June 28, 2019

CANADA CANNABIS SPOT INDEX — June 28, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 28, 2019

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$7.25 per gram this week, up 4.2% from last week’s C$6.81 per gram. This week’s price equates to US$2,500 per pound at current exchange rates.

 

This week we focus on the estimated wholesale to retail pricing for one of Canada’s largest licensed producers to the country’s four most populous provinces: British Columbia (BC), Quebec, Ontario, and Alberta.

 

We started our analysis by identifying the same five product names from a single licensed producer on each of the four online provincial sales portals (accessed June 27, 2019). Prices for each product varied quite a bit across the provincial sales sites. Additionally, there was no consistency to the variation, as no single province had either the lowest or the highest prices across any of the five products. To simplify the analysis, we calculated the average retail price per gram of the five products in each province.

  

 

The average retail price per gram for the five products, before sales tax, is shown in the chart below. As can be seen, Alberta has the highest retail prices, on average, for the products in question. Mean prices in Alberta were C$2/gram, or 22%, higher than the retail prices in BC. Ontario and Quebec fell in the middle.

Source:Cannabis Benchmarks, sqdc.ca, bccannabisstores.com, ocs.ca, albertacannabis.org

To calculate the average wholesale prices at which each of the provinces sells to public and private retailers, we reviewed order data and surveyed retailers on expected margins, revealing a typical retail markup in the range of 40-50%. By stripping out a 45% margin from the above retail prices, we determined the wholesale transaction prices of the five products and compared them to the aggregated wholesale transaction prices reflected in the weekly CCSI. 

 

The average estimated provincial selling (wholesale) price per gram for our group of products is shown in the chart below.

Source:Cannabis Benchmarks

The average across the four provinces was C$6.97, slightly below this week’s assessed price of C$7.25, but comparable to the CCSI’s trailing 4-week average, which is C$7.07.

 

The last piece of our analysis revolved around better understanding the average net selling price for this specific producer. To calculate the average net selling price, we deducted the Canadian federal and provincial excise duty using the framework provided by the government. Based on these calculations, a flat rate of C$1.00/gram was charged to the producer when selling into BC and Quebec. For dried cannabis sold to Alberta and Ontario, there was an additional cannabis duty, resulting in a total estimated excise taxes of C$1.71/gram for Alberta and C$1.18/gram for Ontario. 

 

After removing the excise taxes, we finally arrived at the average net selling price for the group of five products under examination.

Source:Cannabis Benchmarks

The average selling price across the four provinces was C$5.74. Coincidentally, this falls very much in line with their reported average net selling price from their most recent quarterly earnings statements. Our analysis shows that our spotlight producer gets a very similar price when selling into three of the four provinces, but receives up to 11% less when selling to the province of British Columbia.

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

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

28 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — July 5, 2019

U.S. Cannabis Spot Index — Published July 3, 2019

For Week Ending July 5, 2019

— Abbreviated Holiday Edition —

U.S. Cannabis Spot Index down 0.2% to $1,278 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,455 per pound, with 68% of transactions (one standard deviation) in the $651 to $2,259 per pound range. The average reported deal size decreased to 2.5 pounds. In grams, the Spot price was $2.82 and the simple average price was $3.21.

 

The relative frequency of trades for indoor flower increased by 2% week-over-week. The relative frequencies of transactions involving greenhouse and outdoor product each decreased by 1%. Warehouse flower’s share of the total documented weight moved expanded by about 2%, while that for greenhouse product grew by roughly 4%. The relative volume of outdoor flower contracted by a corresponding proportion. 

January 2020 Forward initially assessed at $1,055 per pound.

 

The average reported forward deal size was unchanged at 49 pounds. 

 

At $1,150 per pound, the August Forward represents a discount of 10% relative to the current U.S. Spot Price of $1,278 per pound.

 

The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

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

5 July 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

June 21, 2019

CANADA CANNABIS SPOT INDEX — June 21, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 21, 2019

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$6.96 per gram this week, down 3.9% from last week’s C$7.24 per gram. This week’s price equates to US$2,370 per pound at current exchange rates.

This week we focus on Health Canada’s newly released regulations on cannabis extracts, edibles, and other infused products. The rules will permit the production, distribution, and sale of three new product categories:

  • Edibles – candy, baked goods, beverages

  • Extracts – vapes, oils, resins

  • Topicals – ointments, oils, soaps, makeup

 

The plan sets mid-December as the launch date. The regulations contain very strict packaging and labelling guidelines to diminish appeal to minors and will be thoroughly assessed for flavour, shapes, and branding. Additionally, the proposed products will also be limited to individual packages not exceeding 10mg of THC. As a result, consumers should expect limited selection of products at the outset.

 

With the anticipation of these new products becoming available sometime around the first anniversary of cannabis legalization, there has been a massive build up of finished and unfinished cannabis oil. According to Health Canada’s Cannabis Tracking Program, as of the end of March, 62,188 litres of finished cannabis oil were sitting within facilities owned by the federally licensed producers (LPs) or distribution points. This inventory has been steadily growing, with a big transfer of product from LPs to retailers taking place in the month of March.

 

Source: Health Canada, Cannabis Benchmarks

In addition to that inventory, there was 35,867 litres of unfinished inventory waiting to be processed at the LPs’ sites.

Source: Health Canada, Cannabis Benchmarks

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

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

21 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — June 21, 2019

U.S. Cannabis Spot Index — Published June 21, 2019

U.S. Cannabis Spot Index up 0.3% to $1,259 per pound.

 

The simple average (non-volume weighted) price declined $16 to $1,429 per pound, with 68% of transactions (one standard deviation) in the $619 to $2,238 per pound range. The average reported deal size decreased to 2.5 pounds from 2.7 pounds last week. In grams, the Spot price was $2.78 and the simple average price was $3.15.

 

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

 

The U.S. Spot Index rose marginally for the second straight week, increasing by 0.3% to settle at $1,259 per pound. This is the fifth consecutive week in which a new annual peak was established for the national composite price. Notable declines in the Spot Indices of California and Nevada this week diminished upward pressure on the national average from rising rates in Colorado, Oregon, and Washington State. As we expand upon below, Oregon’s market is experiencing unprecedented demand in recent months, while available information indicates that sales in Washington in March and April reached near-record levels. In regard to mid-sized markets, wholesale rates in Massachusetts and Michigan were on the upswing this week, but are not climbing as rapidly as they were earlier in the year. Meanwhile, Illinois’ Spot price has trended downward in Q2 after rising to one of the highest in the country at the close of Q1, while increased production in New Mexico is pushing down rates in that market.  

The national volume-weighted price for flower to be sold to general consumers jumped this week on increases in Colorado, Oregon, Washington, and Alaska. Prices for medical flower were down this week, due mainly to declines in California, Colorado, Illinois, and New Mexico.  

July Forward unchanged at $1,200 per pound.

 

The average reported forward deal size was 50 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 59%, 30%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 57 pounds, and 64 pounds, respectively.

 

At $1,200 per pound, the July Forward represents a discount of 4.7% relative to the current U.S. Spot Price of $1,259 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

  • Relative Volume of Outdoor Flower Traded in Legal Market is Decreasing in Q2 as Thousands of Temporary Cultivation Licenses Expire
  •  
  • Colorado

    Medical Cannabis Sales in Denver Up Year-Over-Year, Breaking from Statewide Trends

  • Oregon

  • Monthly Retail Revenue Reaches New Record High in May Even as Sales Volume Declines, Indicating Higher Price Points for Customers
  •  
  • Washington

  • Blackout of Plant and Inventory Tracking System Will Prevent Wholesale Trading for 30 Hours Beginning Night of July 13th
  •  
  • Arizona

  • State Spot Index on the Rise in May as New Sales Volume Records Established and State’s Patient Count Tops 200,000
  •  
  • New Mexico

  • State Data Shows Over 75% Expansion of Production in Q1 2019 from Rise in Plant Count Limits, Larger Harvests Pushing Down Spot Index in Current Quarter

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

21 June 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

June 14, 2019

U.S. Cannabis Spot Index — June 14, 2019

U.S. Cannabis Spot Index — Published June 14, 2019

U.S. Cannabis Spot Index up 0.4% to $1,256 per pound.

 

The simple average (non-volume weighted) price increased $13 to $1,445 per pound, with 68% of transactions (one standard deviation) in the $619 to $2,270 per pound range. The average reported deal size increased to 2.7 pounds from 2.6 pounds last week. In grams, the Spot price was $2.77 and the simple average price was $3.18.

 

The relative frequency of trades for outdoor flower increased by 2% week-over-week. The relative frequency of transactions involving greenhouse product decreased by the same proportion, while that for deals for indoor flower was unchanged. Outdoor product’s share of the total documented weight moved nationally also expanded by 2% this week. The relative volume of greenhouse flower contracted by the same proportion, while that for warehouse flower was unchanged.   

 

The U.S. Spot Index rose by 0.4% this week to settle at $1,256 per pound, establishing a new year-to-date peak for the fourth consecutive week. All four of the major Western markets – California, Colorado, Oregon, and Washington – saw upticks in their composite prices this week. Positive trends in rates for outdoor flower in California and Oregon continued to lift the Spot Indices of those states, while volume-weighted prices for greenhouse product in Colorado and Washington rose to year-to-date highs. In contrast to last year at this time, upward price pressure on the national average is also originating from Massachusetts, Michigan, and Nevada. Massachusetts’ young adult-use market generated over $30 million in retail sales in both April and May, as we expand upon further below, after opening in late November last year. 

The national volume-weighted price for flower to be sold to general consumers jumped this week on increases in every functioning adult-use market except for Nevada, which saw only a slight decrease. Prices for medical flower were down this week, mainly on declines in California and Arizona.

July Forward assessed up $75 to $1,200 per pound.

 

The average reported forward deal size was 48 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 56%, 28%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 41 pounds, 51 pounds, and 64 pounds, respectively.

 

At $1,200 per pound, the July Forward represents a discount of 4.4% relative to the current U.S. Spot Price of $1,256 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

  • Monthly Average Prices in Adult-Use Sector Declined in each Month from January through May, But Weekly Rates for Recreational Flower Are on the Rise Recently
  •  
  • Colorado

    Retail Sales Declined in April, While State Spot Index Stabilized to Close the Month After Early Declines

  • Oregon

  • State Spot Index Jumps to New Annual Peak, Settling Above $700 Per Pound for First Time in 2019
  •  
  • Washington

  • Composite Price Climbs to Year-to-Date High on Rising Rates for Indoor and Greenhouse Flower
  •  
  • Massachusetts

  • Adult-Use Retail Demand and Production Both Increased Significantly in May, as Wholesale Prices Declined by Small Margins
  •  
  • Illinois

  • Retail Medical Cannabis Sales Reached New Record High for Fourth Straight Month in May, Up by Almost 90% Year-Over-Year

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

14 June 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved