May 29, 2020

U.S. Cannabis Spot Index — May 29, 2020

U.S. Cannabis Spot Index — Published May 29, 2020

U.S. Cannabis Spot Index up 2.6% to $1,356 per pound.

 

The simple average (non-volume weighted) price increased $91 to $1,616 per pound, with 68% of transactions (one standard deviation) in the $836 to $2,396 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.99 and the simple average price was $3.56.

 

The relative frequencies of trades for each grow type were largely stable from last week. 

 

Indoor flower’s share of the total reported weight moved nationally shrank by 1% this week. Greenhouse product’s relative volume increased by the same proportion, while that for outdoor flower was unchanged.

For the month of May, the U.S. Spot Index averaged $1,336 per pound. May is the third consecutive month to see a downturn in the national composite price, despite reports of strong demand and elevated sales out of several states during the COVID-19 pandemic, which began impacting day-to-day life in the U.S. dramatically in March. 

 

While strong demand has been observed across several states, including the sizeable markets of Oregon and Arizona, early signs out of Colorado – the nation’s second-largest market after California – suggest that previous sales growth rates slowed in March. We have also discussed how Nevada’s cannabis industry has been especially hard-hit by the measures taken to contain the pandemic. Meanwhile, Massachusetts adult-use retailers, who racked up the sixth-largest revenue total of any state with legal cannabis in 2019, were shuttered completely for two months, with sales only resuming this week.

 

In other words, while sales out of some larger and mid-sized markets have remained strong, demand in others has been curtailed or appears to have been suppressed somewhat. (April sales out of Colorado, which should be released in June, will provide a clearer picture of the coronavirus’ impact on the state’s cannabis market.) 

 

 

Additionally, we have not heard reports of any disruptions or slowdowns in supply. No accounts of COVID outbreaks at cannabis cultivation or processing facilities have surfaced to this point, suggesting that production has continued apace during a period of demand fluctuations. Despite reports of occasional runs on cannabis retailers and customers purchasing larger amounts per transaction, wholesale buyers have not evinced anxiety about being able to secure sufficient inventory. The continued prohibition on interstate cannabis commerce may have somewhat insulated each state market from supply chain difficulties that have impacted other industries during the last two unprecedented and unpredictable months.

June Forward down $50 to $1,375 per pound.

 

The average reported forward deal size was 36 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 28 pounds, and 35 pounds, respectively.

 

At $1,375 per pound, the June Forward represents a premium of 1.4% relative to the current U.S. Spot Price of $1,356 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 Releases Cannabis Tax Collections, but Scope of Market Activity Obscured as Taxpayers Allowed to Remit Payments Late Due to COVID-19

Washington

Officials Resume Rulemaking Activities, Including Proposed Rules for Required Pesticide and Heavy Metals Testing

Nevada

Governor Announces that Casinos May Reopen in Early June, Reintroducing Some Tourist Demand to State’s Cannabis Market  

Massachusetts

Adult-Use Retailers Allowed to Open for Curbside Pickup Sales this Week After Two Month Shutdown

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

29 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 29, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 29, 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$6.41 per gram this week, down 1.0% from last week’s C$6.48 per gram. This week’s price equates to US$2,096 per pound at the current exchange rate.

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Last week, Statistics Canada released retail sales data for March 2020. Sales have been steadily growing across Canada, and the impacts of COVID-19 led to sales skyrocketing as cannabis users stockpiled cannabis along with toilet paper. In the back half of March, as work-from-home and social distancing became a reality, provincial online sales and retail sales grew rapidly across the country.

 

March sales settled at C$181M over the month, which was C$29M higher than February’s revenues, as well as up C$120M year-on-year.

 

Source: Health Canada, Cannabis Benchmarks

We have heard that online sales picked up, but the vast majority of sales still occur at physical retail locations. In past reports, we discussed the proportion of online sales to total recreational sales. The last data point on this topic released by Statistics Canada is for September 2019, which shows online sales dropped to 5.9% of total sales at that point. In our April 17 report, we modelled online sales continuing to drop to 5% over the next few months, until March 2020 when COVID-19 lockdowns were initiated. We estimate online sales in March rose to account for 6.5% of total sales.

 

With that estimate, we can better understand the average daily sales per store at the provincial level. We first stripped out the online sales to get to sales at physical retail stores. Next, we divided those figures by our monthly store count, then divided by the number of days in each month, to get the average daily sales per retail store.

Source: Cannabis Benchmarks

The two most populous provinces, Ontario and Quebec, have a relatively low number of stores per capita. Therefore, the licensed retailers in those provinces each serve a disproportionately large number of cannabis users and benefit by seeing voluminous amounts of daily transactions. However, average daily sales per individual retail shop in Quebec have been dropping since mid-2019, as sales have not grown at the same rate as new stores. Ontario looks to be experiencing a similar decline in recent months as new stores have been opening quickly.

 

Alberta and British Columbia have sales levels that are well below the average. While this could potentially point to an oversaturation of physical outlets relative to each province’s consumer base, the average is also skewed upward by the data out of Ontario and Quebec, where retail storefronts have been slower to proliferate.

For more data and analytics like this, subscribe to the Cannabis Market Insights report developed in collaboration Nasdaq. This in-depth monthly report provides exclusive data and analysis on the legal cannabis industry, focusing largely on the Canadian cannabis market, as well as the cannabis equities market in the U.S.

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

29 May 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

May 22, 2020

U.S. Cannabis Spot Index — May 22, 2020

U.S. Cannabis Spot Index — Published May 22, 2020

U.S. Cannabis Spot Index nominally unchanged at $1,322 per pound.

 

The simple average (non-volume weighted) price was unchanged at $1,525 per pound, with 68% of transactions (one standard deviation) in the $784 to $2,266 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $2.92 and the simple average price was $3.36.

 

The relative frequency of trades for indoor flower decreased by almost 2% this week. The relative frequencies of deals for greenhouse and outdoor product each increased by about 1%. The relative volumes of each grow type were fairly stable compared to last week, with only marginal shifts observed.

This week, sales data for April was released by officials in Oregon, Arizona, and Michigan, providing a broader look at demand conditions in legal cannabis markets subjected to stay-at-home orders and other restrictions due to the COVID-19 pandemic.

 

Taken together, the official data available currently indicates that demand has remained elevated and robust despite the coronavirus. Three of the four states mentioned above – Oregon, Michigan, and Illinois – saw sales increase again in April, even after setting records in March. Arizona’s market saw a decline in sales volume from March to April – possibly due to the inability to celebrate 4/20 – but sales figures in the latter month are still the second-highest in the history of the state’s large, mature medical cannabis system. 

 

So far, the available data suggests that cannabis may indeed be a recession-proof commodity, so long as it remains available. Despite record-breaking unemployment levels, along with many Americans facing significant uncertainty about their work and income situations, sales continued to climb in the newer adult-use markets of Michigan and Illinois, while previously-strong growth in Oregon accelerated. 

 

It must be noted that many Americans received stimulus payments of up to $1,200 from the U.S. government in April, while federal legislation passed in response to the COVID-19 pandemic provided for expanded unemployment insurance and increased payments to those who qualify. This assistance may have facilitated spending by consumers in April. 

 

However, the stimulus payments are at this point not recurring and are quite paltry compared to those received by citizens of other countries. (In Canada, for example, residents are receiving C$2,000 per month.) This raises the possibility that cannabis sales could be impacted negatively going forward if the overall economic situation worsens and assistance from the federal government is inadequate or simply not forthcoming. We noted in last week’s report that an official budget forecast out of Colorado anticipates that cannabis tax revenues will decline in the coming fiscal year.

 

Another preliminary conclusion that can be gleaned from the data is that cannabis consumers – both those purchasing in adult-use markets and those registered as medical patients – appear relatively unconcerned with using smokable or inhalable products during an outbreak of a severe respiratory illness. Flower sales climbed in Oregon, Illinois’ medical system, and in both sectors of Michigan’s legal market in April, along with sales of concentrates and extracts for vaping. Edibles sales also rose sharply in Oregon, but the increase was not out of step with those of other product categories. Notably, in Arizona, recent monthly edibles sales volumes have been down compared to last year.

June Forward unchanged at $1,425 per pound.

 

The average reported forward deal size was 35.6 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 41 pounds, 28 pounds, and 36 pounds, respectively.

 

At $1,425 per pound, the June Forward represents a premium of 7.8% relative to the current U.S. Spot Price of $1,322 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

Planned Regulatory, Tax Reforms to Legal Cannabis Market Delayed Due to COVID-19

Oregon

Sales Rise to $89 Million in April, Setting a New Record for the Second Straight Month

Michigan

April Sales See Robust Growth in Both Adult-Use and Medical Markets, But Issuance of New Retailer Licenses Slows  

Arizona

Purchasing Slips in April, But Total Sales Volume is Still Second-Highest in the History of State’s Medical System

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

22 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 22, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 22, 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$6.48 per gram this week, up 1.1% from last week’s C$6.41 per gram. This week’s price equates to US$2,101 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 provide an update on the proliferation of licensed retail storefronts in Canada. As of May, we count 891 retail stores across the country, an increase of 31 from the previous month.

 

Source: Health Canada, Cannabis Benchmarks

Despite COVID-related lockdowns in effect over the past two months, we are still seeing stores open in Canada’s major provinces. 122 stores have opened since the end of February, with 92% of the new shops located in Alberta, British Columbia, and Ontario. 

 

Alberta still has the highest store count at 461, or 52% of the licensed retailers in Canada. As expected, Alberta, with the largest concentration of stores, has greater sales per capita than the other large provinces. 

 

Month-on-month growth in store counts in Alberta is on a decline. However, the growth trajectory in Ontario, the country’s most populous province, is still going strong. Since the start of the year, the number of legal shops in Ontario has been expanding exponentially. This growth comes despite COVID-19 delaying the licensing process, as well as construction. Our count shows that 31 new stores have opened in Ontario since the end of February, doubling the number of stores in operation.

Source: Cannabis Benchmarks

The industry is keeping a close eye on Ontario, as it is home to an estimated two million cannabis users, or 38% of the total in Canada. The new stores provide more convenient access to those who previously purchased from the illicit market or were pushed to the provincial online stores. We have heard from many cannabis users that the online experience is convenient (especially during COVID), but they prefer walking into a store to see product variety, take in the aromas, and hear from experienced staff.

 

According to data compiled by Health Canada, Canada is home to approximately 5.1 million cannabis consumers. Alberta is specifically home to 585,000 users. Its current robust cannabis retail presence of 461 stores works out to one store per 1,269 consumers. 

 

Ontario, on the other hand, has a relatively sparse retail presence. Based on the number of cannabis consumers estimated to reside in the province, there is one legal storefront per 31,779 users in Ontario. Clearly, per capita store counts represent a significant difference between Alberta and Ontario. 

Source: Statistics Canada, Cannabis Benchmarks

How many stores will Ontario’s cannabis consumer population support? If we take the example of Alberta, there would need to be over 1,500 stores across Ontario in order to reach an equivalent per capita store count, based on the number of self-reported cannabis consumers in each province. An increase of over 1,400 retail outlets in Ontario would certainly result in a robust expansion of sales in the province. 

 

Given Ontario’s total population of over 14.5 million, 1,500 licensed cannabis retailers would result in one store per almost 9,700 total residents. Such a per capita store count could plausibly be supported based on data from some of the more mature cannabis markets in the U.S. The hypothetical per capita Ontario store count just noted is in line with that in Colorado, the most mature legal cannabis market in the U.S., where there is one licensed adult-use retailer per roughly 9,800 residents (587 legal storefronts serving a population of over 5.7 million). 

 

For additional context, Oregon, the U.S.’s most saturated legal cannabis market by store count, has one licensed retailer for about every 6,350 residents (661 legal shops serving a population of over 4.2 million). Store counts in both of those U.S. markets have largely stabilized after several years of growth – Colorado’s market opened in 2014, Oregon’s in late 2016 – but both still expanded a bit in 2019.

For more data and analytics like this, subscribe to the Cannabis Market Insights report developed in collaboration Nasdaq. This in-depth monthly report provides exclusive data and analysis on the legal cannabis industry, focusing largely on the Canadian cannabis market, as well as the cannabis equities market in the U.S.

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

22 May 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

May 15, 2020

U.S. Cannabis Spot Index — May 15, 2020

U.S. Cannabis Spot Index — Published May 15, 2020

U.S. Cannabis Spot Index down 1.4% to $1,323 per pound.

 

The simple average (non-volume weighted) price decreased $42 to $1,525 per pound, with 68% of transactions (one standard deviation) in the $783 to $2,267 per pound range. The average reported deal size decreased to 2.3 pounds. In grams, the Spot price was $2.92 and the simple average price was $3.36.

 

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

 

 

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

Additional sales data out of Colorado and Michigan this week is beginning to provide a picture of how adult-use and medical cannabis sales have been impacted by the COVID-19 pandemic and accompanying mitigation measures imposed by officials. At this point, it appears that the one solid conclusion to be drawn is that the effects of the pandemic on cannabis sales will vary state to state, depending on the maturity of the market and other factors. However, one trend that is emerging from medical cannabis sales in March out of Colorado, Oregon, Arizona, Michigan, and Illinois is that demand from registered patients appears to have spiked to greater degrees in response to the coronavirus than it did among adult-use customers. 

 

In our report for April 24, we discussed March sales data from Oregon and Arizona. By analyzing March 2020’s information in light of historical sales data going back to 2017, we concluded that the significant increases in sales in those states in March were likely due largely to organic market growth and seasonal sales trends, with a boost from coronavirus-motivated bulk buying. In other words, the early days of the pandemic in the U.S. resulted in a discernible, but not dramatic, increase in demand in those markets. 

 

The opposite appears to be the case for Colorado. Similar to Oregon and Arizona, Colorado saw a significant month-over-month increase in sales in March, an occurrence that has come to be expected by market observers and participants. However, unlike the two other aforementioned markets, the rate at which sales rose month-over-month in Colorado in March 2020 is down compared to the same period in prior years. Additionally, March’s year-over-year sales growth is lower than the annual growth figures documented in January and February this year, before COVID-19 made its way to Colorado. Overall, it appears that the pandemic put a small dent in demand for cannabis in Colorado in March, despite a brief surge of panic-buying in Denver late in the month.

 

Meanwhile, partial adult-use revenue data out of Michigan indicates that sales in the still-young sector of the state’s market continued to grow through April and into the early days of this month. According to the Detroit News, in the nine weeks from March 9 to May 10, adult-use retailers in Michigan racked up almost $55 million in sales. More than $7 million in sales was recorded in each of the latter four weeks of that period.

June Forward unchanged at $1,425 per pound.

 

The average reported forward deal size was 36 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 42 pounds, 29 pounds, and 36 pounds, respectively.

 

At $1,425 per pound, the June Forward represents a premium of 7.7% relative to the current U.S. Spot Price of $1,323 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

Mark-Up Rate Used to Calculate Retail Excise Tax Will Remain the Same through 2020

Colorado

 

March Sales Rise 15% from February, But Magnitude of MoM Increase Smaller Than in Prior Years

 

State Budget Officials Forecast Declining Cannabis Sales in Current and Forthcoming FY Due to COVID-19

 

Nevada

Retailers May Conduct In-Store Sales With Approval from State Officials Under Phase One of Reopening Plan; Hotels & Casinos Remain Closed   

Massachusetts

Number of Registered Medical Cannabis Patients as of April 2020 Comparable to a Year Ago, But Sales Volume Up Almost 70%

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

15 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved