June 26, 2020

CANADA CANNABIS SPOT INDEX — June 26, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 26, 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$6.19 per gram this week, up 0.7% from last week’s C$6.15 per gram. This week’s price equates to US$2,066 per pound at the current exchange rate.

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Last week, Statistics Canada released retail sales data for April 2020. Sales have been steadily growing across Canada, and the COVID-19 pandemic has led to elevated demand as consumers stockpiled cannabis along with other essential products. In the back half of March, as work-from-home and social distancing became a reality, provincial online sales and in-store retail sales grew rapidly across the country. Those strong sales continued into at least the first half of April.

 

April sales settled at C$180M for the month, which was slightly below March, but higher by C$106M year-over-year. 

Source: Cannabis Benchmarks, Statistics Canada

On a daily basis, April actually saw higher sales than March. While average daily sales nationwide expanded by 2.7%, they varied significantly at the provincial level. Daily sales in most major provinces, other than Ontario, increased from March to April. Quebec led the way with a 13% increase in average daily sales. Ontario saw a drop of 7%, despite adding three retail stores during the month of April. Ontario’s decrease can be attributed to the massive sales spike seen in March ahead of the COVID lockdowns. Prince Edward Island (PEI) saw a massive drop of 62%, due to stores being closed as part of the province’s coronavirus mitigation measures. PEI just permitted cannabis stores to return to normal operating hours this past week.  

 

Below is a breakdown by province of movement in average daily sales from March to April. We expect that overall Canadian sales have continued their upward trajectory in May and June.

Source: Cannabis Benchmarks, Statistics Canada

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

26 June 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

U.S. Cannabis Spot Index — June 26, 2020

U.S. Cannabis Spot Index — Published June 26, 2020

U.S. Cannabis Spot Index up 1.1% to $1,386 per pound.

 

The simple average (non-volume weighted) price increased $6 to $1,552 per pound, with 68% of transactions (one standard deviation) in the $831 to $2,273 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.06 and the simple average price was $3.42.

 

The relative frequency of trades for indoor flower decreased by 3% this week. The relative frequency of transactions for outdoor product increased by the same proportion, while that for deals for greenhouse flower was unchanged.  

 

The relative volumes of each grow type were essentially stable from last week.

In prior reports, we have covered the strong demand that has manifested in many legal state cannabis markets across the U.S. during the COVID-19 pandemic, in both medical and adult-use systems. New data out of Washington State shows that sales have spiked to record levels there as well, similar to the situation in its neighbor to the south, Oregon. However, even as new historic sales figures were established in Washington in each month from March to May, wholesale prices in the state have seen a gradual downward trend in that period. 

 

The same can be said for the U.S. Spot Index as a whole. Prior to June, monthly average prices had been on the decline since February. The mean U.S. Spot rate for May was $1,336 per pound, off by 6.2% from February’s monthly average composite price of $1,424 per pound, which is the current peak to this point in 2020. National flower prices have recovered somewhat this month – the mean U.S. Spot rate for June is $1,382 per pound – but for the most part have not yet responded commensurately to the dramatic and unprecedented demand being documented in numerous states.

 

That could change in the coming months if demand remains elevated in most markets. As we documented last year, national wholesale cannabis prices climbed from the late spring to the fall harvest, and beyond. The 2019 wholesale cannabis price recovery occurred even as retailers saw lower sales generally than those that have been reported in recent months.

July Forward closes down $15 at $1,415 per pound.

 

The average reported forward deal size was 35 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 48%, 33%, and 19% 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 31 pounds, respectively.

 

At $1,415 per pound, the July Forward represents a premium of 2.1% relative to the current U.S. Spot Price of $1,386 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

Los Angeles Cannabis Regulators Seeking to Overhaul City’s Licensing Process

Colorado

State Sales Data Shows YoY Drops in Counties that Receive Significant Tourism; Demand in Suburban Denver Counties More Resilient

 

Adult-Use Cultivators to See Lower Tax Rates on Internal Transfers in Q3

 

Washington

Demand has Spiked During Pandemic with New Sales Records Established Every Month from March to May

Michigan

New Rules Adopted by State Marijuana Regulatory Agency

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

26 June 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

June 19, 2020

U.S. Cannabis Spot Index — June 19, 2020

U.S. Cannabis Spot Index — Published June 19, 2020

U.S. Cannabis Spot Index up 0.2% to $1,371 per pound.

 

The simple average (non-volume weighted) price decreased $23 to $1,546 per pound, with 68% of transactions (one standard deviation) in the $835 to $2,257 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.02 and the simple average price was $3.41.

 

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

 

Indoor flower’s share of the total reported weight moved nationally expanded by 6% this week. The relative volumes of greenhouse and outdoor flower contracted by 2% and 4%, respectively.

The fact that elevated sales figures have been largely sustained in legal cannabis markets in the U.S. from March through May indicates that consumers and patients were not just stockpiling product for future use in the early portion of that three-month period. Two possibilities to explain the persistently high levels of demand are increased consumption and new patients/consumers buying from legal sellers, or some combination of the two. 

 

Anecdotal accounts from market participants and patient count data suggest that both could be occurring, as people largely staying home may be more comfortable consuming more frequently, or might be doing so to relieve stress and anxiety. We noted in last week’s report that retailers in Oregon have stated that they are seeing new customers during this time, who are being converted to regular customers. Growth rates in the patient rolls of Arizona and Illinois in recent months show that the pace at which new patients are registering increased in April and May compared to the months prior. We have also noted in our analyses of the still-developing legal adult-use market in Canada, consumers who previously purchased from unlicensed sources may find that buying from a licensed storefront or delivery service offers greater security and convenience during this tumultuous period. 

 

The maintenance of such developments post-COVID could mean that legal cannabis producers and retailers in many markets across the U.S. may see elevated demand going forward. This would coincide with stabilizing production capacity in numerous mature markets, and could also strain supply in newer, developing markets where cultivation is still ramping up. However, as we pointed out last week, significant unknowns remain regarding how the pandemic will play out, in addition to its continued impact on the overall U.S. economy. To this point, however, it appears that legal cannabis has largely weathered the current situation better than many other industries, and already-strong market growth could even be boosted as other sectors see catastrophic impacts.

July Forward unchanged at $1,430 per pound.

 

The average reported forward deal size was 35.5 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 48%, 34%, and 18% 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 33 pounds, respectively.

 

At $1,430 per pound, the July Forward represents a premium of 4.3% relative to the current U.S. Spot Price of $1,371 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

 

At $1,430 per pound, the July Forward represents a premium of 4.5% relative to the current U.S. Spot Price of $1,369 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:

Michigan

Medical and Adult-Use Sales Both Jump in May to Reach Combined Total of Almost $85 Million

Arizona

May Sales Vault Over March’s to Set New Record; Daily Sales Data Indicates Expiration of Stay-at-Home Order Led to Increased Customer Traffic at Dispensaries

Illinois

Adult-Use Sales in May Spike Almost 19% MoM; Largest Increase Since Opening of State’s Market Points to Growth in Available Supply

New Mexico

Q1 2020 Sales Data Shows Large Expansion in Patient Purchasing, Likely Due to Bulk Buying in March in Response to COVID

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

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

19 June 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — June 19, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 19, 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$6.15 per gram this week, down 2.3% from last week’s C$6.30 per gram. This week’s price equates to US$2,053 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 continue our review of data released recently by the Ontario Cannabis Store (OCS). The report, entitled “A Year in Review,” details the development of Ontario’s cannabis market from April 1, 2019 through March 31, 2020. As a reminder, this is the first report of its kind that shows a full year of history in Canada’s most populous province. You can read the full report here.

 

The following examination focuses on online sales. As we have reported in the past, online sales exploded in March as Canadians prepared for stay-at-home orders in response to COVID-19. Along with other essentials, Ontario residents stocked up on cannabis. With a limited physical retail presence in the province, Ontarians turned to the province’s online outlet, the OCS, to load up on products. Prior to March 2020, the number of OCS purchases remained steady at around 62,000 transactions per month, but in March that jumped to 114,000, an 82% spike.

Source: Cannabis Benchmarks, OCS

We contend that the shift to purchasing from the OCS is not an anomalous response to the unique conditions created by the coronavirus pandemic, but rather the beginning of a fundamental change in buying habits. We are not speaking specifically of buying online, but rather purchasing cannabis from a legal channel where the product is subject to regulation and oversight. If this is the case, then legal Canadian cultivators will be better positioned to win the war against illicitly-produced product.

 

Another factor underpinning this shift is the shrinking price discrepancy between the province’s online store and illegal sources. During the period covered by the report, online cannabis was only C$0.33/gram or 4% more expensive than product coming from illegal channels, according to the OCS. 

Source: Cannabis Benchmarks, OCS

This data validates a strategy undertaken by licensed cultivators: releasing lower-priced options to be more competitive with the illegal market. From Q1 2019 to Q4 2019, the average price of dried flower on the OCS sank by C$2.00/gram, or 21%. The price drop at physical retail outlets was not as dramatic, but that channel also saw prices decline by an average of 10%.

Source: Cannabis Benchmarks, OCS

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

19 June 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

June 12, 2020

U.S. Cannabis Spot Index — June 12, 2020

U.S. Cannabis Spot Index — Published June 12, 2020

U.S. Cannabis Spot Index down 2.3% to $1,369 per pound. The simple average (non-volume weighted) price decreased $66 to $1,570 per pound, with 68% of transactions (one standard deviation) in the $846 to $2,293 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $3.02 and the simple average price was $3.46.

 

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

 

Indoor flower’s share of the total reported weight moved nationally was also stable this week. Greenhouse product’s relative volume shrank by 1%, while outdoor flower saw a 1% expansion in this metric.

New sales data out of various markets this week provides a clearer picture of the impact of the COVID-19 pandemic on the legal cannabis industry. For the most part, it appears that the unique situation created by the novel coronavirus and the accompanying regulatory response has resulted in increased demand, though there are some exceptions. 

 

May sales out of Oregon, Oklahoma, and Illinois’ medical market show continued, sometimes dramatic, expansions, with all three of the aforementioned markets seeing new record revenue figures in May. An analysis of March sales from Washington State also reveals an outsized boost in demand in the country’s second-oldest legal cannabis market in the month that the COVID crisis arrived. In Massachusetts, adult-use retailers were permitted to open for the final week of May after being closed since late March, with sales picking up where they left off prior to the pandemic. 

 

The exceptions to the elevated demand being seen in many legal cannabis markets across the country are Colorado and Nevada. Unsurprisingly, March sales in Nevada dropped significantly. Tourist numbers show that the number of visitors to Las Vegas in March was less than half the levels seen normally, indicating that tourist demand was impacted significantly even prior to the lockdown initiated in the state in late March. 

 

 

April sales in Colorado followed familiar seasonal trends for the most part, though an examination of year-over-year changes indicates that the strong demand growth seen in 2019 and the first two months of this year is subsiding. Adult-use sales slipped notably from March to April in Colorado, suggesting that tourist demand could account for a more significant percentage of sales in the state than is typically acknowledged. Contrastingly, medical cannabis sales in Colorado in April boomed to their highest level in years, even after a big increase in March.

July Forward unchanged at $1,430 per pound.

 

The average reported forward deal size was 37 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 34%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 29 pounds, and 35 pounds, respectively.

 

At $1,430 per pound, the July Forward represents a premium of 4.5% relative to the current U.S. Spot Price of $1,369 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

Sales Growth Observed Prior to COVID-19 Slowed Further in April

Oregon

Demand Continues to Boom During Pandemic as Monthly Sales Top $100 Million in May

Washington

Analysis Shows Outsized Spike in Sales in March as Coronavirus Arrived  

Nevada

Demand Contracted Significantly in March as Las Vegas Saw Less than Half the Usual Number of Visitors

 

Oklahoma

Retail Revenue has Spiked to Record Levels in Recent Months; May Sales Exceeded Those in Many Adult-Use Markets

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

12 June 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved