June 12, 2020

CANADA CANNABIS SPOT INDEX — June 12, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 12, 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$6.30 per gram this week, down 1.7% from last week’s C$6.41 per gram. This week’s price equates to US$2,117 per pound at the current exchange rate.

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This week, we review data released recently by the Ontario Cannabis Store (OCS) that provides significant detail on the province’s legal cannabis market. The report, entitled “A Year in Review,” follows the development of the Ontario cannabis market from April 1, 2019 through March 31, 2020. This is the first report to show a full year of history and development in Canada’s most populous province. You can read the full report here.

 

One of the biggest challenges facing the Canadian cannabis sector is robust illegal operations and distribution. The OCS estimates that the legal market accounted for only 19% of total cannabis commerce in the province in Q4 2019. The lack of licensed retail infrastructure and higher prices in the legal sector helped keep the illegal markets very active. OCS expects that the legal market share will increase dramatically over the next couple of years, as the restructured licensing process accelerates the build out of retail locations. The current Ontario store count stands at 87.

Source: Cannabis Benchmarks, OCS

The establishment and build out of licensed retail stores has proven to be a key element in the growth of the legal market. Ontario has lagged behind the other provinces in licensing new stores. The first set of 10 stores opened on April 1, 2019; since then the roll out of new locations has been slow. Despite only having a total of 53 stores open in the province by March 31, 2020, 81% of all legal sales over the preceding twelve months were generated by these physical retail locations. Online sales did not appear to provide a sufficient consumer experience to compensate for the limited number of stores in the province and take market share from the illicit market.

Source: Cannabis Benchmarks, OCS

Ontario online sales are higher than the national average, which we estimate to be 7% over the same time frame. This is no surprise, as provinces such as Alberta and British Columbia, which have relatively larger retail presences, have a small percentage of sales that occur through their provincial online stores.

 

Cannabis 2.0 products – such as vapes, beverages, concentrates, edibles, and topicals – have also provided a boost to sales levels. In March 2020, cannabis 2.0 products produced C$9M in sales, or 19% of the total. This number is expected to continue to grow as consumers become more familiar with these products, and as a wider variety of products becomes available.

Source: Cannabis Benchmarks, OCS

Drilling deeper into the sales mix, OCS reports cannabis 1.0 products (mainly dry flower) make up 81% of sales. Vapes are the next most popular product category at 14%, with the other cannabis 2.0 products constituting only a sliver of total sales.

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

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

June 5, 2020

U.S. Cannabis Spot Index — June 5, 2020

U.S. Cannabis Spot Index — Published June 5, 2020

U.S. Cannabis Spot Index up 3.3% to $1,401 per pound.

 

The simple average (non-volume weighted) price increased $20 to $1,636 per pound, with 68% of transactions (one standard deviation) in the $887 to $2,385 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $3.09 and the simple average price was $3.61.

December Forward initially assessed at $1,350 per pound.

 

The average reported forward deal size was 35 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 38%, and 15% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 27 pounds, and 35 pounds, respectively.

 

At $1,430 per pound, the July Forward represents a premium of 2.1% relative to the current U.S. Spot Price of $1,401 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

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

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

CANADA CANNABIS SPOT INDEX — June 5, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 5, 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$6.39 per gram this week, down 0.3% from last week’s C$6.41 per gram. This week’s price equates to US$2,135 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 outline the scope of the growing Canadian industrial hemp market. 

 

Under the Cannabis Act, which made cannabis legal last October, Health Canada also set out the Industrial Hemp Regulations (IHR). The rules define hemp as a cannabis plant with a concentration of less than 0.3% THC in the flowering heads and leaves. The IHR constructed a framework around certain activities involving hemp, such as its cultivation, sale, and processing, as well as its importation and exportation into and from Canada. A license needs to be obtained from Health Canada in order to conduct any of these activities.

 

Starting in the 1980’s, industrial hemp cultivation was permitted for scientific research purposes. The first license to grow industrial hemp for commercial purposes in Canada was issued in May 1998. Health Canada data compiled in 2018 shows there were 1,226 licenses issued, with 711 of those for cultivation. Unsurprisingly, 63% of the total cultivation licenses in the country were issued to growers in the three prairie provinces: Alberta, Saskatchewan, and Manitoba.

Source: Hemp Benchmarks, Health Canada

A breakdown of the acreage licensed for cultivation of hemp by province shows a similar picture in which the three prairie provinces constitute most of the country’s production capacity.

Source: Hemp Benchmarks, Health Canada

According to Health Canada, a total of 31,537 hectares, or 77,929 acres, were approved to grow industrial hemp in 2018. Alberta led all provinces with 13 licencees holding cultivation permits encompassing approximately 30,000 acres. We anticipate that Health Canada will update the dataset to include 2019 figures as lockdowns ease, and government workers return to work. 

 

Under the new hemp regulations, harvested hemp flowers, leaves, and branches can be sold to licensed cannabis processors, although the majority of hemp grown in Canada to date is for hempseed. Hempseed is typically used in a wide range of food products, such as hemp oils, hemp protein powders, hemp flour and hemp meal. 

 

Lastly, we note that hemp varieties are strictly controlled by the federal government and growers may only plant a limited variety. Below is the complete list of the approved seed varieties for the 2019 growing season, along with the country of origin. 

Source: Hemp Benchmarks, Health 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

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