PEILCC 2023 Annual Report

FOR THE YEAR ENDED MARCH 31, 2023 75 TH ANNUAL REPORT PEI LIQUOR CONTROL COMMISSION

PEI LIQUOR CONTROL COMMISSION • 75TH ANNUAL REPORT

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

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 2022-2023 Annual Report

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PEILCC 2022-2023 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 PEI Liquor Control Commission Board Accountability to Government and the Public

Appointment of Board Members Responsibilities of Board Members

Audit Committee Organizational Chart Executive Summary

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Sommaire

11

Operational Overview

12 12 15 17

Strategic Goal 1 - Business Results Strategic Goal 2 - Customer Experience

Strategic Goal 3 - Corporate Social Responsibility

Strategic Goal 4 - People & Culture

22 23 23 23 24 24 25 26 28

Statistics

Retail Gross Receipts by Store

PEI Liquor 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, 2022 and March 31, 2023

Featured Producer - Copper Bottom Brewing Company

Management’s Report

31

Appendix

Auditor’s Report and Audited Financial Statements

32

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PEILCC 2022-2023 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 75 TH Annual Report of the Prince Edward Island Liquor Control Commission.

Respectfully submitted,

Honourable Jill Burridge, Minister of Finance

* For the reporting period, Honourable D. Mark V. McLane served as 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 75 TH Annual Report of the Prince Edward Island Liquor Control Commission covering the fiscal year April 1, 2022 to March 31, 2023.

Respectfully submitted,

John Abbott, Chair

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PEILCC 2022-2023 Annual Report

MESSAGE FROM THE CEO

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

Dear Mr. Abbott:

I am delighted to present our annual report for the fiscal year 2023. With great satisfaction and appreciation, I reflect on the remarkable journey that the PEI Liquor Control Commission (PEILCC) has embarked on over the past year.

As we delve into the financial performance of the PEILCC for the period from April 1, 2022, to March 31, 2023, we observe a notable increase in gross receipts, surpassing $141 million, marking the 27 TH consecutive year of record sales. Our contributions to the province also reached new heights, exceeding $49.9 million, an increase of $1.9 million from the previous fiscal year. These returns have been instrumental in funding critical public services and programs such as healthcare, education, and infrastructure. Among our notable achievements over the past year, one stands out prominently: our leadership in driving nationwide sales growth. This accomplishment demanded dedication and commitment from our entire network, especially amidst the challenging economic conditions that affected many Islanders. Furthermore, we’ve made significant strides in optimizing our supply chain processes, enhancing efficiency, and alleviating the burden on our Licensee Distribution Centre. Our commitment to efficiency has not only streamlined operations but also enhanced our overall service quality. In addition to these achievements, we’ve successfully expanded our market presence by introducing four new agency stores, along with renewing six existing agency store contracts. These strategic moves reflect our commitment to meeting growing customer demand, capitalizing on emerging opportunities, along with our dedication to servicing the needs of rural Islanders. At the heart of our endeavors, the pursuit of continuous improvement remains a top priority for PEILCC across all aspects of our business. This commitment extends to our relationships with local producers, our valued licensees, and our unwavering dedication to corporate social responsibility. These accomplishments underscore our comprehensive approach to business growth, operational excellence, and ethical responsibility. We take pride in reaching these milestones and look forward to continuing our journey of progress and excellence. Our achievements would not have been possible without the unwavering support and commitment of our stakeholders and governing bodies. I would like to extend my gratitude to all our Board Members for their invaluable guidance throughout the year. I am particularly pleased to welcome you, John as our new Chair. Your wealth of experience in various roles within the PEILCC will be an asset. While we look forward to continuing working with you, we must also acknowledge the outstanding dedication of our outgoing Chair, Quentin Bevan, who has exemplified true leadership while serving his term with us on both the PEILCC and PEICMC Boards. The PEILCC and PEICMC have been privileged to have him at our table. Our dedicated team, whether at the executive level, in our stores, warehouse, or head office, has consistently demonstrated their commitment to the PEILCC and the people of Prince Edward Island. Despite the ongoing challenges posed by COVID-19 and the disruptions caused by Hurricane Fiona, our team has consistently risen to the occasion. It bears repeating that the key to our success lies within every member of our organization. We are very much focused on the year ahead and look forward to continued success in all facets of our operations. It is my privilege to present the Prince Edward Island Liquor Control Commission’s Annual Report for the fiscal year 2023.

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Respectfully submitted,

Daniel MacDonald, Chief Executive Officer

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PEILCC 2022-2023 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: Perry Gotell - Member, Kate Shreenan - Recording Secretary, Susan Milligan - Member, Murray Murphy - Commission Solicitor. Seated: Daniel MacDonald - Chief Executive Officer, John Abbott - Chair, Kim Griffin - Vice - Chair Nicole DesRoche - Member (absent from photo)

EXECUTIVE MANAGEMENT TEAM Standing: Shawn Alexander - Director, Human Resources and Employee Wellness, Gerald O’Halloran - Acting Director, Supply Chain and Property Management, Mark Carragher - Director, Marketing and Sales, Linda Somers - Director, Retail Operations and Development. 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 2022-2023 Annual Report

MANDATE OF 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 PEILCC is held accountable by the Government and people of PEI in a number of ways, including: • The Annual Report, tabled in the Provincial Legislature and available for all Islanders 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 Each Board member has individual responsibility for corporate governance including: • 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.

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PEILCC 2022-2023 Annual Report

IMPAIRED BOATING IS IMPAIRED DRIVING

HEADER TEXT IMPAIRED

BOATING IS IMPAIRED DRIVING

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PEILCC 2022-2023 Annual Report

ORGANIZATIONAL CHART * Shared-services agreement with PEI Cannabis Management Corporation (PEICMC) ** For the reporting period, Honourable D. Mark V. McLane served as Minister of Finance

**

HON. JILL BURRIDGE

Minister of Finance

JOHN ABBOTT

Chair

PERRY GOTELL

KIM GRIFFIN

Member Vice - Chair

Member

PLEASE DON’T DRINK & DRIVE

SUSAN MILLIGAN

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

Acting 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 2022-2023 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 $141 million. In addition, monetary transfers to the Provincial Treasury were $49.9 million, representing a year over year increase of $1.9 million. The Commission currently operates 18 corporate retail outlets, as well as a central warehouse and Licensee Distribution Centre located in Charlottetown. Four new Liquor Agency stores were added this past year, bringing the total to twelve. Liquor Agencies can now be found in the following locations: 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 2022-2023 Annual Report

SOMMAIRE La Régie des alcools de l’Île-du-Prince-Édouard (RAÎPÉ) 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 au ministre responsable de la Régie des alcools de l’Île-du-Prince-Édouard. Le mandat en vertu de 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 concernant l’octroi de permis et les 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 1 41 millions de dollars, ce qui en fait le plus important organisme de vente au détail de l’Île du Prince Édouard. Sur le plan des transferts monétaires au Trésor provincial au cours de la dernière année financière, un total de 4 9. 9 millions de dollars a été versé à la province, soit une augmentation de 1.9 millions de dollars par rapport à la même période l’an dernier. 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. Quatre nouveaux magasins de franchise ont été ajoutés au cours de la dernière année, apportant le total à 12. On trouve des magasins de franchise dans les communautés suivantes : Bothwell, Cavendish, DeSable, East Royalty, Eldon, Kinkora, Morell, Murray Harbour, North Wiltshire, Oyster Bed Bridge, Wellington et Wood Islands.

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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 2022-2023 Annual Report

OPERATIONAL OVERVIEW The Prince Edward Island Liquor Control Commission’s Strategic Plan continued to guide activities through fiscal 2022-2023. 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 STRATETIC GOAL 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 2021-2022

Target 2022-2023

Actual 2022-2023

% of Target 2022-2023

Target 2023-2024

Gross Receipts

$131,560,947

$131,800,000

$141,049,038

107%

$137,000,000

Gross Profit

$39,004,601

$39,450,000

$40,492,358

102.6%

$40,270,000

Operating Expenses

$17,334,801

$20,084,500

$18,705,635

93.1%

$21,246,800

Net Income

$24,913,541

$22,157,100

$25,171,307

113.6%

$22,111,900

Return To Government*

$47,968,354

$45,327,100

$49,884,597

110.1%

$46,151,900

Revenue Per Litre

$9.34

$9.53

$9.62

100.9%

$9.98

Spirits

$40.86

$40.86

$41.95

102.7%

$43.07

Beer (including draught)

$5.47

$5.50

$5.59

101.6%

$5.60

Wine

$17.38

$17.38

$17.91

103.0%

$18.46

Wine Coolers

$17.62

$17.62

$10.52

59.7%

$10.50

Spirit Coolers

$6.98

$6.98

$7.16

102.6%

$7.34

Operating Expenses as a % of Gross Receipts

13.18%

15.24%

13.26%

87.1%

15.5%

Shrinkage as a % of Gross Receipts

0.03%

0.01%

0.01%

0.00%

0.01%

Inventory Turnover**

Warehouse

54.5

75.0

64

85.3%

75.0

Stores

30.1

30.0

32.3

107.3%

30.0

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

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PEILCC 2022-2023 Annual Report

The PEI Liquor Control Commission delivered both an increased net profit and an increased transfer to the provincial government in fiscal 2022-2023. Gross receipts were $141,049,038 for the fiscal year ended March 31, 2022, an increase of $9.49M over the previous year. This increase came as a result of new sales and marketing initiatives. Net transfers for the year totaled $49,884,597. This year’s performance resulted in a $1,916,243 increase in the PEILCC’s contribution to the Province over the previous year. 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, 2023 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 2022-2023 Annual Report

PERFORMANCE HIGHLIGHTS

Figure A Sources of Gross Receipts

11.8%

0.1%

2.8%

Beer Other Merchandising Coolers Wine Spirits

22.9%

Fiscal Year 2023

36.8%

25.7%

Figure B Application of Gross Receipts

13.0%

Suppliers Federal Taxes Administrative Expenses Payments to Province

39.2%

13.3%

Fiscal Year 2023

34.5%

The Commission spent approximately $56.7 million on alcohol from both national and international sources. Gross margins decreased slightly due to unscheduled freight increases by transportation companies.

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PEILCC 2022-2023 Annual Report

STRATEGIC TARGET • CUSTOMER EXPERIENCE STRATEGIC GOAL 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 2021-2022

Target 2022-2023

Actual 2022-2023

% of 2022 2023 Target

Target 2023-2024

Customers served Average customer transaction value

2,590,766

2,600,000

2,618,423

100.70% 2,610,000

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$50.78

$50.69

$53.87

106.30%

$52.49

Actual 2021-2022

Target 2022-2023

Actual 2022-2023

% of 2022 2023 Target

Target 2023-2024

Litres

Beer (including draught)

9,331,122

9,280,000

9,534,593

102.80%

9,150,00

Spirits

848,343

840,000

888,268

105.80%

850,000

Wine (including BYO)

1,776,264

1,610,000

1,852,826

115.10%

1,780,000

Refreshments

2,124,251

2,100,000

2,389,801

113.80% 2,290,000

Total

14,079,980

13,830,000 14,665,488

106%

14,070,000

PERFORMANCE HIGHLIGHTS

Packaged beer volume increased by 0.5%, and dollar sales were up 5% over the previous year. As Local craft beer continues to grow, more local breweries are now supplying product to PEI Liquor retail stores. Additionally, draught beer volume increased by 18% with dollar sales up 23%.

A strong tourism year resulted in increases in total Licensee sales channel of more than 43%.

Spirits volume increased by 4.7% with dollar sales up 7.5%.

A return of the annual Spirits Festival helped drive increased category awareness and selection in stores.

At-home cocktails continue to be a trend, with the subcategories of Tequila (+16%), Liqueurs (+6%), Gin (+6%), and Irish Whiskey (+5%) leading the growth in this category.

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PEILCC 2022-2023 Annual Report

The volume of Ready to Drink (RTD) products, including ciders increased by 12.5%, with dollar sales increasing by 15.4%. Sales in the RTD category have increased by 235% in the past five years, with local RTDs, large pack sizes, and variety packs responsible for much of this growth. Wine volume increased by 4.3% with dollar sales increasing by 7.5%, these results are due in part to the return of a more consistent supply chain. In addition, sales of rosé and sparkling wines showed vigorous growth and are expected to continue. Our commitment to improving customer experience continued in the past year with retail employees choosing to participate in advanced training in the WSET program. This program provides employees with an additional level of expertise which is beneficial when assisting customers. The Festival of Wines was not able to take place again in 2022, but plans are underway for a return of this annual event in May 2023.

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PEILCC 2022-2023 Annual Report

STRATEGIC TARGET • CORPORATE SOCIAL RESPONSIBILITY STRATEGIC GOAL 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.

% of 2022-2023 Target

Actual 2021-2022

Target 2022-2023

Actual 2022-2023

Target 2023-2024

Number of ID Checks as a % of transactions

12.42% 10.00% 11.58% 115.8% 10.0%

PLEASE DON’T DRINK & DRIVE

Funds raised for charities and foundations

$37,626 $100,000 $17,100

17.1% $20,000

Licensee Compliance Rate

98.1% 95.0% 99.4% 100%

95%

Number of Inspections Conducted

2901

3100

2901

93.6% 3,050

% of Sanctions without Adjudication

100%

100%

100%

100%

100%

PERFORMANCE HIGHLIGHTS

The Commission continues to support the efforts of MADD Canada’s campaign 911, and expanded the in-store retail ice program in a number of corporate retail outlets which also benefits the work of MADD Canada. A return to more normal operations further to past years COVID-19 restrictions, enabled PEILCC liquor inspectors to resume more regular inspections duties. The PEI Liquor Control Commission was also happy to support the continued efforts of the RCMP through their holiday season paper bag campaign. A new holiday initiative saw the Commission support safe rides throughout the holiday season with local ride share provider KARI.

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 as well as social media platforms. The Prince Edward Island Liquor Control Commission continued its support of MADD Canada’s Multi-media School Assembly Program during the 2022-2023 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.

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PEILCC 2022-2023 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 2022-2023 Annual Report

| Fall 2019

PLAN A SAFE RIDE HOME

The PEI Liquor Control Commission partners with both the University of Prince Edward Island (UPEI) and Holland College for each institution’s KEEP IT SOCIAL (KIS) programing. KIS is helping students make responsible decisions when it comes to alcohol. Led by students and guided by the PEILCC, Keep It Social is a long-term initiative designed to address and reduce high-risk consumption. Now in its sixth 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 KKP, a PEILCC funded bus wrap puts a focus on the campaign when student athletes travel throughout the Maritime Provinces.

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PEILCC 2022-2023 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 $17,100 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. “Each and every day our Island charities work tirelessly to support clients across PEI, and we are extremely pleased to contribute and assist through the Gift of Giving Campaign” , said Minister of Finance Mark McLane. “These organizations play such an important role across our province, especially through difficult times, and I want to thank everyone who participated and helped facilitate this funding that will directly support Islanders.” 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.

* For the reporting period, Honourable. D. Mark V. McLane served as Minister of Finance

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PEILCC 2022-2023 Annual Report

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

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PEILCC 2022-2023 Annual Report

STRATEGIC TARGET • PEOPLE & CULTURE STRATEGIC GOAL 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 2021-2022

Target 2022-2023

Actual 2022-2023

Target % 2022-2023

Target 2023-2024

Training Hours per Employee - FTE

6.05

10

10.87

108.7%

10

EMPLOYEE EXCELLENCE Plan

90%

90%

45.8%

50.9%

90%

Employee Wellness Rate

98%

98%

97.24%

98%

99.2%

Lost-Time Frequency

3.31

8

4.69

58.6%

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 2023. The PEILCC training hours per employee were up significantly from 6.05 hours in fiscal 2022 to 10.87 hours for fiscal 2023. This is likely as a result of increased opportunities and offerings subsequent to COVID restrictions. 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 2023. 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.

OPPORTUNITIES AND CHALLENGES AHEAD:

The PEILCC HR and Employee Wellness division continued to implement the objectives of the People & Culture section of the annual report. The objectives are to foster an engaged workforce that is aligned with the strategic objectives of the organization. Through effective implementation the PEILCC has the opportunity to enhance its ability to accomplish these goals.

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PEILCC 2022-2023 Annual Report

STATISTICS Retail Gross Receipts by Store

Year Ended March 31, 2023

Year Ended March 31, 2022

Year Ended March 31, 2021

Retail Store

Gross Sales

O'Leary

$3,115,897

$2,958,595

$3,177,169

Alberton

$2,535,119

$2,357,307

$2,072,944

Tignish

$3,579,926

$3,577,953

$3,173,549

Tyne Valley

$1,633,154

$1,614,437

$1,350,925

Summerside - Waterfront

$5,136,210

$5,177,310

$4,301,421

Summerside - Granville

$11,243,305

$10,520,612

$10,181,107

Gateway

$2,544,212

$2,076,787

$1,593,148

PLEASE DON’T DRINK & DRIVE

Kensington

$5,095,037

$4,724,029

$4,245,930

North Rustico

$4,610,954

$4,020,014

$3,173,181

Cornwall

$7,392,444

$7,306,734

$6,138,686

Charlottetown - Minna Jane Drive

$16,847,858

$16,873,912

$15,163,337

Charlottetown - University Avenue

$17,551,913

$16,583,683

$17,238,797

Charlottetown - Queen Street

$4,829,740

$4,616,712

$3,620,161

Charlottetown - Notables

$1,967,341

$1,800,205

$997,606

Stratford

$11,637,162

$11,624,392

$10,155,052

Montague

$8,753,955

$8,399,740

$8,044,612

Cardigan

$2,454,695

$2,273,233

$1,841,020

Souris

$3,884,011

$3,538,298

$3,367,075

Other

$1,887,176

$1,603,765

$1,491,718

Licensee

$24,349,029

$19,913,229

$22,989,434

Total

$141,049,138

$131,560,947

$124,316,872

PEI Liquor Outlets

CORPORATE RETAIL OUTLETS

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 2022-2023 Annual Report

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

(in 000s)

2023

2022

Gross Receipts

$141,049

$131,561

Gross Profit

$40,492

$39,005

Net Income

$25,171

$24,914

General and Administrative Expenses

$18,705

$17,335

Gross Profit as a Percentage of Gross Receipts

28.71%

29.65%

Net Profit as a Percentage of Gross Receipts

17.85%

18.94%

General and Administrative Expenses as a Percentage of Gross Receipts

13.26%

13.18%

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

4%

9%

Operating Costs:

Salaries and Benefits:

6,217

12,489

144,434

Total Sales:

(Including other income)

49,885

56,682

35%

39%

Returned to PEI:

Cost of Product:

19,161

13%

HST & Other:

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PEILCC 2022-2023 Annual Report

SALES VOLUMES (litres) by Category

5

6

,

4

6

,

8

4

Beer 9,534,593

8

1

L :

A

Spirits 888,268

T O T

Fiscal Year 2023

PLAN A SAFE RIDE HOME

Wine 1,852,826

Coolers 2,389,801

HEADER

SUMMER 2023

FEATURED PRODUCT ADVISOR Judy Hornyik

In addition to her 10 years in the hospitality industry, Judy draws upon her 20 years of experience working with PEI Liquor to better serve customers. Judy has also successfully completed the demanding Wine and Spirit Trust (WSET) Level 3 course. Whether you are looking for grand bottles to impress or everyday hidden gems for yourself, Judy can help you uncover that perfect find. Look for Judy the next time you visit PEI Liquor at 475 Granville North in Summerside. Read more in PEI Liquor’s Celebrate E-Flyer. Subscribe to receive our E-Flyer via email and stay up to date with our latest products, recipes, food pairings and promotions.

1

CELEBRATE SUMMER 2023

Limited time offers from July 26 - August 29

Prices subject to change | Products not available at all locations | While supplies last

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PEILCC 2022-2023 Annual Report

Total Licenses and Special Permits

Year Ended March 31, 2023

Year Ended March 31, 2022

License Type

Agency Store

1

1

Brew Pub

0

0

Caterer

24

24

Club

40

42

Dining Room

208

202

Distillery

11

10

Ferment on Premises

6

6

Liquor Agency

11

7

Lounge

106

101

Micro-Brewery

12

12

Military Canteen

20

20

Package Sales

111

108

Special Premise

162

152

Tourist Home

7

7

Winery

8

8

Total Licenses in Effect

727

700

Special Permits Issued

Year Ended March 31, 2023 Year Ended March 31, 2022

Class I

171

113

Class II

87

65

Total

258

178

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PEILCC 2022-2023 Annual Report

PLEASE DON’T DRINK & DRIVE

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PEILCC 2022-2023 Annual Report

FEATURED PRODUCER

What sets your brewery apart from other producers on PEI?

The brewery is known to punch above its weight in terms of quality. We’ve garnered national recognition for several of our beers at the annual Canadian Brewing Awards, often beating out hundreds of other entrants from across the country. We’re also big advocates for supporting local, from ingredient sourcing to giving back to the community. Through our Giveback Initiative, we’ve been able to provide over $10,000 to local community groups and non-profit organizations that we’re passionate about. Besides our connection with local malt and hop suppliers, our brewery location has a rich history, and the building has served the town of Montague with many purposes during its 85 years of operation. Originally built to function as a town hall, the building was later home to the towns telephone switchboard, fire hall, police station, and until recently home to The Eastern Graphic, our local newspaper. Are there any PEI connections with your products (ingredients, names, etc)?

How did Copper Bottom Brewing get started?

Copper Bottom was born out of a passion for brewing craft beer that spans over a decade long. When owners Ken Spears & Ashley Condon moved back to Condon’s hometown of Montague in 2012, they recognized an opportunity to build a brewery in rural PEI. After years of planning, Copper Bottom opened their doors to the public in November of 2017.

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PEILCC 2022-2023 Annual Report

We often pay homage to our community through the naming of our beers. One of the first beers we’ve ever produced – the Rabble Rouser (Red Ale) – was inspired by the late Jim MacNeil, who owned and operated the Eastern Graphic in the same building we brew in today.

Tell us about how you came up with the idea for Bantam Seltzers.

Over the past couple of years, we’ve seen a huge increase in ready-to-drink products hit the market. We found that most of these beverages either sacrificed flavour for calories, or sacrificed calories for flavour. We set out to create a beverage that sacrifices neither, and the result was Bantam hard seltzer. The word ‘Bantam’ means small but mighty and is a nod to our PEI roots – we’re a small province, but collectively we’re capable of doing big things. What are some of your favourite food & beverage pairings from the Copper Bottom menu? We’re excited that we’ve overgone a complete overhaul of our kitchen program this year, and we’re now offering a small-but thoughtful menu of eats to complement our beverage offerings. A current favourite of ours is our Club Sandwich paired with a pint of Juno, our New England IPA. What styles are you excited to be brewing right now, or would like to brew in the future? With summer nearing its end and Autumn fast approaching, we’re excited to be bringing back some seasonals with a bit more malt character, which we tend to gravitate to during the colder months. Eclipse (Black IPA) and Charlie (Brown Ale) will both return this fall and see distribution at PEI Liquor locations for the first time. We also have some more barrel-aged and mixed fermentation ales in the works. Looking ahead to next summer, we’re hoping to introduce some more lighter and sessionable beers into our lineup – stay tuned!

PLAN A SAFE RIDE HOME

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PEILCC 2022-2023 Annual Report

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PEILCC 2022-2023 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:

• 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.

PLEASE DON’T DRINK & DRIVE

Respectfully submitted,

Daniel MacDonald Chief Executive Officer

Matthew McMillan

Acting Chief Financial Officer

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PEILCC 2022-2023 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, 2023, and the statements of changes in equity, profit or loss and cash flow for the year then ended, and notes 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, 2023, 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)

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PEILCC 2022-2023 Annual Report