Why didn't Cannabis NB turn a profit? Class explores business of legalization

A University of New Brunswick professor is trying to understand why Cannabis NB didn't turn a profit this year.

On Thursday, 20 University of New Brunswick Saint John students will start a cannabis research class called "The impact of cannabis on business."

The third-year class will be taught by six people, including a medical doctor, a criminal lawyer, two people who deal with human resources, a business professor and Shelley Rinehart, director of the master of business administration program.

Rinehart said it was important to have this many people teach different sections of this course because cannabis has been so recently legalized. She said it will be quite some time before we see specialized cannabis business experts.

"None of us are expert in cannabis in general, but all of us have done a little bit of work or a little bit of research in a particular area," she said.

You hear the rumour on the street that their price is too high, that they've turned people back to the black market.- Shelley Rinehart, University of New Brunswick Saint John

For the course, each teacher will have two lectures to pose a question to their students. The students will then research and write a case study about the different ways cannabis legalization is changing the business world.

Rinehart's focus will be on the local retail model. The main question she will be asking her students is about Cannabis NB's poor performance.

She said the answer may not be as simple as high prices.

"You hear the rumour on the street that their price is too high, that they've turned people back to the black market," she said. "I'm not sure. I don't know how much it is in the black market.

"And I'm not sure how people perceive risk around the black market versus Cannabis NB."

Cannabis NB was touted by some as a great source of income for the province. But two months after legalization the retailer saw temporary store closures, product shortages, lowest per-resident sales in Atlantic Canada and 60 layoffs.

Rinehart said she and her students will try to make sense of what factors culminated in Cannabis NB's situations. Is it startup costs, lack of customer interest, marketing, stigma, the high prices, or a combination of any of these factors?

She said it's not easy to tell where New Brunswick went right and where it went wrong, but in general she thinks the country was too hasty in the legalization process.

"I think that we rushed to legalization before we did all of the research and got all of the information that would make it easier for law enforcement and for business and for the general public," she said.

Rinehart said each instructor will be asking students to write a case study answering a particular question, so they can contribute to a lacking body of academic research on the drug.

Medicine, the law and cannabis

Kelly VanBuskirk, a labour lawyer in Saint John, will be teaching a model focusing on national cannabis law and how it may impact different retail models. He'll analyze why different provinces decided to sell cannabis differently, and if a Crown corporation model was the best route to take.

New Brunswick, Nova Scotia, Prince Edward Island, Quebec and the Northwest Territories have a public, government-run retail model, he said.

Ontario, Alberta, Saskatchewan, Manitoba and Newfoundland and Labrador are exclusively privately-run dispensaries. British Columbia and Nunavut have hybrid approaches that are partly public and partly private.

He'll ask students to look at how the rules differ here from other parts of the country, and what that means to a business that's selling cannabis.

Family doctor Julie Hildebrand will be teaching the students about the history of medicinal cannabis, and how recreational legalization could change the business model of cannabis production.

"Where are you going to buy your medications right? Will it only be licensed producer? Will pharmaceutical companies be involved? Will the local pharmacy be able to sell it?" 

Hildebrand said legalization isn't just changing businesses models but minds.

"We're far ahead in time now, it's the 21st century, and I think we need to keep our minds open," she said.