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

 

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

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

CANADA CANNABIS SPOT INDEX — September 11, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 11, 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$6.38 per gram this week, up 3.7% from last week’s C$6.15 per gram. This week’s price equates to US$2,201 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 show our revised sales forecast for Ontario in light of the province’s Alcohol and Gaming Commission (AGCO) issuing a statement on September 1 regarding Cannabis Retail Store Authorizations. 

 

Last December, after pressure from the cannabis industry, the Ontario government altered its retail store licensing process from a lottery system to a more open format. The goal was to issue up to 20 retail store licenses each month starting in April. At Cannabis Benchmarks, we conduct a monthly store count across each province. We have seen a significant uptick in new stores in Ontario since April, with an average of 16.6 stores opening each month. This number does not meet the target AGCO set out, but the lower number was not unexpected given the COVID-19 pandemic. As of the end of August, we count 136 stores open across Ontario.

Source: Cannabis Benchmarks, Statistics Canada

In the recent update, AGCO stated that they are now moving to “double the pace of store authorizations this fall.” This suggests that we may see, on average, up to 40 new stores each month through the end of the year, increasing our forecast of the total store count in Ontario and, as a result, our sales forecast as well. We now expect there will be 298 stores open across Ontario by the end of the year, compared to only 27 stores at the end of 2019.

 

As we have noted in the past, there is a very strong relationship between the number of open stores and the 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. The latest sales data for June 2020 issued by Statistics Canada shows Ontario cannabis retail sales totaling C$48.8M in the month with 116 stores open. Our latest forecast shows sales growing dramatically with the new store openings, bringing December sales to C$73.3M and total Ontario sales for 2020 to C$645M.

Source: Cannabis Benchmarks, Statistics Canada

The Ontario cannabis market is very important to the overall Canadian cannabis industry due to the province’s large population. Ontario has nearly 40% of the overall Canadian population and 38% of the total self-reported users; hence any change to product offerings, product pricing, or accessibility in the province makes a dramatic difference in overall nationwide sales levels. Our models show that the projected increase in stores in Ontario will add roughly $13M in additional sales by the end of the year. This takes our projected monthly Canadian sales to C$251M in December, with projected annual sales for 2020 totaling C$2.45B.

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

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

September 4, 2020

U.S. Cannabis Spot Index — September 4, 2020

U.S. Cannabis Spot Index — Published September 4, 2020

U.S. Cannabis Spot Index down 0.2% to $1,544 per pound.

 

The simple average (non-volume weighted) price increased $36 to $1,798 per pound, with 68% of transactions (one standard deviation) in the $985 to $2,611 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.40 and the simple average price was $3.96.

 

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

 

The relative volume of warehouse product contracted by 2%. The relative volume of greenhouse flower expanded by the same proportion, while that for outdoor product was unchanged.

After falling to its current year-to-date low of $1,322 per pound in late May, the U.S. Spot Index rose by 17% over the roughly three months from that point to the final week of August. The first official August sales figures from a sizable legal cannabis market were released this week by Massachusetts, which showed revenue in the state’s adult-use sector reaching a new record high for the second straight month. Meanwhile, newly-published June sales from Nevada officials show total retail revenue returning to pre-COVID levels, despite tourism to Las Vegas remaining extremely depressed relative to prior to the pandemic. 

 

These early signs suggest that August sales in other state markets may have continued to set records, or at least remain elevated with only small declines. August is typically one of, if not the strongest sales month of the year, particularly in adult-use systems. However, with unprecedented sales since the spring, in addition to the expiration of expanded unemployment benefits for millions of Americans at the end of July, there were questions as to whether the outsized demand that has marked the April through July period would hold. The upcoming Labor Day weekend is also typically a strong sales occasion for legal cannabis retailers.

 

 

While the fall outdoor crop will begin to be harvested in the coming weeks and months, last year’s data indicates that immediate price declines may not be in the cards even with the production of significant new supply. In 2019, the U.S. Spot rose through most of Q3 to reach its annual peak in mid-November.

March 2021 Forward initially assessed at $1,385 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%, 34%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 25 pounds, and 30 pounds, respectively.

 

At $1,435 per pound, the October Forward represents a discount of 7.1% relative to the current U.S. Spot Price of $1,544 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

Tax Collections from Santa Barbara County Cultivators Spike as Strong Retail Demand Inflates Producer Sales and More Growers Come Online

Nevada

June Sales Rise to Pre-COVID Levels Even as Las Vegas Tourism Remains Significantly Lower than Normal

Massachusetts

August Adult-Use Sales Approach $79 Million, Setting a New Record for the Second Straight Month

Illinois

Medical Cannabis Sales Subside by 5% in August After Setting Record in July

Maine

Guidance from Regulators Details How Plants to Supply Adult-Use Market May Be Transferred from Medical System

 

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

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