90 per cent in Newfoundland. Nova Scotia and British Columbia didn’t disclose enough detail to estimate markups. The Prairie provinces don’t have government-owned shops.

To see the markups’ impact, consider a hypothetical cannabis oil product the producer sells to agencies for $20 plus tax. In Quebec, the product might have retailed at $30.41. That includes $4.95 for agency markup, $3.76 for provincial taxes and $1.70 for federal taxes.

In Newfoundland and Labrador, the same product could retail for 54 per cent more, at $46.98. That gives $19.35 to the agency, $5.21 to the province and $2.42 to the feds.

Undisclosed provincial priorities

Price differences aren’t inherently wrong. They just indicate different priorities. Higher markups provide more revenue for governments. Lower markups make legal products more competitive with illegal ones.

What’s wrong is that governments aren’t publicizing this key policy decision. Do Newfoundland and Ontario voters know their governments put more emphasis on making money than on taking business away from black-market vendors?

Are Nova Scotia and British Columbia residents curious about their politicians’ undisclosed priorities?

Unfortunately, this is just one example of provincial pot paternalism.

Consider a simple question: How much cannabis does your province sell?

Quebec answers that question best. Its cannabis agency’s quarterly and annual reports are very detailed. New Brunswick is similarly open about its results.

Other provinces are less transparent. They issue brief quarterly announcements or terse year-end summaries. Supposedly “open for business” Ontario hasn’t provided a full quarterly or annual report since March 2018.

Not knowing provinces’ real numbers, we have to use federal approximations.

For example, Statistics Canada recently estimated that national cannabis sales hit $146 million in December, up eight per cent from November. It estimated provincial sales too.

Imprecise federal estimates

Such estimates are never perfect. But for cannabis, the margins of error can be substantial.

Consider total sales during legalization’s first six months. StatCan’s estimate for Prince Edward Island was bang on, coming within two per cent of the actual total.

But it undershot British Columbia’s sales by 50 per cent: $9.3 million estimated versus about $18.8 million actual.

It also underestimated Quebec’s sales by 17 per cent for September to December 2018. And overestimated them by the same amount the next quarter.

The agency has since made changes. It apparently now gets sales data from Health Canada‘s cannabis tracking system, rather than just store surveys.

Unfortunately, some problems remain. StatCan said it had “excellent” data for Nova Scotia’s October to December sales. But its estimate was 25 per cent too low.

StatCan’s estimates are certainly better than nothing. But even on a quarterly basis, they’ve only been accurate to within about plus or minus 35 per cent, 19 times out of 20.

‘Legal’ sources?

StatCan also just compared cannabis usage before and after legalization. Its graphical summary indicates that before legalization, 23 per cent of consumers reported getting some of their cannabis from legal sources, versus 52 per cent after.

However, StatCan’s accompanying report notes the actual authorized cannabis user count before recreational legalization was only one-third of its estimate. And Health Canada‘s website shows the number who actually bought cannabis legally was only one-seventh of the estimate. That’s a big inaccuracy.

Measuring progress

Canada is ahead of countries like the United States and New Zealand on cannabis legalization, but a lot of work remains. Industry must reduce costs and improve quality. Governments must learn from each other’s successes.

But that’s difficult when key numbers are hidden or uncertain. Businesses, governments and voters need good measurements of legalization’s progress to know what changes are needed.

For example, the New Brunswick sales estimate jumped 18 per cent in December. Does that represent clever agency retailing? Improved government policy? Or statistical miscalculation? Currently, we can’t tell.

How can we decide where to go, if we aren’t even sure where we are?

Canada’s tax season kicks off and with a simplified paper return

The Canada Revenue Agency is sending an unlikely message to kick off tax season: Paper-filers, we have not forgotten you.

Despite a years-long push to have more people file taxes online because it’s generally faster and easier, many Canadians still prefer putting pen, or pencil, to paper.

The people who prefer paper to online are getting particular attention because they tend to be Canadians whose tax files are needed to send them essential benefit payments.

There are seniors who need old-age security, parents eligible for the Canada Child Benefit and first-time filers who might be eligible for a new benefit for low-income workers.

Because of that, the CRA has made changes to the paper tax booklet to further simplify language, add notes about new benefits for the 2019 tax year, and include a checklist so nothing gets missed.

Frank Vermaeten, the CRA’s assistant commissioner, said the agency wants to make sure those who prefer paper are still comfortable using it amid wider pushes to electronic filing.

“Certainly, we promote electronic filing — we see a lot of benefits for Canadians in doing that, but we also want to be sure that paper filers are served and served well,” Vermaeten said in an interview.

The federal tax collector expects to handle about two million paper returns this calendar year out of roughly 26 million filings.

Even at the current rate people are shifting to digital filing and away from paper, Vermaeten said the CRA could see paper files for another 20 years.

The agency’s tax machine fired up in earnest Monday, with new staff joining call centres that run at extended hours.

About 1.6 million printed tax-return booklets are also being mailed out that include an option for some to file by phone if their incomes are largely unchanged from year to year, such as seniors.

Staff have also been hired to manage paper filers, including a team that searches for errors and corrects them.

Vermaeten said a new service will see staff input forgotten T4 slips, for instance, on paper returns filed before the deadline, to save taxpayers interest penalties.

ICBC and police remind drivers to “take a break” from their phones

February 27, 2020

Since 2014, more than one in four fatal crashes on B.C. roads have involved distracted driving, which is why ICBC and police continue to combat this dangerous driving behaviour that claims 76 lives each year.*

This month, drivers will be hearing one message – take a break from your phone when you’re behind the wheel. Not only is it dangerous, but the costs can add up quickly.

One distracted driving ticket is $368 plus four penalty points ($252) for a total of $620. And this number vastly increases to more than $2,500 if you get a second distracted driving ticket within 12 months. Yet tough penalities haven’t deterred some drivers, with an average of 1,335 drivers receiving multiple tickets every year.**

If you want to save your money for something more fun, remember to leave your phone alone while driving.

Police across B.C. are ramping up distracted driving enforcement during March, and community volunteers are setting up Cell Watch deployments to remind drivers to leave their phone alone. The campaign also features advertising and social media support.

Drivers can do their part by avoiding distractions while driving and encouraging others to do the same. Activate Apple’s Do Not Disturb While Driving feature or what’s similarly available on other devices. Free ‘not while driving’ decals are available at ICBC driver licensing offices and participating Autoplan broker offices for drivers to support the campaign and encourage other road users to leave their phones alone.

You can get tips and statistics in an infographic at icbc.com.

Quotes:

Chief Constable Neil Dubord, Chair of the BC Association of Chiefs of Police Traffic Safety Committee

“Distracted driving continues to be a serious issue in our province – it’s the number one cause of crashes. Police officers see distracted drivers on the roads in every community. We are stepping up efforts making sure people leave their phones alone while driving.”

Lindsay Matthews, ICBC’s Vice-President Public Affairs & Driver Licensing

“Using electronic devices, like smartphones, is one of the most common and riskiest forms of distracted driving. Safer roads start with every driver making a conscious decision to focus on the road and leave their phones alone. Let’s all do our part to create a safer driving culture in B.C.”

Regional statistics*:

  • Every year, on average, 26 people are killed in distracted driving-related crashes in the Lower Mainland.

  • Every year, on average, nine people are killed in distracted driving-related crashes on Vancouver Island.

  • Every year, on average, 29 people are killed in distracted driving-related crashes in the Southern Interior.

  • Every year, on average, 12 people are killed in distracted driving-related crashes in the North Central region.

*Police data from 2014 to 2018. Distraction: where one or more of the vehicles involved had contributing factors including use of communication/video equipment, driver inattentive and driver internal/external distraction.

**Annual average based on 2016 to 2018 ICBC data.

 

Openness in relationships extends to your finances, experts say

Openness in relationships extends to your finances, experts say

By Christopher Reynolds

THE CANADIAN PRESS

John Shmuel knows firsthand what financial openness and secrecy can do.

By the third date, his fiancee knew his income and savings. A year later they’d agreed to focus on saving for a condo before getting married.

“We were quite transparent from the start,” said Shmuel, a 33-year-old Toronto-based content strategy director who cites financial honesty as an essential ingredient in the couple’s relationship.

“My dad had debts and he didn’t disclose his financial situation. It created conflict in the household,” he recalled.

His parents are much more open about money now, but only after he sat down with them to stress full disclosure, he said.

“The money conversation is one of the toughest conversations in a relationship, one of the biggest conflict points.”

Amid soaring real estate prices and persistently high household debt levels, financial transparency plays a bigger role than ever in solidifying romantic partnerships, experts say.

A recent survey by Credit Canada, a non-profit credit counselling agency, found that financial dishonesty is the leading money-related reason Canadians would or have cut ties with their partner, with more than 70 per cent citing the sticking point as a potential deal breaker.

Dishonesty can include making secret purchases and hiding debt, income or bankruptcy. But transparency means more than the absence of deceit and requires putting numbers as well as goals and priorities on the table.

“It’s almost taboo to talk about money,” Shmuel said. “So what ends up happening is a lot of people just keep the status quo and maybe don’t mention that massive credit-card debt that they’re carrying.”

A hefty debt load or sagging credit score can lead to a rude awakening at the car dealership or the mortgage broker’s office.

“There’s no guide posts for when you should have these conversations,” Shmuel said, adding that there’s no set point in a relationship, but that a discussion before moving in together seems sensible.

About 85 per cent of Canadians with partners said that similar financial goals and habits were a prerequisite to a healthy, long-term relationship, according to a Royal Bank of Canada poll last month.

“It’s not always an outright deception, it’s just that one might want to spend a whole lot and…one might be a big saver. So how do you resolve that tension?” asked Amy Dietz-Graham, a portfolio manager and investment adviser with BMO Private Wealth.

“That tends to be the trickiest one.”

An approach to avoid is spying on your beloved to see if they’re concealing cash.

“I don’t think it’s going to be very productive to go snooping around in your partner’s credit card statement and try to old, ‘Ah ha, I got you,”’ Shmuel said. “That’s going to be a source of conflict.”

Instead, concerned spouses can watch for red flags _ spending sprees or an aversion to discussions of debt, for example.

“Those should be a catalyst to say, ‘Hey, I just saw this new set of golf clubs you have in the closet. You didn’t tell me you were buying this. I know it’s your money, but we have this decision to buy a car together in two years. I really want to make sure we’re on the same page. Can we talk about our finances?”’ Shmuel advised.

A common budget spreadsheet is a basic way to keep track of spending. Many spouses set up joint chequing accounts or combine virtually all of their finances, while others keep them totally separate, Dietz-Graham said.

“There’s no right way. It’s more important just to understand what you’re doing with money and who’s responsible for what.”

Sitting down with a financial adviser offers a “more comfortable setting so that it doesn’t feel like you’re judging your partner or putting them on the spot,” she said.

Topics that often get overlooked even by diligent couples include insurance, wills, retirement savings and secondary properties, she said.

“So sit down and just have a conversation,” Dietz-Graham said.  “It will make you feel a lot less of a burden about money.”

Edmonton travel agents field calls, re-book and cancel trips over COVID-19

The excerpted article was written by  

Approximately 100 people working in tourism gathered Thursday in Edmonton for an industry conference that touched on the novel coronavirus and its impact on travel.

The coronavirus COVID-19 has reached every continent except for Antarctica and has upheaved the travel industry, disrupting flights, accommodations and tourist attractions around the world.

The conference included tour suppliers as well as independent travel agencies in the city, and some agents said they are busy fielding calls from concerned travelers.

Hidar Elmais, manager of Travel Gurus, said the agency was busy last month repatriating travellers who were stuck overseas in infected areas.

He said this month, the agency is working with travellers who are uncertain about booking a trip or mulling whether a trip should be cancelled.

Elmais said travel insurance is an important consideration, adding that if the federal government said Canadians should avoid non-essential travel to certain countries, travel insurance would kick in to offer a full refund for those looking to cancel or bring travellers who are already overseas back to Canada.

“Travel insurance can be purchased at any time. The problem is it has to be unforeseen. If you were to purchase travel insurance after Canada had declared non-essential travel to that country, you won’t be covered because it was foreseen. The earlier you purchase travel insurance, the better,” Elmais said.

He said that the most important period of time to purchase extra coverage, such as cancel for any reason coverage, is within the first 72 hours of booking a trip.

Ashish Sanghrajka, president of Big Five Tours and Expeditions, said there has been a roughly 10 to 20 per cent drop in business to certain countries. He said that business to Asia has come to a standstill because of the virus.

“Fear is real. People look at this and say, ‘What do I do?’ There’s a lot of questions,” he said.

However, Sanghrajka said the industry has experience in dealing with major disruptions, citing the SARS epidemic as well as concerns over Ebola.

He said travellers have asked to postpone their trips by a year or have asked to re-book in different parts of the world, such as Africa and Latin America.

He said that it is important for travellers to understand their travel insurance and its limitations.

“This is what will happen. Your deposit does become non-refundable because of this, this and this. Understanding all of that. Much like when you’re buying a car, much like when you’re investing in a portfolio,” he said.

Leah Wood of Peace River has been planning a family trip to England and Scotland since last year but the coronavirus prompted her family to re-think their plans.

“The rate of spread. The videos I was seeing out of China. It just was really concerning and now it seems to be spreading – not just in China, everywhere else. I just didn’t want to put my family at risk,” Wood said.

Wood said her family intended to book this month but has decided to postpone travel overseas until the risk of the virus lessens. They could explore Canada instead, she said.

“We’ve seen a lot of people stuck on cruise ships, people stuck at hotels. I did not want to be quarantined to an airplane or another country where I’m not from there and I don’t have family,” Wood said.

“It broke my heart. [But] the safety of my four kids and my family is more important than just a vacation.”

Canadian insurance providers must define new business models

Canadian insurance providers must define new business models

Emerging technologies and intensifying competition provide occasions for reinvention

  • Consumer trust, legacy technology and talent challenges create more urgency for change
  • Defining a clear vision of the future crucial to long-term value creation
  • An aspirational purpose, new offerings or traditional business models no longer enough

TORONTO, Feb. 26, 2020 – Canadian insurers must rethink existing business models to overcome the complex challenges brought on by new emerging technologies and intensifying competition.

“Canadian insurance providers are vulnerable to shifting trends within their own industry,” says Neil Pengelly, EY Canada Insurance Technology Leader. “Declining levels of consumer trust, along with legacy technology systems and a growing skills gap are creating more urgency for change. Those with a clear vision of the future and the courage to invest in thoughtful, customer-focused business models will emerge as leaders in the new economy.”

EY’s NextWave Insurance: personal and small commercial 2020 report outlines how providers can’t afford to be all things to all customers. They’ll have to focus and prioritize as they redesign their business models. Canadian insurers can embark on the right path forward by considering how to:

  • Create seamless digital experiences: The most effective insurers will drive growth and capture customer loyalty and market share by anticipating consumer needs, targeting and cross-selling more effectively, building out robust self-service capabilities and focusing on data-driven customer relationships.
  • Leverage relationships to enhance business processes and customer experiences: Insurance providers can expand the value of their offerings and rapidly move to cloud-based platforms by partnering with ecosystem relationships (e.g. sharing platforms, social media, InsurTechs and data providers) to offer specialized, but complementary services in mutually beneficial ways.
  • Take a proactive approach to personal and commercial cyber risk protection: Insurance providers can build trust and confidence with consumers by developing effective techniques — from proactive monitoring to incident response — to fight cyber threats, adopting the strongest possible defences to protect their customers from identity theft and data breaches.

“While tomorrow’s leading insurance businesses will be purpose-led in their strategies — including more agile with their resources and dramatically more customer-centric — the most important capability will be their ability to drive organizational change,” says Pengelly. “Creating an aspirational purpose, new offerings or traditional business models isn’t enough. Insurers must also get better at execution.”

Read the full EY NextWave Insurance: personal and small commercial 2020 report.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. For more information about our organization, please visit ey.com.

SOURCE EY (Ernst & Young)

Related Links

www.ey.com

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest