January 10, 2020

U.S. Cannabis Spot Index — January 10, 2020

U.S. Cannabis Spot Index — Published January 10, 2020

U.S. Cannabis Spot Index down 0.4% to $1,391 per pound.

 

The simple average (non-volume weighted) price decreased $30 to $1,576 per pound, with 68% of transactions (one standard deviation) in the $929 to $2,224 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.07 and the simple average price was $3.48.

 

The chart below shows the course of the Cannabis Benchmarks® U.S. Spot Index from its inception in April 2015 through the end of 2019.

The U.S. Spot Index declined by 0.4% this week to settle at $1,391 per pound. The significant Q4 price decline typically observed in prior years did not come to fruition in 2019. However, since around mid-November the national composite price has displayed a modest downward trend. Wholesale prices also trended downward a bit from the final week of 2018 through the end of January 2019, a period in which they declined by by 1.5%, from $1,175 to $1,157 per pound. Product from a prior year’s fall harvest continuing to come to market, along with generally depressed sales in the wake of the end-of-year holiday season, traditionally apply downward pressure to wholesale cannabis prices to open any given year. Based on early data from the opening weeks of 2020, it appears that such trends are holding in California, Colorado, and Oregon. 

 

As we noted last week, though, the new and expanding adult-use markets of Massachusetts, Michigan, and Illinois will influence national wholesale rates in a manner that they have not in prior years. Still, at the moment those markets are relatively small in terms of the volume of product being moved, despite posting some impressive gross sales figures. For example, Massachusetts adult-use retailers racked up over $445 million in sales in 2019, almost a third of Colorado’s combined adult-use and medical retail revenue in 2018. However, Massachusetts growers harvested less than a tenth of the number of plants in 2019 that Colorado cultivators did in 2018, emphasizing the significantly higher prices in the East Coast’s only regulated adult-use market.

Upward pressure on the national price for recreational product came from the new markets of Michigan and Illinois, where adult-use flower prices were assessed at $3,499 and $3,036 per pound, respectively. Additionally, the rate for adult-use product in Massachusetts was observed to settle at $3,355 per pound this week. However, downturns in the recreational sectors of the markets of California and Colorado, as well as in Oregon, outweighed the higher prices in the newer, smaller markets and resulted in the small decrease in the national rate.

February Forward unchanged at $1,450 per pound.

 

The average reported forward deal size was 47.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 46%, 36%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 50 pounds, 42 pounds, and 50 pounds, respectively.

 

At $1,450 per pound, the February Forward represents a premium of 3.8% relative to the current U.S. Spot Price of $1,391 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

Volume-Weighted Price for Indoor Flower Jumps Over $2,000 Per Pound for First Time in Over Three Years

 

Oregon

State Spot Index Has Stabilized from November 2019 to Present After Significant Volatility Earlier in 2019

 

Nevada

Total Sales in October 2019 Reached Over $62.5 Million, Just Short of Record Set in August 2019

 

Michigan

State Spot Index Jumps to Over $2,500 Per Pound for First Time in Over Three Years

 

Massachusetts

Adult-Use Retailers Realized Over $445 Million in Gross Sales in 2019, Despite Small Number of Storefronts Licensed

 

Illinois

State Spot Index Climbs Almost $200 in Two Weeks as Retailers Rang Up Over $10 Million in Sales in First Five Days of Adult-Use Legalization

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

10 January 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 10, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 10, 2020

*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$6.51 per gram this week, down 1.8% from last week’s C$6.61 per gram. This week’s price equates to US$2,260 per pound at the current exchange rate. 

Let’s start by clarifying the definition of Cannabis 1.0 and Cannabis 2.0.

Cannabis 1.0 refers to the first phase of THC product legalization in Canada, which included the sale of dry flower (combustible products), cannabis oils, and cannabis plants and seeds. These products first became available for recreational use on October 17, 2018. At the outset, this new industry faced some turbulence in the form of supply shortages that quickly turned into oversupply. Today, with over 100 different licensed producers (LPs), the market is flooded with dry flower of different qualities and strengths. Consumption has not tracked with the growth in supply; most cannabis consumed in Canada is still bought from illicit sources due to the legal market’s inadequate accessibility and high prices.

Cannabis 2.0 refers to the legalization of edibles, extracts, and topicals. While these expanded product lines were formally permitted on the one-year anniversary of legalization in October 2019, a full product offering is not yet available in most provinces due to regulatory timelines and approval processes put in place by Health Canada. Cannabis cultivators are required to apply for an amended license, submit products for a 60-day review period, and pass strict quality assurance standards. When products meet these criteria, they may be introduced to the market; hence the earliest these products could be available would have been Dec 17, 2019.

As of this week, while most provinces are authorized to sell these products, retailers have very limited, if any, product selection.

Major Provinces Cannabis 2.0 roll out details:

Saskwetchwan & Manitoba: Limited product available as of late December, with more selection available at retail shops expected in late January.

Quebec: Limited products available as of January 1. 

Ontario: Limited selection available in stores starting January 6. Stores have been given a head start in selling new products ahead of the provincial online store due to limited availability initially. The online store is scheduled to start sales on January 16.

British Columbia: The BC online store had its first batch of four products available on December 20. Products were to arrive in stores by late December

Alberta: Products are expected to be available in mid-January.

Per-item prices for edibles are expected to range from $7 to $14, beverages are set to cost between $4 and $10 each, and vapes will be priced anywhere from $25 to $125 per unit. 

Cannabis 2.0 is expected to kick start additional demand in the legal market. Despite many stores not being stocked with the new product offerings currently, LPs are more prepared this time around relative to the start of Cannabis 1.0. The initial supply shortages are not expected to persist for as long as the shortages for dried flower and oils that occurred in late 2018 and early 2019. These products will fetch a hefty premium over dry cannabis, as this category does not compete directly with most cannabis products coming from the illicit market.

The variety of products should expand the current cannabis user base by bringing in novelty buyers, as well as attracting consumers away from the illicit market. We anticipate additional spending for Cannabis 2.0 products and forecast the boost in sales to reach 25% of the total spend in this market by Q4 2020.

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

10 January 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

January 3, 2020

U.S. Cannabis Spot Index — January 3, 2020

U.S. Cannabis Spot Index — Published January 3, 2020

U.S. Cannabis Spot Index down 1.0% to $1,397 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,607 per pound, with 68% of transactions (one standard deviation) in the $963 to $2,251 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.08 and the simple average price was $3.54.

 

The relative frequency of trades for indoor flower decreased by 2% this week. The relative frequency of deals for greenhouse product increased by the same proportion, while that for transactions involving outdoor flower was unchanged. 

 

 

Greenhouse flower’s share of the total reported weight moved nationally expanded by 2% this week. The relative volumes of warehouse and outdoor product each contracted by 1%.

The U.S. Spot Index declined by 1% this week to open 2020 at $1,397 per pound. Although down marginally week-on-week, this week’s national composite price is up by about 20% compared to a year ago. 

 

In 2019, the U.S. Spot was generally on the downswing in the opening quarter of the year, sliding to reach its annual low in the first week of April. However, several factors not present in 2019 will likely apply upward pressure to wholesale prices in Q1 2020. The opening of adult-use sales in Illinois, as well as the continued expansion of that sector of the market in Michigan, has generated significant new demand not present a year ago, while cultivators in both states still need time to ramp up production to full capacity. Additionally, wholesale prices in Washington State have continued to climb to begin 2020 with reports that 2019’s harvest was smaller than in prior years. 

 

Other sources of upward price pressure observed last year may subside in 2020. Whether the significant growth in sales documented in California, Colorado, and Oregon in 2019 will continue into this year is an open question. Furthermore, 2019’s autumn crops could drive down prices in the two aforementioned West Coast markets through at least the opening quarter of this year, as they did last year.

The national volume-weighted price for flower to be sold to general consumers increased this week. Rises in Oregon, Washington, and Nevada – as well as the addition of an average price of $3,057 per pound for adult-use product in Illinois – outweighed small decreases in California and Colorado’s recreational sectors. The national price for medical flower dropped this week on decreases in that section of the market in California, Colorado, and Illinois, in addition to falling rates in the medical-only systems of Arizona, Connecticut, Maine, and Washington, D.C.

July Forward initially assessed at $1,455 per pound.

 

The average reported forward deal size was nominally unchanged at 48 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 46%, 36%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were nominally unchanged at 50 pounds, 43 pounds, and 50 pounds, respectively.

 

At $1,450 per pound, the February Forward represents a premium of 3.8% relative to the current U.S. Spot Price of $1,397 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

Flower and Trim Harvested On or After January 1st Now Subject to Required Testing for Heavy Metals

 

Oregon

State Spot Index Up About 90% Compared to Opening Week of 2019

 

Michigan

Medical Cannabis Sales Up Over 30% in Q3 2019, But Declines in Flower Sales Volume in August & September Indicate Tight Supply

 

Illinois

Retail Revenue on First Day of Adult-Use Sales Equivalent to 12% of All Medical Cannabis Sales Made in November

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

3 January 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 3, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 3, 2020

*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$6.61 per gram this week, down 2.1% from last week’s C$6.76 per gram. This week’s price equates to US$2,305 per pound at the current exchange rate. 

This week we examine the latest Statistics Canada data on retail cannabis sales by province. The release of data for October 2019 now gives us a view of sales expansion in each province over the course of the first year of Canada’s legal adult-use market. Total retail sales for October 2019 amounted to C$129M, or C$4.2M per day.


As seen in the chart below, retail sales grew steadily until August, after which they leveled off. The variances in average daily sales from August through October were within C$100,000 of an average of C$4.1M per day.

 

Source: Cannabis Benchmarks

Total national sales grew 240% from last November, but drilling into individual provinces tells quite a different story. Most provinces do show a big jump, but Manitoba saw almost no growth, while the Maritime Provinces actually saw a decline in monthly revenue.

Source: Cannabis Benchmarks

Notable aspects of the data include:

 

  1. Both Manitoba and the Maritime Provinces showed no growth over the year, even though the number of licensed stores grew and product prices dropped. 
  2. British Columbia’s sales grew by 1,201%. This is not entirely surprising; sizeable illicit market sales shifted to the legal side, as the number of licensed storefronts grew from less than 10 to over 100 in that time frame.
  3. Ontario – the largest province by population – experienced significant sales growth, but the most recent revenue figures are quite comparable to those of provinces such as Alberta, which has a much smaller population. 2020 should see Ontario’s sales break away from those of other, less populated provinces, as more stores open due to the Ontario government relaxing their retail store licensing process.
  4. Alberta has the most storefronts of all the provinces and this shows in the sales figures. Alberta sales grew by 253%, while the number of storefronts expanded by 580%.
  5. Saskatchewan sales were robust with a growth rate of 315% over the year. This is the only province where licensed producers can sell directly to retail stores, essentially cutting out the middle man (the Canadian government in this case). This keeps prices lower and more competitive with the black market. 

For more data and analytics like this, please sign up to become a BETA client of our market fundamentals dashboard. Please click the link below to register and we will email you directly as our platform becomes available.

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

03 January 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved