March 27, 2020

U.S. Cannabis Spot Index — March 27, 2020

U.S. Cannabis Spot Index — Published March 27, 2020

U.S. Cannabis Spot Index down 1.3% to $1,357 per pound.

 

The simple average (non-volume weighted) price decreased $26 to $1,565 per pound, with 68% of transactions (one standard deviation) in the $799 to $2,330 per pound range. The average reported deal size increased to 2.2 pounds. In grams, the Spot price was $2.99 and the simple average price was $3.45.

 

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

 

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

The COVID-19, or coronavirus, crisis continued to reshape legal cannabis markets in the U.S. this week. For the most part, cannabis businesses up and down the supply chain have been declared “essential” by regulators and remain open even under shelter-in-place or stay-at-home orders issued by state and local officials. However, in many cases operations have been compelled to alter their practices significantly, while some state and local regulators have shown a willingness to shutter adult-use cannabis businesses for public health concerns.

 

Early indications from California suggested that stay-at-home, shelter-in-place, and similar orders result in a surge of sales ahead of their effective period, but could result in a steep drop in demand if residents comply with the directives. Requirements to carry out sales “curbside” or via delivery now in effect in numerous states may also slow down the pace of sales, due to each customer taking longer to serve, and result in lower revenues generally.

 

Notably, the only current official sales data able to be located to this point comes from Oregon. As part of its announcement of temporary rules, noted below, the OLCC stated, “During the period of March 1-18, 2020, OLCC marijuana retailers have seen a 25-30% increase in sales compared to the same period last year.” However, the year-over-year increase noted by Oregon officials for the first two-and-a-half weeks of March is largely consistent with general sales growth observed in the state since last year. For 2019, annual sales increased by 23% compared to 2018, as we detailed in our report for January 24. We also noted last week that February 2020’s sales were up by 30% relative to those recorded in February 2019.

 

Given this context, it does not appear that the COVID-19 crisis spurred consumer demand for cannabis in Oregon significantly greater than the growth that was taking place already. However, in markets where year-over-year growth has been slowing – such as Colorado and Washington State, as well as Nevada – ramifications of the pandemic and reactions of consumers to stay-at-home orders may have led to different results.

April Forward closes down $25 to $1,375 per pound.

 

The average reported forward deal size was 37.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 35%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 30 pounds, and 37 pounds, respectively.

 

 

At $1,375 per pound, the April Forward represents a premium of 1.3% relative to the current U.S. Spot Price of $1,357 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:

National

 

  • Most Stay-at-Home Orders Classify Cannabis Businesses as Essential, Some States Mandate Major Operational Changes in Light of COVID-19
  • Apprehension About Possible Closures, Unwillingness to Take in Inventory Applying Downward Pressure to Wholesale Prices Despite Strong Demand

Colorado

Adult-Use Cultivators Will See Lower Tax Rate on Internal Transfers of Flower in Q2

 

Washington

Tax Payments and Late Payment Penalties Deferred Until Late April for Cannabis Businesses

       

Nevada

Cannabis Sales Permitted Only by Delivery; Lack of Tourism in Las Vegas Likely to Depress Demand Significantly

 

Massachusetts

Adult-Use Cannabis Operations Ordered to Cease Operations, Medical Businesses Still Open

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

27 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — March 27, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published March 27, 2020
1

*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$6.33 per gram this week, down 0.6% from last week’s C$6.37 per gram. This week’s price equates to US$2,010 per pound at the current exchange rate.

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Illegal to Essential

 

As the coronavirus crisis deepens in Canada, the regulatory and business landscape continues to change rapidly. Each province has made countless moves to contain COVID-19. At this point, most provinces have declared a “state of emergency” or a “public health emergency.” This led to a massive spike in medical and recreational cannabis sales over the past week as consumers stocked up on products ahead of any potential availability issues or retail store closures. 

 

The cannabis industry has already faced many challenges this year and closures to any part of the supply and distribution chain would be difficult to overcome. Canadian cultivators and retailers have already been struggling ahead of the pandemic, as they compete directly with lower priced and more accessible illicit markets. The same goes for ancillary businesses – including processing, packaging, distribution, delivery, and maintenance – that rely on continuous business operation to keep afloat.

 

In today’s report, we look at how each province is dealing with cannabis businesses and whether the provinces have qualified cannabis operations as essential services that will be allowed to operate as the country begins to mandate business closures, lay-offs, mandatory quarantine, and work from home programs. 

 

Alberta
The Alberta Government has declared a public health emergency but has not recommended that any business or workplace close. At this point the Alberta Gaming, Liquor and Cannabis Commission (AGLC) is allowing liquor and cannabis retail stores to remain open, but the province is presently reviewing potential additional measures, including further restrictions on businesses. As of now, Alberta has not produced a list of essential businesses.

 

British Columbia (BC)

BC has ordered a mandatory closure of all non-essential businesses, such as dine-in restaurants and personal services. The Public Safety Minister encouraged businesses that are listed as essential to follow the advice of the provincial health officer. Cannabis retailers and producers have been deemed essential under the food and agriculture service providers listing.

Ontario

The Ontario Government ordered the mandatory closure of all non-essential workplaces, effective March 25. This closure will be in effect for 14 days and may be extended. Cannabis retailers and producers will remain open, as they are listed as essential under the retail and wholesaling category.

Quebec
The Quebec Government has announced the closure of all non-essential businesses until April 13. This measure went into effect as of March 25. Quebec has listed cannabis retailers as an essential business. The provincial-run SQDC outlets will remain open, but will limit the number of customers permitted at any given time and will only process non-cash payments.

 

Saskatchewan

The Saskatchewan Government released a comprehensive list of critical public services and business services that will be allowed to continue operations on March 26. Cannabis retailers are amongst the critical businesses allowed to remain open.

 

Manitoba

The Manitoba Government is developing a list of essential businesses. At the moment, cannabis stores remain open, but it is still uncertain if they will be deemed an essential service.

Nova Scotia

The Nova Scotia Government declared a state of emergency on March 19, ordering any non-essential services to close. The provincial-run Nova Scotia Liquor Corporation has been allowed to remain open.

New Brunswick
The New Brunswick Government declared a state of emergency on March 19, ordering any non-essential services to close. Cannabis retailers are recognized as essential businesses and will remain open. 

 

Prince Edward Island (PEI)
The PEI government has taken the strongest actions of all provinces by closing all provincial-owned liquor and cannabis stores.

 

Newfoundland and Labrador
The Newfoundland and Labrador Government has declared a public health emergency. Cannabis retailers were not recognized as an essential service. All stores were closed on March 26.

 

Online sales from the provincial-run stores will still be allowed. The only change will be that Canada Post will discontinue home delivery as it will not be accepting signatures at one’s door, but customers may pick up their packages from a local post office.

 

 

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27 March 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

March 20, 2020

U.S. Cannabis Spot Index — March 20, 2020

U.S. Cannabis Spot Index — Published March 20, 2020

U.S. Cannabis Spot Index down 2.1% to $1,375 per pound.

 

The simple average (non-volume weighted) price decreased $27 to $1,591 per pound, with 68% of transactions (one standard deviation) in the $845 to $2,337 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.03 and the simple average price was $3.51.

 

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. 

 

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

Fallout from the COVID-19 – or coronavirus – pandemic continued to ripple across the U.S. this week. Reports from several states told of runs on legal cannabis retailers, as consumers and patients looked to stock up ahead of taking recommended social distancing and self-isolation measures. We noted in last week’s report that the COVID-19 pandemic could result in a short-term increase in demand due to such circumstances.

 

In other cases, such as in the San Francisco Bay Area, residents were ordered to “shelter in place,” or stay at home unless absolutely necessary, beginning Monday, March 16. However, while non-essential businesses in the Bay Area were ordered to close, licensed cannabis retailers were deemed essential and permitted to stay open. California Governor Gavin Newsom extended the shelter-in-place order to the entire state beginning Thursday, March 19. Yet, in virtually all states with legal cannabis markets, sales have continued through this week. Officials in numerous states have designated cannabis retailers – both medical and adult-use – as essential businesses for the time being.

 

A rundown from Leafly provides updates on many regulated cannabis markets in the U.S.

April Forward down $35 to $1,400 per pound.

 

The average reported forward deal size was 38 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 35%, and 17% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 31 pounds, and 36 pounds, respectively.

 

 

At $1,400 per pound, the April Forward represents a premium of 1.8% relative to the current U.S. Spot Price of $1,375 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

Northern California Grower States Wholesale Sales are Slow, Attributes to Shelter-in-Place Order for San Francisco Bay Area

Oregon

February Retail Sales Up 30% YoY

 

Michigan

February Sales and Production Data Indicates Supply is Loosening, Future Months Should See Bigger Harvests if Production is Not Disrupted by Pandemic

       

Arizona

Dispensaries Sell Almost 13,400 Pounds of Flower in February

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20 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — March 20, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published March 20, 2020
1

*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$6.37 per gram this week, down 3.1% from last week’s C$6.58 per gram. This week’s price equates to US$2,035 per pound at the current exchange rate.

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The Cannabis Industry and COVID -19

Sales of cannabis have been steadily growing over the past year. The latest data from Health Canada tallies the total September 2019 non-medical and medical sales at approximately 13,000 kilograms. We project that volume has increased to approximately 14,000 kilograms last month as more retail locations opened across the country, especially in key provinces such as Ontario.

Source: Cannabis Benchmarks

March daily sales are likely to be volatile with COVID-19 hitting our side of the world. The extreme measures of self-isolation, work from home, and social distancing have actually resulted in increased sales for the cannabis industry. Over the past week, cannabis users have been stocking up on cannabis in every province. It has been reported that there are lines at dispensaries across Toronto, while online sales have spiked. The Ontario Cannabis Storage (OCS) stated they had processed 80-100% of typical sales volumes earlier in the week as consumers are choosing home delivery over going out to a physical store. Similar reports are being heard from provincial bodies and local retailers across the country. 

 

Even with these spikes in sales, Canada seems to be prepared. There will likely be no shortage of product, as expanding production capacity has led to growing inventory of packaged goods. The latest Health Canada report shows 66,000 kilograms of packaged goods in inventory as of the end of November 2019.  If that amount of inventory was still in place today, that is enough cannabis to meet 4.7 months worth of demand.

Source: Cannabis Benchmarks

Going forward, however, we do not expect sales to be as robust. In fact, April sales might be a bit rocky. We are still in the early stages of Canada’s response to the growing threat from COVID-19, and more extreme measures are being taken by some companies and provinces. Cannabis retailers Superette and 23 shops owned by Canopy Growth announced earlier this week that they would close all of their physical retail locations. Canopy indicated they would still sell products online. Prince Edward Island announced that the province’s liquor and cannabis stores would be closed effective yesterday. Other provinces have not yet taken such actions, but it is not out of the question as we observe similar responses from other countries around the world, as well as in some states in the U.S. Yesterday, California Governor Gavin Newsom announced that only limited businesses, including cannabis retailers, will be allowed to operate, but people are to “shelter-in-place,” or remain home unless absolutely necessary. Today, New York’s Governor Andrew Cuomo ordered New Yorkers to stay at home for the foreseeable future. Such a response in Canada could shut off both production and sales, whether through retail or online, of cannabis products.

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20 March 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

March 13, 2020

U.S. Cannabis Spot Index — March 13, 2020

U.S. Cannabis Spot Index — Published March 13, 2020

U.S. Cannabis Spot Index up 1.1% to $1,404 per pound.

 

The simple average (non-volume weighted) price increased $45 to $1,617 per pound, with 68% of transactions (one standard deviation) in the $866 to $2,369 per pound range. The average reported deal size increased to 2.1 pounds. In grams, the Spot price was $3.10 and the simple average price was $3.57.

 

Transaction stats on the national level, shown in the chart below, were largely stable from last week. 

 

 

As we approach the end of the first quarter of 2020, relatively more indoor flower is being traded compared to the start of this year. In the opening week of 2020, each grow type constituted roughly a third of the total observed volume traded in the U.S. Now, however, indoor flower’s share of the total documented weight moved is almost half. Despite higher-priced warehouse product making up a significantly larger portion of the total, this week’s U.S. Spot is up only $7 from the first week of this year. 

The U.S. Spot Index rose by 1.1% this week to settle at $1,404 per pound. As the COVID-19 – or coronavirus – pandemic dominates national and international headlines, it is not yet clear how the situation will impact the U.S. cannabis industry. However, numerous states with large legal cannabis markets are being affected. At this point, information from the Centers for Disease Control (CDC) shows that Washington State and California are among the top three states in terms of reported cases of the virus (along with New York). As of March 12, Colorado officials had counted 49 presumptive cases of COVID-19 in the state. 

 

Recommended measures such as “social distancing” could lead to lower sales for a period, depending on how long the situation persists. On the other hand, consumers and patients in hard-hit areas may look to stock up on product ahead of isolating themselves, possibly providing a short-term increase in demand. On the production side, greater spread of the virus in areas with significant cultivation capacity could interrupt or constrict supply if employees are compelled to stay home or work only intermittently. 

 

In more quotidian developments, Boston saw its first licensed adult-use retailer open recently, which should result in a boost to statewide revenue figures as there are currently only about three dozen permitted recreational storefronts in Massachusetts. Meanwhile, regulatory changes in Michigan could tighten supply and result in less flexibility in transferring product from the medical to the adult-use sector in some cases.

March Forward unchanged at $1,435 per pound.

 

The average reported forward deal size was 38 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 36%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 31 pounds, and 37 pounds, respectively.

 

 

At $1,435 per pound, the April Forward represents a premium of 2.2% relative to the current U.S. Spot Price of $1,404 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

Q4 2019 Tax Collections Suggest Flattening Retail Sales, While Amount of Flower Entering Commercial Market Grew Almost 20% from Prior Quarter

Colorado

January 2020 Sales Up 12% YoY, Maintaining Annual Growth Rate Observed for 2019

 

Michigan

Officials Apply New Parameters to Transfers from Medical Dispensaries to Adult-Use Retailers, Allow Growers to Transfer Plants from Medical to Adult-Use Operations

       

Washington

Public Hearing on Proposed Rules for Enhanced Quality Control Testing Delayed, Comment Period Extended Due to Coronavirus Concerns

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

13 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved