May 31, 2019

U.S. Cannabis Spot Index — May 31, 2019

U.S. Cannabis Spot Index — Published May 31, 2019

U.S. Cannabis Spot Index up 3.1% to $1,233 per pound.

 

The simple average (non-volume weighted) price increased $75 to $1,389 per pound, with 68% of transactions (one standard deviation) in the $612 to $2,166 per pound range. The average reported deal size was nominally unchanged at 2.8 pounds. In grams, the Spot price was $2.72 and the simple average price was $3.06.

 

The relative frequency of trades for indoor flower decreased by almost 2% week-over-week. The relative frequency of transactions involving greenhouse product increased by the same proportion, while that for deals for outdoor flower was unchanged. Warehouse flower’s share of the total documented weight moved nationally expanded by almost 5% this week. The relative volumes of greenhouse and outdoor product contracted by about 3% and 1%, respectively, compared to last week.

 

The U.S. Spot Index rose by 3.1% this week to settle at $1,233 per pound, a new year-to-date peak and the highest that the national composite rate has been observed to settle since June 2018. Upward-trending prices in California continue to be the primary driver of the recent positive movement in the national average. State tax collection data for Q1 shows that the excise tax on retailers rose by over 10% from Q4 2018, while only slightly more flower and less trim entered the commercial market, indicating that demand has increased while supply stagnated early this year. A rise in Colorado’s Spot also provided upward pressure on the U.S. composite rate this week, although the nation’s most mature market continues to show the greatest stability in wholesale pricing of the four major Western states in 2019.   

The national volume-weighted price for flower to be sold in adult-use markets rose again this week on increases in Colorado and Nevada. Prices for medical flower were up this week on rising rates in California, Arizona, Michigan, Maine, Connecticut, and D.C.  

June Forward closes up $50 at $1,125 per pound.

 

The average reported forward deal size was 46.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 58%, 26%, and 15% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 40 pounds, 51 pounds, and 62 pounds, respectively.

 

At $1,125 per pound, the June Forward represents a discount of 8.7% relative to the current U.S. Spot Price of $1,233 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines From This Week’s Premium Report:

  • California

  • Tax Department Data Shows Volume of Wholesale Flower Entering Commercial Market in Q1 2019 Expanded by Only 1% – 2% from Q4 2018
  •  
  • Colorado

    Average Size of Wholesale Transactions Cut in Half from a Year Ago

  • Oregon

  • Volume of Flower Purchased at Licensed Retailers in First Four Months of 2019 Up About 40% Year-Over-Year
  •  
  • Washington

  • Price for Indoor Flower Reaches New Year-to-Date High, Settles Above Rate for Warehouse Product in Colorado for First Time Since March 2018
  •  
  • Arizona

  • Bill to Require Quality Assurance and Safety Testing of Medical Cannabis Products Approved by the Legislature and Sent to Governor
  •  
  • Illinois

  • Adult-Use Legalization Bill Approved by State Senate as Additional Concerns Raised About Availability of Supply, Anti-Competitive Character of Potential New Market
  •  

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

31 May 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 31, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 31, 2019

The CCSI came in at C$6.96 per gram this week, from last week’s C$7.33 per gram. This week’s price equates to US$2,341 per pound at current exchange rates.

 

Health Canada released the latest Canadian sales data on May 24th through the Cannabis Tracking System program. Non-medical sales continue to grow across Canada with average daily sales reaching 191 kg/day, while medical sales slid further to 54 kg/day. Although these are preliminary estimates, the revisions in sales have been minimal for the past few months. In the recent report, February non-medical sales figures were lowered by 2.3%.

 

Our expectation is that non-medical sales will pick up significantly in next month’s report with the release of April data, as a result of the opening of Ontario retail stores on April 1st. Ten retail stores were opened on day one, with another 15 added by the end of the month, providing Ontario cannabis consumers with greater access to the legal, regulated market.

From the data we see that non-medical sales are on the rise versus medical sales. As of March, sales to non-medical consumers were 350% of medical sales.

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

31 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

May 24, 2019

U.S. Cannabis Spot Index — May 24, 2019

U.S. Cannabis Spot Index — Published May 24, 2019

U.S. Cannabis Spot Index up 6.5% to $1,196 per pound.

 

The simple average (non-volume weighted) price increased $78 to $1,314 per pound, with 68% of transactions (one standard deviation) in the $556 to $2,072 per pound range. The average reported deal size decreased nearly 15% to 2.8 pounds from 3.3 pounds last week. In grams, the Spot price was $2.64 and the simple average price was $2.90.

 

The relative frequency of trades for outdoor flower decreased by 3% week-over-week. The relative frequency of transactions involving indoor and greenhouse product both increased, by 1% and 2%, respectively. Outdoor product’s share of the total documented weight moved nationally contracted by 10% this week. The relative volumes of warehouse and greenhouse flower expanded by 5% each compared to last week.

 

The U.S. Spot Index rose by 6.5% this week to settle at $1,196 per pound, a new year-to-date high and the first time that the national price observed in the opening week of this year has been exceeded. Significant increases in the Spot Indices of California and Oregon were the primary drivers of the uptick in the national rate. Perhaps just as influential, though, was a contraction in the relative volume of outdoor flower. Wholesale buyers in Oregon continue to state that much of what is on offer is undesirable. Additionally, licensed growers in California are becoming fewer, while more are required to employ the state’s track-and-trace system, theoretically reducing the porousness of the state’s licensed market to unlicensed production.   

The national volume-weighted price for flower to be sold in adult-use markets jumped this week on notable increases in California and Oregon. Rising prices in Nevada’s market also provided upward pressure on the U.S. rate for product designated as recreational.

 

Prices for medical flower were up this week on rising rates in California, Colorado, Arizona, Michigan, and Connecticut.  

June Forward up $40 at $1,075 per pound.

 

The average reported forward deal size was 44 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 30%, and 15% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 39 pounds, 49 pounds, and 51 pounds, respectively.

 

Monthly Implied Forward Prices for June through October increased this week. Trends in cultivation licensing in California, the country’s largest legal cannabis market, are leading to fewer permitted operators overall, as we discussed in detail in last week’s report.

 

Meanwhile, those California growers that are able to gain annual or provisional licenses are required to use the state’s track-and-trace system, leading to the regulated market becoming increasingly closed off to unlicensed production. Reports from the field indicate that this should tighten supply progressively, at least until the fall harvest.

 

At $1,075 per pound, the June Forward represents a discount of 10.1% relative to the current U.S. Spot Price of $1,196 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Sample Headlines From This Week’s Premium Report:

  • California

  • State Spot Index Ascends to Highest Point Since January, As Volume-Weighted Price for Outdoor Flower Reaches New Annual Peak
  •  
  • Colorado

    Overall Stability in Wholesale Pricing Observed in Nation’s Most Mature Market This Year, But Modest Downward Trend Has Developed in Recent Weeks

  • Oregon

  • State Spot Index Jumps to Settle Just Below Current Year-to-Date High
  •  
  • Washington

  • Bill That Would Have Allowed Business Owners to Hold More Licenses and Permitted Some Out-of-State Investment Did Not Pass This Year
  •  
  • Illinois

  • Retail Demand in April Up 81% Year-Over-Year, Yet Wholesale Prices Fell for the First Time in 2019

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

24 May 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 24, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 24, 2019

The CCSI moved higher to C$7.33 per gram this week, from last week’s C$6.96 per gram. This week’s price equates to US$2,346 per pound at current exchange rates.

 

This week we take a closer look at the cannabis excise duty rates charged by each province.

 

The Government of Canada’s Department of Finance lays out the Federal and Provincial excise duty rates payable by licensed cannabis producers. These duties are paid when the cannabis products they produce and package are delivered to a provincially-authorized distributor/retailer or final consumer.

 

The Cannabis Benchmarks’ CCSI monitors wholesale transactions between the provincial regulatory bodies and market distribution centers, such as the online provincial stores and private or public brick and mortar stores; hence the CCSI is inclusive of the average Canadian cannabis excise duties.

 

Based on Cannabis Benchmarks’ calculation for this week’s price assessment of C$7.33, the duties vary widely from on province to the next. Manitoba has the lowest cannabis excise duties at C$0.25 per gram, while Alberta’s inclusion of a sales tax adjustment takes the duties to a whopping C$1.75 per gram.

Source: Govt of Canada Department of Finance, Cannabis Benchmarks

This week, the average Canadian excise duty (population weighted average) is calculated to be C$1.14 per gram. Therefore, without the duty, this week’s average LP selling price is C$6.19 per gram, or US$2,086 per pound at current exchange rates.

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

24 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

May 17, 2019

CANADA CANNABIS SPOT INDEX — May 17, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 17, 2019

The CCSI declined by 7.8% to C$6.96 per gram this week, from last week’s C$7.55 per gram. After a momentary uptick last week, prices returned to levels observed throughout April and May. This week’s price equates to US$2,346 per pound at current exchange rates.

 

After a challenging start to the legalization of dry cannabis last year, major licensed producers (LPs) are better prepared for the upcoming launch of vapes and edibles. While supply shortages and the slow opening of retail cannabis stores set the new industry off to a slow start, conditions might be different for phase two of the Canadian cannabis market with strong consumer demand for vapes and edibles. The official launch date has not been released, but it has been stated that these new product categories will commence sometime before October 17, 2019.

 

 

On Tuesday, one of the largest LPs, Aurora Cannabis, stated in its earnings call that it is working towards reducing its production cost while building inventory for the launch of edibles and vaping products. It is doing so by controlling costs and taking advantage of economies of scale as it makes strides towards its goal of building out a production capacity of 625,000 kg/year of dry cannabis.

 

With the start of the Edmonton Aurora Sky and Bradford facilities, Aurora’s production has increased to 150,000 kg and they have brought their cost per gram of dried product down to $1.42 from $1.92. The company anticipates continued reduction in its production and manufacturing costs with an expectation of it trending below $1 per gram. It should be noted that their average net selling price was also down to $6.40 from $6.80 per gram.

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

17 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved