September 11, 2020

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.

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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

 

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

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

CANADA CANNABIS SPOT INDEX — September 4, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 4, 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 2.1% from last week’s C$6.28 per gram. This week’s price equates to US$2,133 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 recent data from Health Canada on the growing Canadian industrial hemp industry. Recently released 2019 statistics detail the number of active industrial hemp licenses for cultivation, registered hectarage, and the type of hemp cultivated in each province.

 

The Industrial Hemp Regulation (IHR) Program permits farmers to grow low-THC cannabis for industrial use. Industrial hemp has been proven to be a fibrous, fast growing, and high yield crop that has also shown good potential for crop rotation. Its short growth period, averaging 100 days, makes it well-suited for the shorter outdoor cultivation season in many parts of Canada – especially in the Prairie provinces, as seen in the data below.

 

The data reflects the changes in the hemp industry across Canada. From 2018 to 2019, we saw a modest increase of only 20 hemp cultivation licenses nationwide. Most major provinces saw a dramatic decrease in cultivation licenses, with the exception of British Columbia and Ontario. The reason we see dramatic fluctuations in provincial licensing numbers is likely due to the relatively flexible window that growers have to apply for a license. Applications are accepted as early as mid-November for a license that will be good through the end of the following year. However, most farmers need not apply until they are ready to harvest. Consequently, depending upon the point in any given year that licenses are counted, the numbers could be different and not entirely representative of the number of farmers growing hemp.

Source: Hemp Benchmarks, Health Canada

Registered hectarage also grew year-on-year, with a 19% jump to 37,435 hectares in 2019. As alluded to above, licensing data does not necessarily correspond to registered hectarage in each province. In Ontario and BC, for example, registered hectarage was negligible for 2019 even though roughly 26% of cultivation sites are registered in those provinces. The main provinces to register hemp cultivation sites and hectarage are Alberta, Saskatchewan, and Manitoba.

Source: Hemp Benchmarks, Health Canada

Finally, we look at the breakdown of the types of hemp cultivars planted across Canada. Cultivation for flowering heads, leaves and branches – in other words, varieties high in CBD and other non-THC cannabinoids – was the most prominent, accounting for 42% of the planted hectarage, followed by grain, then fiber. Only 3% of the hectarage was planted for seed. 

 

This data was not available for 2018, so we cannot analyze exactly how this might have changed year-on-year. However, an overview of the Canadian hemp industry published last year by the U.S. Department of Agriculture’s (USDA’s) Foreign Agricultural Service notes that, as of the end of 2018, “high-CBD varieties have yet to be registered for use in Canada.” The USDA report, combined with Health Canada’s 2019 data, suggests that hectarage registered for high-CBD varieties may have gone from nonexistent in 2018 to the most prevalent production target in the country in 2019. 

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

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