Defending the Legal Path: SQDC’s Resolve in Attracting Customers

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Defending the Legal Path: SQDC’s Resolve in Attracting Customers

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Quebec’s cannabis retailer, the Société québécoise du cannabis (SQDC), has established itself as a key player in the province’s legal cannabis market since its launch in June 2018. However, SQDC president and CEO Jacques Farcy believes that there is no need for more flexible laws to attract cannabis customers to the legal market. In a recent interview, Farcy shared insights into the SQDC’s scope of action, the debate surrounding flexibility in the market, and the corporation’s strategies to maintain its position.

The Scope of Action for Quebec’s Cannabis Retailer (SQDC)

Unlike Loto-Québec or the Société des alcools du Québec (SAQ), the SQDC operates within a more limited scope of action. While its mission is to attract consumers who previously purchased cannabis from the illegal market, the SQDC aims to do so without encouraging increased consumption. This unique position has sparked discussions among industry players about the potential benefits of a more aggressive marketing strategy for the SQDC.

The Debate on Flexibility in Quebec’s Cannabis Market

One notable area where the regulations surrounding the sale of cannabis in Quebec differ from other provinces, such as Ontario, is in the availability of edibles. In Ontario, the market for edibles is more varied, offering a wider range of options. However, the SQDC is currently unable to sell cannabis-infused candies and has turned to alternatives like cauliflower or dried beets. This discrepancy has fueled the debate on whether Quebec’s regulations should be more flexible to make the SQDC more appealing than the illicit market.

SQDC’s Stance on Marketing Strategy

Jacques Farcy emphasizes that the SQDC does not push for a specific direction but leaves it to the government to establish the regulatory framework. While debates continue among industry players, Farcy doubts that a more flexible framework would have a significant impact on the growth of the Crown corporation. He draws attention to other Canadian provinces with different legal frameworks, where the proportion of the illegal market captured is comparable, ranging between 50% and 60%.

Capturing the Illegal Market

The question of capturing the illegal market arises as the SQDC reaches a “plateau” in its growth, marking five years since its establishment. Farcy, however, views this stage as fairly normal. Instead of focusing on aggressive marketing strategies, the SQDC aims to maintain its current customer base and attract new customers from the illegal market by emphasizing the advantages of purchasing cannabis legally.

Reaching a Plateau and Focusing on Customer Service

To retain customers and encourage them to choose the legal market, the SQDC aims to provide excellent customer service. Farcy highlights the affordability of dried cannabis, with prices as low as $3.43 per gram. The corporation also offers various delivery options to compete with traditional corner drug dealers. Customers can enjoy 90-minute delivery, same-evening delivery, and standard Canada Post delivery services.

Home Delivery as a Competitive Advantage

Recognizing the convenience and safety offered by home delivery, the SQDC seeks to raise awareness of its delivery services. By ensuring reliable and efficient delivery, the SQDC aims to attract customers who value convenience and want a hassle-free purchasing experience. This strategy aligns with the broader trend of online shopping and delivery services in today’s retail landscape.

Labour Dispute and its Impact

In recent months, the SQDC has faced a labor dispute, with employees at 24 out of 98 branches going on strike. The corporation and the Canadian Union of Public Employees (CUPE) are scheduled to meet with a conciliator to address the dispute. The reduced operating hours due to the strike have had an impact on the company’s revenues, highlighting the significance of resolving the labor dispute promptly.

Sales Performance and Revenue Stability

Despite the challenges posed by the labor dispute, the SQDC’s sales remained stable in the 2022-2023 fiscal year. The corporation recorded total sales of $601.9 million, representing the sale of 106,526 kg of cannabis. This performance demonstrates the resilience of the legal market and the SQDC’s ability to maintain its position. Furthermore, the stable sales figures were achieved despite the opening of ten new branches during the same period.

Salary Conditions and Recruitment

One of the main points of contention in the labor dispute is salary conditions. Farcy assures that the salary conditions at the SQDC are attractive, highlighting the entry-level salary of $19.30 per hour. He further mentions that the salary exceeds $20 per hour after two or three years of employment. These competitive working conditions not only support employee recruitment but also contribute to building a dedicated workforce.

Compensation of SQDC’s CEO

The recently unveiled annual report of the SQDC also disclosed the total compensation received by Jacques Farcy. During the year, Farcy received a total compensation package amounting to $359,603. Unlike some other Crown corporations, such as the SAQ or Investissement Québec, the SQDC does not have long-term incentive plans or annual bonuses.

Reinvestment of Revenues in Cannabis Prevention and Research

In the 2022-2023 fiscal year, the SQDC achieved net earnings of $94.9 million, representing an increase compared to the previous year. As a Crown corporation, the SQDC contributes significant tax revenues to the Quebec government, including dividends and taxes. These revenues are reinvested in cannabis prevention and research, as well as efforts to combat the harms associated with the use of psychoactive substances.

Conclusion

The SQDC’s president and CEO, Jacques Farcy, believes that the corporation does not require more flexible laws to attract cannabis customers to the legal market. Despite discussions about the potential benefits of an aggressive marketing strategy, Farcy emphasizes that the SQDC’s focus is on maintaining its current customer base and attracting customers from the illegal market through exceptional customer service and competitive advantages such as home delivery. The SQDC’s stable sales performance and reinvestment of revenues in cannabis prevention and research demonstrate its commitment to the responsible growth of the legal cannabis industry in Quebec.

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