February 28, 2020

U.S. Cannabis Spot Index — February 28, 2020

U.S. Cannabis Spot Index — Published February 28, 2020

U.S. Cannabis Spot Index down 4.4% to $1,358 per pound.

 

The simple average (non-volume weighted) price decreased $107 to $1,578 per pound, with 68% of transactions (one standard deviation) in the $861 to $2,296 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $2.99 and the simple average price was $3.48.

 

The relative frequency of trades for greenhouse flower decreased by 5% this week. The relative frequencies of deals for indoor and outdoor product increased by 3% and 2%, respectively. 

Greenhouse product’s share of the total reported weight moved nationally contracted by 4% this week. The relative volume of outdoor flower expanded by the same proportion, while that for warehouse flower was unchanged.

U.S. Spot Index declined by 4.4% this week to settle at $1,358 per pound. Overall on a national level, and in the West Coast states individually, outdoor flower has been observed to have been coming to market in increased amounts in recent weeks. Average deal sizes for such product, as well as its proportions of the total amount of flower documented to have been traded, have been on the rise. Although prices for outdoor product are generally strong relative to a year ago, the greater prevalence of the lowest-priced grow type has contributed to the recent downward trend in the national composite price. 

 

Meanwhile, the recent development of slightly falling prices in the states with the newest adult-use markets persisted this week. However, assessments of both adult-use and medical product prices were observed to stabilize overall this week in Illinois, Michigan, and Massachusetts. However, in the latter state, sales continue to grow while production has stagnated in the past four months. Additionally, production data out of Michigan reviewed in previous reports indicates that a lull in harvests could occur at some point in the coming weeks, leading to tighter supply.

March Forward assessed down $40 to close at $1,435 per pound.

 

The average reported forward deal size was 40 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 50%, 34%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 44 pounds, 33 pounds, and 39 pounds, respectively.

 

At $1,435 per pound, the March Forward represents a premium of 5.7% relative to the current U.S. Spot Price of $1,358 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

State Officials Release Proposed Regulations to Establish Appellations of Origin for Cannabis Products

Arizona

January 2020 Sales Volumes Slip Slightly for Second Straight Month; Still Up 30% YoY

 

Massachusetts

Monthly Adult-Use Revenues Top $50 Million for the First Time in January as State Spot Ascended Above 2019 Peaks   

       

Illinois

Medical Cannabis Sales Down Almost 15% in January, While Average Flower Price for Patients Rose 5%

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

28 February 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — February 28, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published February 28, 2020
image1

*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$6.36 per gram this week, up 1.3% from last week’s C$6.28 per gram. This week’s price equates to US$2,168 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week, we analyze newly released retail sales data from Statistics Canada. With the December 2019 data release, we now have a complete look at sales for the 2019 calendar year. Total Canadian recreational cannabis sales for 2019 are reported to be C$1.19 billion. December sales were C$146M, a jump of C$11M, or 8%, from the previous month. The increase in revenue is largely due to more physical stores opening. As reported last week, we counted 770 more retail stores across Canada as of February 2020, with the number expanding from less than 600 in November 2019 to over 650 in December 2019.

Source: Cannabis Benchmarks, Statistics Canada

The 2019 calendar year was largely restricted to Cannabis 1.0 products. Cannabis 2.0 products were available in the last few weeks of 2019, although selection and supply were quite limited. In our January 10 report, we clarified the new product types available in the Cannabis 2.0 era.

  • Cannabis 1.0 refers to the first phase of THC product legalization in Canada, which included the sale of dry flower (combustible products) and cannabis oils, as well as cannabis plants and seeds. 

  • Cannabis 2.0 refers to the legalization of edibles, extracts, and topicals.

In the Cannabis 1.0 era of legalization, the relationship between store counts and sales was observed to be predictable through a logarithmic relationship; in other words, there was a rapid rise, followed by a leveling off of daily sales as more physical outlets opened and total dollars spent were distributed over a greater number of locations. The average daily sales per store in Canada over Q4 2019 was C$7,300. This is a drop from Q3 2019, when average daily in-store sales were C$8,660.

 

In the chart below, the number of stores licensed and operating in Canada is shown on the x-axis, with average daily Canada-wide sales on the y-axis.

Source: Cannabis Benchmarks

Extending that relationship forward, we can roughly gauge where sales will go based on how many stores open. This is a generalized model for all of Canada. We recognize that incremental opening of stores in a province such as Alberta, which is already home to 55% of the nation’s licensed shops, would have a dramatically different impact on national sales than new stores opening in Ontario, the most populous province in the country where there are only 31 locations operating at the moment. In today’s analysis, we are simply affirming the general point that more stores will help grow sales; this argument has also been put forward by the management of almost every major licensed producer in Canada. In the chart above, we have also outlined the impact of Cannabis 2.0 products hitting the shelves. These newly available products are expected to boost sales by providing more product variety, as well as attracting consumers that might be averse to smoking. Additionally, Cannabis 2.0 products generally have higher price points than flower, which will likely expand sales revenue as existing consumers seek out novel experiences. As the chart illustrates, we anticipate sales jumping to a new trajectory line this year. We expect in-store sales to be 25% higher than they would have been if Canada continued with only Cannabis 1.0 products by the end of this year. Our forecast for January retail sales is C$155M, rising to C$161M in February.

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.

If you missed our announcement last week:

We are pleased to share that Cannabis Benchmarks® has begun disseminating its Canada cannabis index data through Nasdaq’s GIDS service. These unbiased indexes provide a variety of benefits for this emerging commodity, including:

 

– making it easier to reference the market value of product in buy/sell negotiations,
– writing spot and forward contracts on a published index,
– third-party validation for asset valuation (e.g., biological assets), and
– paving the way for more sophisticated financial instruments for hedging, trading, and risk management (e.g., swaps, futures, and other derivative contracts).


Click to read the full press release: Cannabis Benchmarks® Distributes its Canada Cannabis Pricing Indexes on Nasdaq Global Index Data Service

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

Do you support wholesale market transparency?

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

28 February 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

February 21, 2020

U.S. Cannabis Spot Index — February 21, 2020

U.S. Cannabis Spot Index — Published February 21, 2020

U.S. Cannabis Spot Index down 2.6% to $1,421 per pound.

 

The simple average (non-volume weighted) price decreased $2 to $1,685 per pound, with 68% of transactions (one standard deviation) in the $929 to $2,442 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.13 and the simple average price was $3.72.

 

The relative frequency of trades for indoor flower increased by 3% this week. The relative frequencies of deals for greenhouse and outdoor product decreased by 1% and 2%, respectively. 

 

 

Greenhouse product’s share of the total reported weight moved nationally contracted by 4% this week. The relative volumes of warehouse and outdoor flower expanded by 3% and 1%, respectively.

The U.S. Spot Index declined by 2.6% this week to settle at $1,421 per pound. The trend lines of the Spot Indices of each of the country’s four largest markets are all on the downswing for the first time since early 2019. In the West Coast states, the overall declines in wholesale flower pricing are due primarily to falling rates for outdoor product. Such flower saw both its national relative volume and average deal size grow this week, indicating that additional amounts of last year’s autumn crop are coming to market.

 

We have pointed out in prior reports that historical sales data shows the first two months of any given year are generally a period of lower demand relative to March, when sales have been observed to spike in numerous adult-use markets, as well as medical ones in some cases. Retailers preparing for increased sales in the coming spring season may be bringing in lower-priced outdoor flower as inventory in order to help boost margins. Wholesale prices for such product indicate that supply is ample; this week’s volume-weighted rate for outdoor flower is off by 20.3% from the opening week of this year. 

 

 

In addition to falling prices in the four largest markets, the states with the newest adult-use systems – Massachusetts, Michigan, and Illinois – have also seen wholesale flower rates subside in recent weeks. Prior to that, climbing prices in those states provided some upward pressure on the U.S. Spot.

March Forward unchanged at $1,475 per pound.

 

The average reported forward deal size was 41 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 49%, 34%, and 17% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 46 pounds, 34 pounds, and 39 pounds, respectively.

 

At $1,475 per pound, the March Forward represents a premium of 3.8% relative to the current U.S. Spot Price of $1,421 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

Revised Definition of “Wholesale Cost” Could Lower Tax Burdens of Retailers in Some Cases

Colorado

Flower Production Up, but Demand Down YoY in H1 2019; Consumers Turned Increasingly to Concentrates and Edibles in First Half of Last Year

 

Oregon

Retail Sales Down Slightly in January, but Largely Stable at About $67.5 Million, as Monthly Harvest Volume Up Around 20% YoY   

       

Michigan

Medical Cannabis Sales Rise 1.4% in January to $25.2 Million; Adult-Use Retail Revenue Up 41% MoM to $9.8 Million

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

21 February 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — February 21, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published February 21, 2020
image1

*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$6.28 per gram this week, down 0.5% from last week’s C$6.31 per gram. This week’s price equates to US$2,151 per pound at the current exchange rate.


Company Announcement:

We are pleased to share that Cannabis Benchmarks® has begun disseminating its Canada cannabis index data through Nasdaq’s GIDS service. These unbiased indexes provide a variety of benefits for this emerging commodity, including:

– making it easier to reference the market value of product in buy/sell negotiations,
– writing spot and forward contracts on a published index,
– third-party validation for asset valuation (e.g., biological assets), and
– paving the way for more sophisticated financial instruments for hedging, trading, and risk management (e.g., swaps, futures, and other derivative contracts).


Click to read the full press release: Cannabis Benchmarks® Distributes its Canada Cannabis Pricing Indexes on Nasdaq Global Index Data Service

Join our Price Contributor Network If you have not already done so, we encourage you to join our Price Contributor Network where market participants anonymously submit weekly wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week we look at how growth in the number of physical brick and mortar stores has been the key driver behind rising national cannabis sales. We now count 770 retail stores across Canada as of February, an increase of 47 stores from the previous month for a 6.5% growth rate.

Source: Cannabis Benchmarks, Statistics Canada

Alberta still has the highest store count with 420 stores, or 55% of the cannabis stores across Canada. As expected, Alberta, with the largest concentration of stores, has greater sales per capita than the other large provinces. While all other major provinces saw new store openings, this month was particularly important for Ontario. Stores from Ontario’s second lottery that was conducted in August 2019 opened this month. Six new stores of the 42 licenses issued opened in Canada’s largest province, which takes Ontario’s total to 31 retail outlets. 

 

As new stores have opened across the country, they have provided more convenient access to cannabis users who previously purchased from the illicit market or were pushed to the provincial online stores. This has been positive for the industry as the customer base continues to grow. We have heard from many cannabis users that the online experience is convenient, but they prefer walking into a store to see product variety, take in the aromas, and hear from experienced staff.

As seen in newly released data from Statistics Canada, the opening of new stores has coincided with a large drop in online sales as a proportion of overall revenue. At the onset of legalization, the lack of retail stores resulted in 44% of total sales coming from online provincial marketplaces. The latest data for September shows only 6% of sales coming from online stores.

Source: Cannabis Benchmarks, Statistics Canada

We project this downward trend in online buying to continue, and forecast monthly sales of $6.6M, or daily sales of $220,000, for all Canadian online stores for the month of November. We expect the growth in store counts, lower priced products, shrinking retail margins, and new cash and carry models will put immense pressure on provincial government run stores that continue to operate in the red. In our opinion, this could eventually lead to the privatization of online sales

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?

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

21 February 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

February 14, 2020

U.S. Cannabis Spot Index — February 14, 2020

U.S. Cannabis Spot Index — Published February 14, 2020

U.S. Cannabis Spot Index up 0.1% to $1,459 per pound.

 

The simple average (non-volume weighted) price increased $50 to $1,687 per pound, with 68% of transactions (one standard deviation) in the $929 to $2,445 per pound range. The average reported deal size increased to 2.0 pounds. In grams, the Spot price was $3.22 and the simple average price was $3.72.

 

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

 

Warehouse product’s share of the total reported weight moved nationally contracted by 2% this week. The relative volume of greenhouse flower expanded by the same proportion, while that for outdoor product was unchanged.

The U.S. Spot Index rose by 0.1% this week to settle at $1,459 per pound. This week’s small increase in the national composite rate is due to an uptick in the U.S. price for indoor flower. Meanwhile, prices for outdoor flower have been trending downward to open this year. A similar trend was observed through the first quarter of 2019, after which rates for outdoor product began to rise in April, along with the U.S. Spot Index. This year, strong prices for warehouse flower have buoyed the national composite rate so far in Q1; if prices for outdoor product turn upward in the spring and summer, as they did last year, then the U.S. Spot appears poised to climb into territory not observed last year, as this week’s price is already just $5 off of 2019’s peak.

 

New data out of Colorado and Oregon shows that sales in December 2019 did not experience the uptick that has been observed in that month in previous years. However, year-over-year sales growth in both markets was strong in 2019. Colorado saw demand – measured in terms of total retail sales revenue – increase by about 13% from 2018 to 2019, after sales stagnated somewhat in the former year. Oregon’s market saw about a 22% year-over-year rise in sales in 2019, comparable to the rate of expansion documented in 2018. Those trends helped boost wholesale prices in both markets last year, with rates in both states holding relatively steady to begin 2020. Colorado and Oregon are the second and fourth largest legal cannabis markets in the country, respectively, in terms of retail revenue.

March Forward unchanged at $1,475 per pound.

 

The average reported forward deal size was 42 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 36%, and 17% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 46 pounds, 32 pounds, and 46 pounds, respectively.

 

 

At $1,475 per pound, the March Forward represents a premium of 1.1% relative to the current U.S. Spot Price of $1,459 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:

Colorado

Total Retail Sales Reach Nearly $1.75 Billion in 2019, Up 13% YoY

Oregon

Retailers Tallied About $792 Million in Sales in 2019, Including Almost 220,000 Pounds of Flower Sold to Consumers and Patients

Washington

Bill Would Allow Producers & Processors to Provide Discounts to Retailers in Wholesale Transactions             

 

Nevada

November 2019 Retail Sales Approach $61 Million, Down Almost 3% From October

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

Do you support wholesale market transparency?

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

14 February 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved