PEILCC Annual Report 2024

FOR THE YEAR ENDED MARCH 31, 2024 2024 ANNUAL REPORT PEI LIQUOR CONTROL COMMISSION

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P.E.I. Liquor Control Commission 3 Garfield Street Charlottetown, PE C1A 6A4

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PEILCC WHAT GUIDES US

CORPORATE VISION To be a leading retailer and regulator that exceeds all expectations.

MISSION STATEMENT To be a superior organization recognized for business excellence, exceptional customer service, commitment to corporate responsibility and progressive employment practices. The Prince Edward Island Liquor Control Commission’s strategic plan is based on four theme areas which serve as a blueprint for incorporating our mission statement into the day-to-day activities. STRATEGIC PILLARS Business Results: To be a key contributor to PEI’s general revenue through business excellence and continuous improvement in operational effectiveness and efficiency. Customer Experience: To achieve and maintain high levels of customer satisfaction through innovation, service excellence, and responsiveness to customer preferences in product selection. Corporate Social Responsibility: To encourage and monitor the responsible consumption of beverage alcohol in PEI through public engagement, internal campaigns, passionate employees, and fair regulation. People & Culture: To foster a high-performing, customer-focused culture of engaged employees through open communication, learning & development, safe work environments, and overall wellness. CORPORATE VALUES Moderation – We promote responsible use as a way of life. Quality Service – We take pride in the quality of our work. We strive for excellence in caring for our customers, suppliers and one another. Continuous Improvement – As a retailer, we welcome change. We are committed to continuous improvement to all of our services. Integrity and Fairness – We take responsibility and are fully accountable for our actions, decisions and behaviour. We meet our commitments and obligations to co workers, customers and business partners. We are open, honest and fair. Importance of People – We are committed to fostering a positive workplace that builds teamwork, mutual respect and encourages individual development. Focus on Results – We are committed to getting the job done and improving our productivity levels.

PLEASE DON’T DRINK & DRIVE

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PEILCC 2023-2024 Annual Report

Know what’s in your glass

A standard drink is 13.5 grams of alcohol.

WINE 142ml or 5oz (12% ABV)

BEER OR CIDER 341ml or 12oz (5% ABV)

SPIRITS 43ml or 1.5oz (40% ABV)

Understanding how much is in a standard single serving of alcohol helps you to pace yourself and stay in control. Please drink responsibly.

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PEILCC 2023-2024 Annual Report

TABLE OF CONTENTS

PEILCC - What Guides Us

1

Table Of Contents

3 4 4 5 6 7 7 7 7 7 9

Message from the Minister Message from the Chair Message from the CEO Corporate Governance

Mandate of the PEI Liquor Control Commission Board Accountability to Government and the Public

Appointment of Board Members Responsibilities of Board Members

PLAN A SAFE RIDE HOME

Audit Committee Organizational Chart Executive Summary

10

Sommaire

11

Operational Overview

12 12 16 18 24 25 25 25 26 26 27 28 30 33

Strategic Target - Business Results Strategic Target - Customer Experience

Strategic Target - Corporate Social Responsibility

Strategic Target - People & Culture

Statistics

Retail Gross Receipts by Store

PEI Liquor Retail Outlets

Summary of Profit and Expense Ratios – Two-Year Comparison

Our Spending... All Profits Stay Here Sales Volumes (litres) by Category

Total Licenses and Special Permits – March 31, 2023 and March 31, 2024

Featured Producer - Moth Lane Brewing

Management’s Report

Appendix

Auditor’s Report and Audited Financial Statements

34

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PEILCC 2023-2024 Annual Report

MESSAGE FROM THE MINISTER

The Honourable Antoinette Perry Lieutenant Governor of Prince Edward Island 1 Terry Fox Drive Charlottetown, PE C1A 0E8

May It Please Your Honour:

Pursuant to the Liquor Control Act and as Minister designate, it is my privilege to submit the 76 TH Annual Report of the Prince Edward Island Liquor Control Commission.

Respectfully submitted,

Honourable Jill Burridge, Minister of Finance

MESSAGE FROM THE CHAIR

The Honourable Jill Burridge Minister of Finance 95 Rochford Street Charlottetown, PE C1A 3T5

Minister:

In compliance with Section 87(3) of the Liquor Control Act , it is my honour to submit this 76 TH Annual Report of the Prince Edward Island Liquor Control Commission covering the fiscal year April 1, 2023 to March 31, 2024.

Respectfully submitted,

John Abbott, Chair

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PEILCC 2023-2024 Annual Report

MESSAGE FROM THE CEO

Mr. John Abbott, Chair PEI Liquor Control Commission 3 Garfield Street Charlottetown, PE C1A 6A4

Dear Mr. Abbott,

It is my honour to present the annual report for the PEI Liquor Control Commission (PEILCC) for the period of April 1, 2023, to March 31, 2024. We are proud to see these returns to the government continue to be instrumental in funding critical public services and programs such as healthcare, education, and infrastructure. With gross receipts over $140 million and contributions to the province exceeding $48.7 million, achieving these numbers was no small feat, and I am proud of our organization’s results.

