September 25, 2020

U.S. Cannabis Spot Index — September 25, 2020

U.S. Cannabis Spot Index — Published September 25, 2020

U.S. Cannabis Spot Index up 1.5% to $1,594 per pound.

 

The simple average (non-volume weighted) price decreased $28 to $1,768 per pound, with 68% of transactions (one standard deviation) in the $987 to $2,548 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.51 and the simple average price was $3.90.

 

The relative frequency of trades for greenhouse flower increased by almost 4% this week. The relative frequencies of transactions for indoor and outdoor product decreased by about 2% each.  

 

The relative volume of outdoor product contracted by almost 3%. The relative volumes of warehouse and greenhouse flower expanded by about 1% and 2%, respectively.

As we have covered in recent months, the major story of this year in the legal cannabis realm has been the dramatic increase in demand that has occurred under the specter of the COVID-19 pandemic. With data reported out of most major markets, it is clear that elevated sales continued through August. However, August is typically the peak month of the year for legal cannabis sales. Historical data shows that monthly revenues generally decline in each month from September through November, before picking up in December to close the year. Whether those seasonal sales trends will hold this year in light of unprecedented socio-economic circumstances is an open question. 

 

Even if sales do subside this autumn, it may not be enough to cause wholesale prices to fall to the levels seen earlier this year. New data out of Colorado covering the first half of 2020 illustrates a situation that is shared by numerous mature legal cannabis markets. Namely, production capacity and supply stabilized during the past two years, and is now being strained by the new, unanticipated demand that has manifested during the coronavirus crisis. 

 

If sales in the coming months remain at or close to the elevated levels seen this summer, new production may have to come online in order to bring down prices while satisfying a higher level of baseline demand. However, if serious shortages can be avoided and consumers will tolerate price rises at retail, cannabis businesses will likely be content to maintain current supply levels while enjoying relatively high wholesale rates not seen in several years

October Forward closes up $30 to $1,525 per pound.

 

The average reported forward deal size was 25 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 36%, 38%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 27 pounds, 19 pounds, and 31 pounds, respectively.

 

At $1,525 per pound, the October Forward represents a discount of 4.3% relative to the current U.S. Spot Price of $1,594 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

Bill Preventing Increases in Cannabis Taxes in 2021 Signed into Law by Governor

Colorado

New Data Shows Growth in Flower Sales Volume Significantly Outpaced Small Increase in Production in H1 2020

Washington

July Sales Up Over 40% YoY

Arizona

August Sales Volume Down Slightly from Record Levels Recorded in July

 

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

25 September 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 25, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 25, 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$6.18 per gram this week, up 0.8% from last week’s C$6.13 per gram. This week’s price equates to US$2,108 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

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Last week, Statistics Canada released retail sales data for July 2020. Sales have been increasing steadily across Canada, but July’s sales growth was explosive. July sales settled at C$231M for the month, which is C$30.5M higher than June 2020 and up C$124M year-over-year. The monthly increase is the largest gain since cannabis was legalized almost two years ago. Our current 2020 legal cannabis sales forecast is C$2.45B, but July’s figures point to an annual run rate of C$2.73B. The prospect of retail sales eclipsing $3B in 2021 looks to have a high probability now.

 

We believe the high level of sales are a result of elevated demand during the summer months, growth in retail outlets in key provinces such as Ontario and British Columbia (BC), more higher value sales opportunities with cannabis 2.0 products, and traditional consumers switching to the safer and regulated legal channels. Apart from seasonal demand trends, the aforementioned developments represent goals that legal cannabis market participants and proponents have been working toward since the opening of the regulated market. 

Source: Cannabis Benchmarks, Statistics Canada

On an average daily basis, July sales were higher across every province. While average daily sales nationwide expanded by 11.5%, increases varied significantly at the provincial level. Of the major provinces, Ontario led the way with a 20% rise in average daily sales and BC saw an increase of 14%. Prince Edward Island (PEI) saw the biggest pop with the province permitting stores to return to normal hours after being shut down as part of the COVID-19 response. 

 

Below is a breakdown by province of movement in average daily sales from June to July. We expect that overall Canadian sales will continue their upward trajectory through the end of the year, although at a slightly lower month-over-month growth rate.

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

25 September 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

September 18, 2020

U.S. Cannabis Spot Index — September 18, 2020

U.S. Cannabis Spot Index — Published September 18, 2020

U.S. Cannabis Spot Index up 1.4% to $1,570 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,796 per pound, with 68% of transactions (one standard deviation) in the $953 to $2,638 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.46 and the simple average price was $3.96.

 

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

 

The relative volume of warehouse product expanded by 2%. The relative volumes of greenhouse and outdoor flower contracted by 1% each.

New sales data out of several states this week affirms what we noted in last week’s report: the robust demand for legal cannabis that has manifested during the pandemic persisted in August, despite the cessation of federal relief to individuals and businesses. 

 

Oregon, Michigan, and Illinois officials all reported strong revenues, with a new record for total adult-use and medical sales established in the latter market. In Oregon and Michigan, however, August revenues were down a bit from the month prior, suggesting that retail demand may be reaching a momentary peak. Looking back to July, Colorado regulators this week reported record-breaking sales for that month. 

 

While demand remains very strong, the unprecedented wildfires burning on the West Coast have put the size and quality of the autumn harvest in question. Reports out of California this week state that fires have forced evacuations in the state’s famed Emerald Triangle. 

 

 

On top of fires destroying grow sites or product becoming unmarketable due to damage from smoke and other debris, disruptions in the supply chain will almost certainly occur. In Oregon, reports of cannabis businesses of all types being destroyed have surfaced, including testing labs and processors that are necessary for product to flow from farm to retail. Consequently, even if enough marketable product to meet demand is generated ultimately, temporary “shortages” could develop as market participants work to move inventory through damaged supply chains.

October Forward assessed up $35 to $1,495 per pound.

 

The average reported forward deal size was 27 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 38%, 37%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 23 pounds, and 30 pounds, respectively.

 

At $1,495 per pound, the October Forward represents a discount of 4.8% relative to the current U.S. Spot Price of $1,570 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

Wildfires Reportedly Pushing Toward Emerald Triangle, Some Farmers Forced to Evacuate

Colorado

July Sales Rise to New Record; Total Adult-Use and Medical Revenues Top $225 Million

Oregon

Sales Dip Slightly in August, Suggesting Demand Possibly Reaching a Plateau

Michigan

Total Sales Down Slightly in August to Under $109 Million on Decrease in Medical Market, Slowing Growth in Adult-Use Sector

Illinois

Combined Adult-Use and Medical Sales Exceed $95 Million in August, a New Record

 

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

18 September 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 18, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 18, 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$6.13 per gram this week, down 3.8% from last week’s C$6.13 per gram. This week’s price equates to US$2,112 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 share our latest sales forecast for Alberta, which has one the most robust legal cannabis markets in Canada. The Alberta Gaming and Liquor Commission (AGLC) is the provincial regulatory body responsible for regulating private retail cannabis, the distribution of cannabis, and operation of online cannabis stores. They have been the most efficient of all provinces in having retail applications translate into store openings.

 

At Cannabis Benchmarks, we conduct a monthly store count across each province. We have seen a significant uptick in new stores across all major provinces. Alberta is the fourth most populous province with 10% of the country’s population, but it is home to 515 cannabis stores as of August 31, or 48% of all physical retailers nationwide. 

Source: Cannabis Benchmarks, Statistics Canada

 

The number of new stores opening in Alberta each month has slowed as major cities like Calgary and Edmonton are becoming saturated. We expect new store openings to continue to grow at a slower pace through the end of the year, resulting in a total of 600 stores by the beginning of 2021. 

Source: Cannabis Benchmarks, PotGuide.com

As we have noted in the past, there is a very strong relationship between the number of open stores and monthly retail sales in each province. Each new store provides better accessibility to the legal cannabis market and helps pull consumers away from the still robust illicit market. However, after a certain threshold new store openings begin to have a diminishing effect on sales; it appears that Alberta might be reaching that saturation point. The latest sales data issued by Statistics Canada for June 2020 shows Alberta’s retail cannabis sales totaling C$46.7M for the month. Ontario, with triple the number of people but only quarter of the number of stores, had a similar level of sales. 

 

Our latest forecast for Alberta has sales growing, but at a reduced pace due to the slowdown in new store openings and overall saturation. We project December sales to reach C$51.3M and total Alberta sales for 2020 to reach C$540M. Based on this forecast, sales in 2020 will amount to more than double those in 2019. This is a positive sign for regulators and market participants who are looking for the legal cannabis system to take a bigger chunk out of the illicit trade.

Source: Cannabis Benchmarks, PotGuide.com

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

18 September 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

September 11, 2020

U.S. Cannabis Spot Index — September 11, 2020

U.S. Cannabis Spot Index — Published September 11, 2020

U.S. Cannabis Spot Index up 0.3% to $1,549 per pound.

 

The simple average (non-volume weighted) price decreased $6 to $1,792 per pound, with 68% of transactions (one standard deviation) in the $954 to $2,630 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $3.41 and the simple average price was $3.95.

 

The relative frequency of trades for indoor flower decreased by almost 4% this week. The relative frequencies of transactions for greenhouse and outdoor product increased by about 2% each.  

 

The relative volume of warehouse product contracted by 6%. The relative volumes of greenhouse and outdoor flower expanded by 5% and 1%, respectively.

Over one month after the expiration of the CARES Act, passed by the U.S. Congress in response to the COVID-19 pandemic, early signs indicate that strong legal cannabis demand has persisted despite the cessation of the expanded unemployment benefits, eviction moratorium, and small business support included in the aforementioned law. This week, new data shows medical cannabis sales in Oklahoma rebounded in August, almost approaching the record set in June. 

 

While strong sales persist, natural disasters on the West Coast could lead to significant disruption in or loss of supply.  Major wildfires sprang up in Oregon this week, a state that had previously dodged such bullets this year. Some of the fires are located in southwestern Oregon, home to most of the state’s outdoor cultivation capacity. Wildfires are also burning in central and eastern Washington, where significant outdoor growing takes place. Meanwhile, California’s record-breaking blazes persist. Early snowfall this week in Colorado has at least curtailed the expansion of the historically large conflagrations there, but it may also have damaged crops. At the moment, it appears Oregon’s industry could be the hardest-hit by the current wildfires.

 

 

In prior years, severe wildfires have not had a significant impact on wholesale flower prices. However, in the face of record-setting demand in almost every legal adult-use cannabis market this year, diminished and damaged fall harvests on the West Coast and in Colorado could exacerbate what has been described as already tightening supply in those markets, which as the largest in the country exercise the most influence on the U.S. Spot.

October Forward assessed up $25 to $1,460 per pound.

 

The average reported forward deal size was 28 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 35%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 24 pounds, and 30 pounds, respectively.

 

At $1,460 per pound, the October Forward represents a discount of 5.7% relative to the current U.S. Spot Price of $1,549 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

Bill to Temporarily Freeze Retail Excise and Cultivation Tax Rates Approved by Legislature, Sent to Governor

Oregon

Severe Wildfires Threaten Hundreds of Cannabis Businesses and Significant Portion of State’s Outdoor Crop

Oklahoma

August Sales Reach $78.4M, Up from July but Below Peak Established in June, Despite Influx of New Registered Patients

Maine

State Issues First Active Adult-Use Licenses in Preparation for Sales to Begin October 9

 

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

11 September 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved