Budgeted to stall, New Brunswick alcohol, cannabis sales keep growing

An early pandemic surge in legal cigarette, cannabis and alcohol sales in New Brunswick has more than evaporated for tobacco in the last year, but gains made by the other two have shown surprising resilience. 

According to provincial budget documents, the sale of taxed tobacco products in New Brunswick was down 22 per cent for the fiscal year ended in March.

It's the equivalent of 124 million fewer legal cigarettes being sold in the province in the second year of the pandemic compared to the first year.

People are still smoking, according to Rick Barnum, the executive director of the National Coalition Against Contraband Tobacco.

But he said a large portion of consumption shifted to illegal and cheaper illicit-market cigarettes as soon as New Brunswick's borders reopened to interprovincial traffic last summer.

"Contraband tobacco is back going again," said Barnum. "The highways are open and the trafficking is happening."

The RCMP have publicized a number of arrests for tobacco smuggling in the Maritime provinces this year, including an arrest in Boistown, N.B., in February of a 62-year-old man stopped for speeding who was found with what police say were 30,000 "illegal" cigarettes.

Underground cigarettes are manufactured outside of New Brunswick and are mostly driven into the province through Quebec and Ontario, which wasn't possible during the early months of COVID restrictions, according to Barnum

"It's being manufactured in Ontario and it's heading east and west across the country, there's no doubt about it," he said.

"What you think is happening, is happening. That's how quickly that can change."

In the early months of the pandemic, lockdowns and border closures triggered a number of changes in how New Brunswick residents were able to access restricted products.

Cheap beer and liquor from Maine and Quebec were suddenly unavailable and illicit markets in cigarettes and other substances normally fed from outside the province ran dry of goods to sell. 

That left illicit-market consumers little choice but to turn to mainstream sellers to supply what they wanted beginning in the spring of 2020.

Sales at Cannabis N.B. rose $30.6 million in the first year of the pandemic over the previous year. Legal cigarette sales which have long been in decline in New Brunswick jumped by $40 million and sales at N.B. Liquor leaped ahead by an unprecedented $56.7 million.

For N.B. Liquor, that was $14 million more than sales increases it posted during the previous 10 years combined.

But while the market for legal cigarettes in New Brunswick has since melted with the reopening of interprovincial borders, government sales of alcohol and cannabis have so far defied expectations and continued to grow.

"Both Cannabis N.B. and ANBL (N.B. Liquor) saw strong financial results in fiscal 2021-22, surpassing their plans," Emilie Dow, a spokesperson for both organizations, said in an email to CBC News late last week.

N.B. Liquor budgeted for a drop in sales in the second year of the pandemic of up to 10 per cent, but is now reporting an increase of 2.8 per cent instead. Cannabis N.B., which had been budgeting for a year of modest, even flat, growth, saw sales jump 11 per cent.

Profits made by the two were a record $215.4 million for the fiscal year ended in March. That is $26.4 million higher than originally budgeted and $7.4 million more than Finance Minister Ernie Steeves was projecting they would make just two months ago.

The organizations do not have a clear explanation for why sales were up, not down like tobacco, but Dow said it is believed "changes in consumer behaviours" and some sluggishness in fully reopening borders, especially with the U.S., have each played roles.

Still the two organizations are no longer expecting a return to pre-pandemic sales levels. Both are budgeting for more earnings growth this year, even as the legal sale of cigarettes continues to tumble.