Among our achievements over the past year, one we are most proud of is our commitment to reducing impaired driving and promoting a culture of responsibility. In my 25 years working within the industry, I have witnessed a notable shift towards a more health-conscious and socially responsible environment. While initiatives to promote a safer culture have shown progress, there is still more work to be done, particularly in reducing impaired driving, which remains an ongoing issue. We will continue to innovate and expand our initiatives, leveraging our partnerships and community engagement to drive meaningful impact. This year, we have once again intensified our efforts to raise awareness about the dangers of impaired driving and to support initiatives that enhance road safety. Addressing this issue is crucial to protecting lives and fostering a responsible culture. Further strides toward our mission include enhancing controlled access to the marketplace through modern, appealing venues. Infrastructure upgrades have significantly improved our service offerings, exemplified by the Stratford and Queen Street exterior renovations. We’ve also completed cooler upgrades at Oaktree, West Royalty, and Granville Street. Additionally, an increased focus this year has been on providing equal opportunities and advanced training programs to foster personal growth and bolster our overall customer service strategy. Throughout the year, we have offered a wide array of courses to our staff and plan to continue doing so to ensure our team remains engaged and prepared to serve Islanders. I would like to express my gratitude to outgoing board members Perry Gotell and Susan Milligan for their dedication and commitment during their terms with the PEILCC. We would also like to extend a warm welcome to new board members Kelly Shea Rayner and Ian Burge. I am deeply appreciative of our entire team, whether at the executive level, in our stores, warehouse, or head office. Everyone has contributed to the success of our organization, and for that, I am sincerely grateful. Looking ahead, we remain steadfast in our commitment to our mission and intent on further advancing all areas of our operations. It is my privilege to present the Prince Edward Island Liquor Control Commission’s Annual Report for the fiscal year 2024.

PLEASE DON’T DRINK & DRIVE

Warm regards,

Daniel MacDonald, Chief Executive Officer

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PEILCC 2023-2024 Annual Report

CORPORATE GOVERNANCE Corporate governance describes the process and structure for overseeing the direction and management of a crown corporation so that it effectively fulfills its mandate. This involves both its public policy and commercial objectives. It defines who is responsible for what, and how to ensure accomplishment and accountability.

PEI LIQUOR CONTROL COMMISSION BOARD Standing: Kate Shreenan - Recording Secretary, Ian Burge – Member, Nicole DesRoche – Member, Kelly Shea Rayner – Member.

Seated: Daniel MacDonald - Chief Executive Officer, John Abbott - Chair, Kim Griffin - Vice - Chair. Murray Murphy - Commission Solicitor. (absent from photo)

EXECUTIVE MANAGEMENT TEAM Standing: Mark Carragher - Director, Marketing and Sales, Gerald O’Halloran - Director, Supply Chain and Property Management, Linda Somers - Director, Retail Operations and Development, Shawn Alexander - Director, Human Resources and Employee Wellness. Seated: Matthew McMillan – Acting Chief Financial Officer, Daniel MacDonald - Chief Executive Officer, Heather Rossiter - Director, Corporate Affairs and Regulatory Services.

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PEILCC 2023-2024 Annual Report

MANDATE OF THE PEI LIQUOR CONTROL COMMISSION BOARD The mandate of the board is to supervise the business affairs of the Commission. Its most important responsibilities are: • Ensuring that the PEILCC provides high-quality service to the public; • Developing and approving the strategic plan and monitoring management’s success in meeting the strategic plan; • Approving annual financial plans; • Assessing and managing business risk; and • Ensuring that the PEILCC performs its regulatory role in a fair and impartial manner. ACCOUNTABILITY TO GOVERNMENT AND PUBLIC • The Annual Report, tabled in the Provincial Legislature and available to review, either in print or online at www.liquorpei.com; • Annual audits of the PEILCC’s financial statements by a qualified auditor; • Public access to records under the Freedom of Information and Protection of Privacy Act ; and • Publicly appointed commission members. APPOINTMENT OF BOARD MEMBERS The Lieutenant Governor in Council, through an Order-in-Council, appoints the members of the PEILCC Board, establishes the honourariums, and designates the Chair and Vice-Chair. RESPONSIBILITIES OF BOARD MEMBERS • Acting honestly and in good faith in making decisions with a view to the best interests of the PEILCC and all its stakeholders; • Overseeing the management of the business affairs of the PEILCC; • Avoiding conflicts of interest; • Having adequate knowledge of the PEILCC’s business, how it is organized and how it functions; • Attending Board meetings and seeking professional advice where necessary; and • Providing guidance on policy development. AUDIT COMMITTEE The Audit Committee is elected annually and consists of three Board Members in addition to the Chair and the CEO as ex-officio. The committee ensures the reliability and accuracy of the PEILCC’s Financial Statements, helps co-ordinate and improve internal control functions, and ensures the PEILCC adheres to sound corporate governance principles. The PEILCC is held accountable by the Government and people of PEI in a number of ways, including: Each Board member has individual responsibility for corporate governance including:

PLAN A SAFE RIDE HOME

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PEILCC 2023-2024 Annual Report

ORGANIZATIONAL CHART * Shared-services agreement with PEI Cannabis Management Corporation (PEICMC) ** For the period starting May 14, 2024

HON. JILL BURRIDGE

Minister of Finance

JOHN ABBOTT

Chair

**

KIM GRIFFIN

IAN BURGE

Member Vice - Chair

Member

**

PLEASE DON’T DRINK & DRIVE

KELLY SHEA RAYNOR

NICOLE DESROCHE

Member

Member

*

*

DANIEL MACDONALD

KATE SHREENAN

Chief Executive Officer

Executive Assistant

*

*

Director, Corporate Affairs and Regulatory Services

HEATHER ROSSITER

MATTHEW MCMILLAN

Acting Chief Financial Officer

*

*

Director, Human Resources and Employee Wellness

Director, Supply Chain and Property Management

SHAWN ALEXANDER

GERALD O’HALLORAN

Director, Retail Operations and Development

LINDA SOMERS

MARK CARRAGHER

Director, Marketing and Sales

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PEILCC 2023-2024 Annual Report

EXECUTIVE SUMMARY The Prince Edward Island Liquor Control Commission (PEILCC) is a crown corporation responsible for the administration of the Liquor Control Act and Regulations, along with the purchase, control and sale of all beverage alcohol in the province. A five-member Board of Commissioners is responsible for the Commission’s activities. The Chair reports to the Minister responsible for the PEI Liquor Control Commission. The mandate under the Liquor Control Act has two primary components: regulatory and commercial. The regulatory function responsibilities include: • licensing and inspecting licensed premises and special permit events; • investigating and reporting on all licensee or special permit complaints and determining whether there were infractions of the Liquor Control Act ; and • making recommendations to government on amendments to legislation. The PEILCC continues to be a major contributor to the provincial economy with gross receipts in excess of $140.3 million. In addition, monetary transfers to the Provincial Treasury were $48.8 million. The Commission currently operates 18 corporate retail outlets, as well as a central warehouse and Licensee Distribution Centre located in Charlottetown. In addition, 12 Liquor Agency stores can be found in the following locations across the province: Bothwell, Cavendish, DeSable, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, North Wiltshire, Oyster Bed Bridge, Wellington, and Wood Islands. A strategic plan is in place that guides the Commission to success in meeting its performance and accountability goals.

The Commission focuses on the following four key areas to measure performance:

1. Business Results; 2. Customer Experience; 3. Corporate Social Responsibility; and 4. People and Culture.

These areas serve as a blueprint for incorporating the Mission Statement into day-to-day activities and establishing strategic goals, the details of which are explained in further detail in this report.

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PEILCC 2023-2024 Annual Report

SOMMAIRE La Régie des alcools de l’Île-du-Prince-Édouard est une société de la Couronne responsable de l’administration de la Liquor Control Act (loi sur les alcools) et de ses règlements, ainsi que de l’achat, du contrôle et de la vente de toutes les boissons alcoolisées dans la province. Un conseil composé de cinq commissaires est responsable des activités de la Régie. La présidence fait rapport à la ministre responsable de la Régie des alcools de l’Île-du-Prince-Édouard. Le mandat donné par la Liquor Control Act compte deux principaux volets – l’un, réglementaire et l’autre, commercial. Les responsabilités du volet de réglementation comprennent : • octroyer des licences et inspecter les débits de boisson et les événements rattachés aux permis spéciaux; • enquêter et faire rapport sur les plaintes liées aux détenteurs de permis et aux permis spéciaux ainsi que déterminer s’il y a eu infraction à la Liquor Control Act ; • faire des recommandations au gouvernement sur la modification des lois. Du côté commercial, la Régie continue d’être un levier important de l’économie de la province, ses recettes brutes dépassant les 140,3 millions de dollars. Sur le plan des transferts monétaires au Trésor provincial, un total de 48,8 millions de dollars a été versé à la province. À l’heure actuelle, la Régie exploite dix-huit (18) points de vente au détail ainsi qu’un entrepôt central et un centre de distribution pour les détenteurs de permis situés à Charlottetown. Douze (12) magasins de franchise sont répartis dans les communautés suivantes : Bothwell, Cavendish, DeSable, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, North Wiltshire, Oyster Bed Bridge, Wellington et Wood Islands.

PLAN A SAFE RIDE HOME

La Régie utilise un plan stratégique pour atteindre ses objectifs de performance et de responsabilité.

Elle concentre ses efforts sur quatre domaines principaux afin de mesurer sa performance :

1. Résultats opérationnels 2. Expérience client 3. Responsabilité sociale 4. Personnes et culture

Ces domaines servent de plan directeur à l’intégration de notre mission dans nos activités quotidiennes et à l’établissement d’objectifs stratégiques qui seront expliqués plus en détail plus loin dans ce rapport.

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PEILCC 2023-2024 Annual Report

OPERATIONAL OVERVIEW The Prince Edward Island Liquor Control Commission’s Strategic Plan continued to guide activities through fiscal 2023-2024. Progress on strategic objectives is supported by annual business plans that set priorities for actions to meet objectives and timelines for their completion. The following is an overview of the performance in each of the four strategic objectives:

STRATEGIC TARGET • BUSINESS RESULTS

STRATEGIC TARGET To maximize net income within the policy guidelines established by the provincial government.

CORPORATE OBJECTIVES 1. Optimize return to government. 2. Grow revenue through effective planning and execution. 3. Continuously improve operational effectiveness and efficiency.

PERFORMANCE MEASURES

Actual 2022-2023

Target 2023-2024

Actual 2023-2024

% of Target 2023-2024

Target 2024-2025

Gross Receipts

$141,049,038

$137,000,000 $140,325,106

102.43%

$142,323,000

Gross Profit

$40,492,358

$40,270,000

$39,766,128

98.75%

$40,292,300

Operating Expenses

$18,705,635

$21,246,800

$19,073,915

89.77%

$21,517,800

Net Income

$25,171,307

$22,111,900

$24,196,320

109.43%

$21,924,500

Return To Government*

$49,884,597

$46,151,900

$48,780,067

105.69%

$46,873,500

Revenue Per Litre

$9.62

$9.98

$9.99

100.10%

$10.41

Spirits

$41.95

$43.07

$43.00

99.84%

$44.10

Beer (including draught)

$5.59

$5.60

$5.81

103.75%

$6.14

Wine

$17.91

$18.46

$18.82

101.95%

$19.69

Wine Coolers

$10.52

$10.50

$11.17

106.38%

$11.20

Spirit Coolers

$7.16

$7.34

$7.40

100.82%

$7.37

Operating Expenses as a % of Gross Receipts

13.26%

15.5%

13.59%

87.65%

15.12%

Shrinkage as a % of Gross Receipts

0.01%

0.01%

0.00%

100.00%

0.01%

Inventory Turnover**

Warehouse

64

75.0

62.7

83.60%

70.0

Stores

32.3

30.0

28.2

94.00%

30.0

* Inclusive of Net Income and health tax transfers to government ** Measured in days

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PEILCC 2023-2024 Annual Report

The industry faced many hurdles in Fiscal 2024, overall economic downturn, shifting spending habits, new social trends, and rising input costs. These factors all contributed to declining volumes and were a common trend across the country. Despite these challenges, The PEI Liquor Commission surpassed March 31, 2024, targets. Gross receipts were $3.32M and net transfers were $2.63M, representing positive variances to budget of 2% and 6% respectively.

PERFORMANCE HIGHLIGHTS

The PEILCC set inventory turnover goals at the beginning of the fiscal year as part of its strategic plan. These turnover ratios were based on the year ended March 31, 2024 to measure inventory efficiencies. The PEILCC has been better able to manage the days in inventory and the warehouse level in order to meet the needs of our customers. Store inventory turns are up slightly from last year which can be attributed to the increase in the number of products held in store inventory and necessary to fulfill customer demands. An improved store ordering process continues to keep store inventories in check and ensured better distribution and availability of inventory across the retail network. In addition, the central warehouse has been reconfigured to optimize space and manage warehouse efficiency.

PLEASE DON’T DRINK & DRIVE

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PEILCC 2023-2024 Annual Report

PERFORMANCE HIGHLIGHTS

Figure A Sources of Gross Receipts

Beer Other Merchandising Coolers Wine Spirits

25.6%

36.2%

Fiscal Year 2024

22.8%

2.9%

0.1%

12.5%

Figure B Application of Gross Receipts

Suppliers Federal Taxes Administrative Expenses Payments to Province

33.9%

39.6%

Fiscal Year 2024

13.3%

13.3%

The Commission spent approximately $56.9 million on alcohol from both domestic and international sources. Gross margins decreased slightly due to shifting category customer preference, sales channels allocation and rising input costs.

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PEILCC 2023-2024 Annual Report

PLAN A SAFE RIDE HOME

CHERYL MACDONALD

Help us extend a warm welcome to Cheryl, the newest addition to our team of product advisors at Notables! Cheryl’s passion for wine blossomed during her time at Arterra Wines back in 2018. It didn’t take long for her to uncover this hidden passion, earning herself the prestigious Sales Driver Award for Eastern Ontario in the same year. Transitioning seamlessly into the vibrant vineyard scene of Prince Edward County, Cheryl took on the role of Professional Wine Sales with gusto. With each bottle she encounters, Cheryl firmly believes there’s a story waiting to be discovered. Her mission? To share the excitement of uncovering these hidden gems with fellow wine enthusiasts on their own unique journeys. Certified with Merit in WSET 3, Cheryl is constantly seeking new ways to deepen her understanding of the industry and expand her palate into the captivating world of spirits. Look for Cheryl the next time you visit Notables by PEI Liquor in the Founders’ Food Hall & Market located at 6 Prince Street in Charlottetown.

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PEILCC 2023-2024 Annual Report

STRATEGIC TARGET • CUSTOMER EXPERIENCE

STRATEGIC TARGET To understand the needs of our customers so that we can provide quality products and services that are delivered by knowledgeable, courteous employees in attractive and accessible facilities. CORPORATE OBJECTIVES 1. Enhance the shopping experience for PEILCC wholesale and retail customers. 2. Provide enhanced customer services. 3. Improve product portfolio.

Actual 2022-2023

Target 2023-2024

Actual 2023-2024

% of Target 2023-2024

Target 2024-2025

PERFORMANCE MEASURES

Customers served Average customer transaction value

2,618,423

2,610,000

$2,521,517

96.61%

$2,535,600

$53.87

$52.49

$55.65

106.02%

$56.13

Actual 2022-2023

Target 2023-2024

Actual 2023-2024

% of Target 2023-2024

Target 2024-2025

Litres

Beer (including draught)

9,534,593

9,150,00

8,995,490

98.31%

8,590,700

Spirits

888,268

850,000

859,151

101.08%

840,300

Wine (including BYO)

1,852,826

1,780,000

1,749,143

98.27%

1,670,400

Refreshments

2,389,801

2,290,000

2,441,562

106.62%

2,490,400

Total

14,665,488

14,070,000

14,045,346

99.82%

13,591,800

PERFORMANCE HIGHLIGHTS

Packaged beer volume decreased by 6%, with dollar sales down by 2%. Additionally, draught beer volume decreased by 2%, with dollar sales up 1%. The beer category remains in decline, as all markets across Canada struggle to stabilize the decrease in mainstream beer, specifically from a volume perspective. This is being offset from a dollar perspective by consumers purchasing premium beer products. Local craft beer sales have slowed as many consumers continue to shift towards Ready to Drink (RTD) products. Spirits decreased 3% in volume, with dollar sales down by 1%. The current state of the spirits category within our market aligns closely with that of the national numbers. Growth within this category continues to be led primarily by tequila, American whiskey, and Ready to Mix cocktails. Ready to Drink volume increased by 2%, dollar sales increased by 6%. The RTD category continues to grow, with canned cocktails, iced tea and tequila based RTDs seeing the greatest growth. Specifically, higher Alcohol by Volume (ABV) canned cocktails have seen the largest growth, along with hot new innovations and celebrity endorsed products. Volume in the wine category decreased by 5%, with dollar sales decreasing by 1%. Cost of production saw substantial increases

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PEILCC 2023-2024 Annual Report

in every wine producing region which resulted in higher costs. Category growth was led by Rosé and sparkling wines. Innovation is trending toward lower alcohol choices as well as organic, sustainable and low intervention wines. The beer, spirits and wine festivals were all successful this year. It was the first Festival of Wines since 2019 and showcased Italy as the feature country. Our commitment to improving customer experience continued in the past year with 82 retail employees choosing to participate in advanced training in the WSET program. This training program provides employees with an additional level of expertise which is beneficial when assisting customers.

PLEASE DON’T DRINK & DRIVE

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PEILCC 2023-2024 Annual Report

STRATEGIC TARGET • CORPORATE SOCIAL RESPONSIBILITY

STRATEGIC TARGET In partnership with community groups and suppliers, the PEILCC will strive to raise public and staff awareness of the responsible use of beverage alcohol. CORPORATE OBJECTIVES 1. Enhance our reputation as a socially responsible corporate citizen. 2. Build corporate social responsibility into all areas of our business. 3. Regulate the consumption of beverage alcohol throughout the province in a fair and responsible fashion.

Actual 2022-2023

Target 2023-2024

Actual 2023-2024

% of Target 2023-2024

Target 2024-2025

PERFORMANCE MEASURES

Number of ID Checks as a % of transactions

11.58% 10.0% 10.74% 107.4% 10.0%

Licensee Compliance Rate

99.4%

95%

99.6% 104.8% 95%

Number of Inspections Conducted

2901

3,050

3,267

107.1% 3,100

% of Sanctions without Adjudication

100%

100%

99%

99%

100%

PERFORMANCE HIGHLIGHTS

The PEI Liquor Control Commission continues to promote the responsible use of alcohol by offering products that are socially responsible and incorporating responsible messaging into product promotions. Ongoing responsible use activities include: Challenge and Refusal Initiative, ID Training for PEILCC corporate retail and liquor agency staff and the Check 30 ID Program. A variety of targeted responsible use messaging was promoted throughout the year, using local media outlets and social media platforms, as well as signage at various events and in select areas across the province. The Prince Edward Island Liquor Control Commission continued its support of MADD Canada’s Multi-media School Assembly Program during the 2023-2024 school year. This year marked the return to in-school presentations post COVID-19 and saw 20 presentations of the English language Final Play and the French language version Détour 2 , take place in schools across the Island. New this year, Island schools were offered more than one film choice. In addition to last year’s Final Play, No Tomorrow and Over the Edge were available in English, with Le Pacte Précipte included as a second option to Détour , which was also presented to French students last year. The Commission continues to support the efforts of MADD Canada through support of campaign 911 and the in-store retail ice program available in a number of corporate retail outlets. The commission continued to promote safe rides featuring ride share provider KARI. This year promotional discounts were available during the annual PEI Spirits Festival as well as generally during the holiday season. New at-cash fundraising began in October 2023, encouraging customers to round up their purchase in order to generate funds in support of a variety of charities. This initiative generated over $134,000 for a different cause each month including Canadian Mental Health Association, P.E.I., Diabetes Canada, Santa’s Angels, Alzheimer’s Society (PEI Chapter), Heart and Stroke Foundation PEI and the Upper Room Hospitality Ministry.

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PEILCC 2023-2024 Annual Report

PLAN A SAFE RIDE HOME

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PEILCC 2023-2024 Annual Report

CREATIVE EXECUTIONS FOR YOUR CAMPUS

WHAT IS ?

KEEP IT SOCIAL IS … A multi-year platform designed to promote responsible consumption and harm reduction of beverage alcohol and recreational cannabis among university and college students. Founded in 2013, the Keep It Social program has been adopted by 13 schools and 5 liquor jurisdictions in Canada. OBJECTIVES 1. Promote responsible consumption of beverage alcohol and recreational cannabis. 2. Student-led, collaborative and sustainable. 3. Gain student leadership commitment.

| Fall 2019

WHAT IS CANNABIS?

ONSET AND DURATION

Cannabis refers to a group of plants with psychoactive properties. The flowers of these plants are harvested and dried and used for recreational, medical and industrial purposes. In PEI, recreational cannabis is sold by the PEICMC. There are three types of Cannabis plants; indica, sativa and hybrids of the two. • Indicas: Reported to have more relaxing, sedating effects than sativas • Sativas: Reported to provide a more euphoric, energized effect

Everybody’s response to cannabis is different, and it can vary from one occasion to the next. It takes longer to feel the effects of eating or drinking cannabis, but the effects are often stronger and last longer than when it is smoked or vaporized.

Onset Time for Type of Cannabis Consumed

STAGE

INHALATION

WHAT IS THC AND CBD? Tetrahydrocannabinol (THC) and cannabidiol (CBD) are the two primary cannabinoids that occur naturally in the Cannabis plant. Both of these interact with the cannabinoid receptors found in the human body and brain, but they differ dramatically in their effects. • THC is psychoactive and provides a euphoric feeling once consumed • CBD is non-psychoactive which means that it does not provide a euphoric effect

INGESTED

Onset

5-10 minutes

30 minutes - 2 hours

Duration

5-30 minutes

Plateau

4-12 hours

1-2 hours

Onset Type

1-2 hours

Rapid

Slow

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PEILCC 2023-2024 Annual Report

| Fall 2019

PLEASE DON’T DRINK & DRIVE

The PEI Liquor Control Commission continues to partner with both the University of Prince Edward Island (UPEI) and Holland College for each institution’s KEEP IT SOCIAL (KIS) programing. KIS helps students make responsible decisions when it comes to alcohol. Led by students and sponsored by the PEILCC, Keep It Social is a long-term initiative designed to address and reduce high-risk consumption. Now in its seventh year, KIS tackles the false perceptions that many students have about how much alcohol their peers consume. By getting the message out on campuses, keepitsocial.ca offers students tips and advice on how to make the right decisions when they’re planning a night out. UPEI and Holland College appoint several student athletes as KEEP IT SOCIAL Ambassadors who act as leads to spread the message about the impacts of high-risk alcohol consumption among students. The KIS message is promoted through social media and KIS videos that are shown and promoted throughout the academic year at various athletic and social events. In partnership with UPEI, Coach Atlantic, and DALMAC, a PEILCC funded bus wrap puts a focus on the campaign when student athletes travel throughout the Maritime Provinces.

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PEILCC 2023-2024 Annual Report

GIFT OF GIVING CAMPAIGN RESULTS

The PEI Liquor Control Commission (PEILCC) presented donations to several charitable organizations as part of its annual Gift of Giving Campaign again this year. The Gift of Giving Campaign is an annual event that donates a portion of gift card sales from PEILCC locations across the Island during the month of December to community organizations. This past holiday season, the campaign raised over $14,000 for charities across PEI including Blooming House, Bedford MacDonald House, MADD Canada, Make-A-Wish Foundation, Canadian Mental Health Association, and several food banks across the Island. PEILCC is committed to the communities it serves, and this campaign gives back to organizations that provide important support and assistance to Islanders.

FULL LIST OF CHARITIES:

MADD Canada, The Salvation Army, Bedford MacDonald House, Blooming House, West Prince Caring Cupboard, Summerside Salvation Army, Charlottetown Salvation Army, Upper Room Soup Kitchen & Food Bank, Southern Kings & Queens Food Bank, Souris Food Bank, Make-A-Wish, PEI Chapter (Unified with Children’s Wish), and Canadian Mental Health Association – PEI Division

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PEILCC 2023-2024 Annual Report

Don’t drink & drive. Plan a safe ride home.

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PEILCC 2023-2024 Annual Report

STRATEGIC TARGET • PEOPLE & CULTURE STRATEGIC TARGET Build a customer-focused, high-performance work environment that results in greater employee involvement, development, innovation and creativity. CORPORATE OBJECTIVES 1. Always recruit, retain, and develop the best people. 2. Foster a culture of performance, communication, and engagement. 3. Rigorously establish and promote a healthy, safe, and respectful workplace.

Actual 2022-2023

Target 2023-2024

Actual 2023-2024

Target % 2023-2024

Target 2024-2025

PERFORMANCE MEASURES Training Hours per Employee - FTE

10.87

10

20.34

203.4%

10

EMPLOYEE EXCELLENCE Plan

45.8%

90%

67.76%

75.3%

90%

Employee Wellness Rate

97.24%

99.2%

97.94%

98.7%

98%

Lost-Time Frequency

4.69

8

4.70

58.8%

8

PERFORMANCE HIGHLIGHTS

The PEILCC continued to re-invest in its employees training and development by providing them with a range of developmental opportunities over fiscal 2024. The PEILCC training hours per employee were up significantly from 10.87 hours in fiscal 2023 to 20.34 hours for fiscal 2024. This is a result of an emphasis on product knowledge courses facilitated through the PEILCC. More employees are also utilizing the PEI Public Service Commission’s training opportunities and offerings. We continue to offer Wine and Spirit Education Trust (WSET) training and the PEILCC Development & Training Fund continues to be utilized by staff along with the Union of Public Sector Employee and Public Service Commission Development & Training Fund. These funds are allocated to developmental opportunities that assist employees in achieving their personal career objectives, while simultaneously bridging individual performance gaps that collectively lead to increased levels of organizational success. The PEILCC had continued success in fostering high levels of workplace wellness and safety over fiscal 2024. In addition to efforts in employee engagement and the provision of OH&S training, new disability management initiatives and decreases in workplace accidents leading to lost time. A healthy workforce is extremely important to the PEILCC, particularly given the physically demanding work involved in many operational processes. Continued effort in this regard will be an ongoing priority moving forward.

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PEILCC 2023-2024 Annual Report

STATISTICS Retail Gross Receipts by Store

Year Ended March 31, 2024

Year Ended March 31, 2023

Year Ended March 31, 2022

Retail Store

Gross Sales

Alberton

$2,579,509

$2,535,119

$2,357,307

Gateway

$2,421,561

$2,544,212

$2,076,787

O'Leary

$3,072,094

$3,115,897

$2,958,595

Granville

$11,316,549

$11,243,305

$10,520,612

Waterfront

$4,990,274

$5,136,210

$5,177,310

PLAN A SAFE RIDE HOME

Tignish

$3,798,295

$3,579,926

$3,577,953

Kensington

$5,007,526

$5,095,037

$4,724,029

Tyne Valley

$1,648,366

$1,633,154

$1,614,437

Queen Street

$4,382,439

$4,829,740

$4,616,712

Oaktree

$17,196,412

$17,551,913

$16,583,683

N. Rustico

$4,208,041

$4,610,954

$4,020,014

West Royalty

$15,567,560

$16,847,858

$16,873,912

Licensee

$27,020,600

$24,349,029

$19,913,229

Cornwall

$6,891,552

$7,392,444

$7,306,734

Stratford

$11,692,178

$11,637,162

$11,624,392

Notables

$1,844,881

$1,967,341

$1,800,205

Cardigan

$2,526,325

$2,454,695

$2,273,233

Souris

$3,525,669

$3,884,011

$3,538,298

Montague

$8,673,363

$8,753,955

$8,399,740

Other

$1,961,912

$1,887,176

$1,603,765

Total

$140,325,106

$141,049,138

$131,560,947

PEI Liquor Retail Outlets

CORPORATE RETAIL STORES

LIQUOR AGENCY STORES

Alberton Borden-Carleton Cardigan Charlottetown - Minna Jane Drive Charlottetown - Notables Charlottetown - Queen Street Charlottetown - University Ave. Cornwall Kensington

Montague North Rustico O’Leary Souris Stratford

Bothwell Cavendish DeSable East Royalty Eldon Kinkora Morell

Summerside - Granville Street Summerside - Water Street Tignish Tyne Valley

Murray Harbour North Wiltshire Oyster Bed Bridge Wood Islands Wellington

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PEILCC 2023-2024 Annual Report

STATISTICS Summary of Profit and Expense Ratios • Two-year Comparison

(in 000s)

2024

2023

Gross Receipts

140,325

$141,049

Gross Profit

39,766

$40,492

Net Income

24,196

$25,171

General and Administrative Expenses

19,074

$18,705

Gross Profit as a Percentage of Gross Receipts

28.34%

28.71%

Net Profit as a Percentage of Gross Receipts

17.24%

17.85%

General and Administrative Expenses as a Percentage of Gross Receipts

13.59%

13.26%

OUR SPENDING (IN 000’S) All Profits Stay Here

4%

9%

Operating Costs:

Salaries and Benefits:

6,259

12,815

143,829

Total Sales:

(Including other income)

48,780

56,902

34%

40%

Returned to PEI:

Cost of Product:

19,073

13%

HST & Other:

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PEILCC 2023-2024 Annual Report

SALES VOLUMES (litres) by Category

5

4

64%

,

3

0

,

4

Beer 8,995,490

4

6

1

L :

6.1%

A

Spirits 859,151

T O T

Fiscal Year 2024

PLEASE DON’T DRINK & DRIVE

12.5%

Wine 1,749,143

17.4%

Coolers 2,441,562

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PEILCC 2023-2024 Annual Report

Total Licenses and Special Permits

Year Ended March 31, 2024

Year Ended March 31, 2023

License Type

Agency Store

1

1

Brew Pub

18

0

Caterer

23

24

Club

38

40

Dining Room

190

208

Distillery

11

11

Ferment on Premises

5

6

Liquor Agency

11

11

Lounge

108

106

Micro-Brewery

12

12

Military Canteen

20

20

Package Sales

103

111

Special Premise

160

162

Tourist Home

7

7

Winery

8

8

Total Licenses in Effect

715

727

Special Permits Issued

Year Ended March 31, 2024 Year Ended March 31, 2023

Class I

120

171

Class II

75

87

Total

195

258

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PEILCC 2023-2024 Annual Report

PLAN A SAFE RIDE HOME

MOTH LANE BREWING

Are there any PEI connections with your products (ingredients, names, etc)?

How did Moth Lane Brewing get started?

It all started as a sort of retirement adventure. Brewing had always been a passion, so I thought, why not share it with friends? Initially, I imagined just selling brews on Thursday nights, maybe even at our daughter’s restaurant.

All of the Moth Lane beer names have a connection to my life and the people in the area. Each name tells a story—a nod to our roots and the folks around us. Tell us about how you came up with some of the different products that you create/styles of beer you choose to brew. Brewing to me, is like baking bread — a tradition passed down the line. With over 40 years under my belt, I’ve got a knack for playing with flavours, thanks to different grains and yeasts. While I aim to brew product our customers love, it’s got to bring me joy too—like a nod from the beer gods themselves.

What sets your brewery apart from other producers on PEI?

Moth Lane Brewing is located down a dirt road in rural PEI. Before opening the brewery, I owned an oyster processing plant down by the water, just a stone’s throw from where we live now. I loved the area and figured that it was a perfect place for me to spend the rest of my life.

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PEILCC 2023-2024 Annual Report

PLEASE DON’T DRINK & DRIVE

What are some of your favourite food & beverage pairings from your menu?

Some of my favourites would be The Answer DIPA with a Smoked Brisket Sandwich, or the Red Dirt Road Red Ale with Pulled Pork or you can’t go wrong pairing a Drag’n Anchor Summer Wheat Ale with a plate of Nachos. What styles are you excited to be brewing right now, or would like to brew in the future? Lately, we’ve been tinkering with wild yeast and bacteria, caught from the breezes off the Sandhills and Gulf of St. Lawrence. Exciting stuff! Now, we just have to give this creation a name that tips its hat to my ancestors, many of whom worked at the lobster factories in the Sandhills and fished the Gulf.

Featured / Favourite Products

• Any barrel aged beer only for sale at the brewery, each have a great story and it’s neat to be able to use wood as a storage vessel

• Red Dirt Road Red Ale because I’m an Islander and I love the story of our past.

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PEILCC 2023-2024 Annual Report

MANAGEMENT’S REPORT Mr. John Abbott, Chair PEI Liquor Control Commission 3 Garfield Street Charlottetown, PE C1A 6A4

Dear Mr. Abbott:

The preparation of financial information is an integral part of the PEILCC’s senior management’s responsibilities, including the accompanying Financial Statements. This responsibility includes the selection of appropriate accounting policies and making judgments and estimates consistent with International Financial Reporting Standards.

The Commission maintains an accounting system and related controls providing:

PLAN A SAFE RIDE HOME

• Reasonable assurance that transactions are executed and recorded as authorized; • That assets are properly safeguarded and accounted for; and • That financial records are reliable for the preparation of Financial Statements in accordance with International Financial Reporting Standards. Financial information presented elsewhere in this annual report is consistent with that in the Financial Statements.

Respectfully submitted,

Daniel MacDonald, Chief Executive Officer

Matthew McMillan,

Acting Chief Financial Officer

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PEILCC 2023-2024 Annual Report

INDEPENDENT AUDITOR'S REPORT

To the Commissioners of Prince Edward Island Liquor Control Commission Opinion

We have audited the financial statements of Prince Edward Island Liquor Control Commission (the Commission), which comprise the statement of financial position as at March 31, 2024, and the statements of changes in equity, profit or loss and cash flow for the year then ended, and notes and schedules to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Commission as at March 31, 2024, and the financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Commission in accordance with ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Commission's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Commission or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Commission's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. (continues)

1

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PEILCC 2023-2024 Annual Report

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: � Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. � Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Commission’s internal control. � Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. � Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Commission’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Commission to cease to continue as a going concern. � Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Commission’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Commission’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Commission to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. MRSB CHARTERED PROFESSIONAL ACCOUNTANTS INC. Charlottetown, PE June 27, 2023 As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

PLEASE DON’T DRINK & DRIVE

MRSB CHARTERED PROFESSIONAL ACCOUNTANTS INC.

Charlottetown, PE June 25, 2024

2

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PEILCC 2023-2024 Annual Report