October 30, 2020

U.S. Cannabis Spot Index — October 30, 2020

U.S. Cannabis Spot Index — Published October 30, 2020

U.S. Cannabis Spot Index down 0.4% to $1,658 per pound.

 

The simple average (non-volume weighted) price decreased $9 to $1,870 per pound, with 68% of transactions (one standard deviation) in the $1,105 to $2,636 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.66 and the simple average price was $4.12.

 

The relative frequencies of trades for each grow type were essentially unchanged from last week.  

 

The relative volume of outdoor flower grew by about 3% this week. The relative volumes of indoor and greenhouse product contracted by about 2% and 1%, respectively.

The U.S. Spot Index averaged $1,645 per pound this month, up 5.2% from September. October 2020’s national mean composite price is the highest observed since April 2017; it also represents a year-over-year increase of 14.9% relative to October 2019. The U.S. Spot and state-level Spot Indices for most major markets have been trending upward for much of the time that the COVID-19 pandemic has been with us. This week’s national composite rate is up by 22.2%, or roughly $300, from March 27, by which time most of the sizable state markets covered in our reporting had enacted stay-at-home orders. 

 

We have noted that there is some uncertainty regarding this year’s fall outdoor harvest due to the wildfires that ravaged the West Coast. It should also be pointed out that indoor production will likely see a boost with the help of cooler weather. Summer heat can strain climate control systems and negatively impact yield and product quality; and this summer saw record-breaking temperatures in numerous regions of the country, including the major markets on the West Coast and in Colorado, as well as in Arizona. 

 

Recent demand trends show sales plateauing in recent months, albeit at elevated levels. Increased supply from both outdoor and indoor growers may help moderate wholesale price increases. However, with the coronavirus surging across the country, increased restrictions and possibly even new shutdowns could result in consumers diverting disposable income from disallowed activities to cannabis, behavior that was likely a big contributor to earlier sales growth.

November Forward closes up $35 to $1,625 per pound.

 

The average reported forward deal size increased to 23 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 38%, and 24% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 27 pounds, 17 pounds, and 24 pounds, respectively.

 

At $1,625 per pound, the November Forward represents a discount of 2% relative to the current U.S. Spot Price of $1,658 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

Report from Regulators Show Concentrates Commanded Increasing Market Share, Industry Consolidation Advanced in 2019

Oregon

Rise in Wholesale Prices this Year Proportionally Smaller than in 2019, Despite Record Sales

Washington

January 1, 2021 Deadline for Product Labels to Be Approved Under New Rules Approaching

Massachusetts

Additional Comment Period on Establishment of Adult-Use Delivery Licenses Opened by Officials

Legalization Updates

Arizona, Montana, Mississippi, New Jersey, and South Dakota Voters to Decide on Adult-Use and Medical Cannabis Legalization Initiatives Next Week

 

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

30 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — October 30, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published October 30, 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$5.96 per gram this week, up 0.6% from last week’s C$5.92 per gram. This week’s price equates to US$2,041 per pound at the current exchange rate.

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This week, we turn our attention to supply and demand dynamics for cannabis 2.0 products in Canada’s legal cannabis market. The three main product categories that fall under the cannabis 2.0 umbrella are edibles, extracts, and topicals. The official Health Canada definitions of each are as follows:


Edibles: Products that are solid or liquid at a temperature of 22 ± 2°C and that are intended to be eaten or drunk the same way as foods such as chocolate, cookies, sodas, teas.


Extracts: Products made using extraction processing methods or by synthesizing phytocannabinoids and intended for inhalation or ingestion, including by absorption in the mouth or other routes of administration (e.g. vape pens, hash, tinctures, softgels, suppositories).

Topicals: Products that include cannabis as an ingredient and that are intended for use on external body surfaces such as skin, hair, or nails.

 

In today’s report, we look specifically at the supply and demand associated with edibles and extracts, which are the two larger categories. To date, Health Canada has compiled and published monthly data for production, consumption, and inventory of packaged units through July 2020.

 

Below are two groupings of charts that show the monthly supply and demand for edibles and extracts from the introduction of cannabis 2.0 products in October 2019 through July 2020. 

 

Starting with edibles, we see the production of packaged units by licensed producers ramped up quickly and at a consistent rate until the most recent month. With the production increase, we see medical and non-medical sales picked up as well, but not at the same rate, leading to excess production going into inventory at the federal, provincial, or retail level. 

 

Just as with dry flower cannabis in 2019, the mismatch between supply and demand is causing inventories to rise at massive rates. The current inventory of edible packaged units sits at 8.4M, which is approximately 6.3 months worth of supply at July’s consumption rate.

Source: Cannabis Benchmarks, Statistics Canada

The story for extracts is broadly similar. Production ramped up at a faster rate than domestic consumption, leading to growing inventory. The current inventory of extract packaged units sits at 9.8M, which is approximately 7.3 months worth of supply at July’s consumption rate. 

Source: Cannabis Benchmarks, Statistics Canada

Cannabis 2.0 products seem to be following a similar trajectory as cannabis flower in 2019, with excess inventory leading to declining prices and write-offs of older products. Cannabis 2.0 products, however, typically have a longer shelf life than dry flower. When we inspected edible and extract packaging, there was a clear packaging date, but no expiration date.

 

In analyzing the Health Canada data, it is clear that there is a massive gap between supply, consumption, and storage in the market. We anticipated all this monthly data to perfectly net out to zero, but that is not the case. We have backed into the gap and labeled it as “unaccounted” inventory, which is identified in the charts above with the boxed pattern. We show unaccounted inventory only in the charts below to more clearly see the size of it each month.

Source: Cannabis Benchmarks

The growing size of the “unaccounted” category is concerning, although it is not clear if these products are being consumed somewhere in the system or it is going into inventory. If it is going to inventory, there are an additional 1.45M packaged units of edibles and 1.31M packaged units of extracts to account for, making the inventory overhang even larger.

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

30 October 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

October 23, 2020

CANADA CANNABIS SPOT INDEX — October 23, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published October 23, 2020
ccsi image 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$5.92 per gram this week, down 2.0% from last week’s C$6.04 per gram. This week’s price equates to US$2,044 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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This week, Statistics Canada released retail sales data for August 2020. Sales have been increasing steadily across Canada, but sales growth in July and August was substantially higher than expected. August sales settled at C$245M for the month, which is C$12.2M higher than July 2020 and up C$119M year-over-year. The monthly increase is not as large as the gain from June to July, but still very notable. August’s figures point to an annual run rate of C$2.93B for 2020. The prospect of retail sales eclipsing $3B in 2021 is now extremely likely.

 

As reported last month, the high level of sales looks to be the result of:

 

  1. Elevated demand during the summer months, 

  2. growth in retail outlets in key provinces, 

  3. higher-value sales opportunities with cannabis 2.0 products, and 

  4. traditional consumers switching to safer and regulated legal channels.  

Source: Cannabis Benchmarks, Statistics Canada

On an average daily basis, August sales were higher across every province. While average daily sales nationwide expanded by 5.2%, increases varied significantly at the provincial level. Of the major provinces, Ontario led the way with a 10.5% rise in average daily sales and the Maritime provinces saw an increase of 8.1%. 

 

 

Cannabis Benchmarks estimates that a total of 22,141 kg of dry cannabis was sold in August. This is approximately 1,169 kg more than July. The majority of that product was sold in Ontario, followed by Alberta.

Source: Cannabis Benchmarks, AGCO

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

23 October 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

U.S. Cannabis Spot Index — October 23, 2020

U.S. Cannabis Spot Index — Published October 23, 2020

U.S. Cannabis Spot Index up 1.1% to $1,665 per pound.

 

The simple average (non-volume weighted) price increased $16 to $1,879 per pound, with 68% of transactions (one standard deviation) in the $1,110 to $2,648 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.67 and the simple average price was $4.14.

 

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

 

The relative volumes of each grow type observed to be traded nationally were virtually unchanged from a week ago.

New data out of several states with sizable legal cannabis markets continues to show that the unprecedented sales growth enjoyed by licensed retailers this summer is cooling. Colorado saw an uncharacteristic decrease in monthly retail revenues from July to August, a phenomenon that only occurred once in the previous six years. In Michigan and Oklahoma, September sales ticked downward, the second straight decrease in monthly revenues in both states. 

 

While sales growth appears to be slowing, demand is still elevated significantly relative to last year. Additionally, seasonal sales trends typically see decreasing monthly revenues from September through November. This year, however, the declines seen in September in the states that have reported data for that month are of relatively small proportions, compared to sometimes significant downturns from August to September in prior years. Furthermore, sales are continuing to grow in some states; both Massachusetts and Illinois saw increases in monthly revenues in September, albeit fairly modest ones compared to those documented in the summer.

 

 

All this to say, demand remains strong enough to strain supplies in both mature markets and those where production capacity is still developing; this despite the fact that monthly sales records and remarkable sales spikes are no longer occurring nearly every month, in virtually every major state market covered in our reporting, as they were just a few months ago.

November Forward up $30 to $1,590 per pound.

 

The average reported forward deal size was nominally unchanged at 22 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 37%, 41%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 25 pounds, 18 pounds, and 25 pounds, respectively.

 

At $1,590 per pound, the November Forward represents a discount of 4.5% relative to the current U.S. Spot Price of $1,665 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

August Sales See Month-Over-Month Decrease for Only Second Time in Seven Years

Michigan

Total September Revenues Slip, Primarily on Decline in Medical Cannabis Sales; Average Daily Sales in Adult-Use Sector Up Compared to August

Massachusetts

Adult-Use Sales Continue to Ascend in September, Approach $80 Million

Illinois

September Medical Cannabis Sales Down, but Total Monthly Retail Revenues Reach $99 Million, a New Record

Oklahoma

Medical Sales Slide for Second Straight Month in September; Active Patient and Business License Numbers Also Begin to Decrease After Previously Explosive Growth

 

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

23 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

October 16, 2020

U.S. Cannabis Spot Index — October 16, 2020

U.S. Cannabis Spot Index — Published October 16, 2020

U.S. Cannabis Spot Index up 1.5% to $1,647 per pound.

 

The simple average (non-volume weighted) price increased $63 to $1,863 per pound, with 68% of transactions (one standard deviation) in the $1,083 to $2,644 per pound range. The average reported deal size increased to 2.2 pounds. In grams, the Spot price was $3.63 and the simple average price was $4.11.

September sales data continues to show demand elevated well above pre-COVID levels. However, similar to August, there are also some signs that it may have reached, or at least be near, a current peak. Sales volume to patients in Arizona’s medical cannabis system declined for the second straight month in September. Adult-use sales in Illinois continued to climb, but growth has slowed in recent months after a big jump in July, although that may be due in part to still-developing production capacity and tight supply. 

 

As record sales have strained supplies even in mature and previously well-supplied markets, new regulatory developments could add more costs for businesses, potentially applying further upward pressure on wholesale prices. Proposed rules in Oregon and Washington would enact new regulations around additives in vape products in the former state and implement required pesticide and heavy metals tests for products in the latter. Mandatory quality assurance and safety screenings of products will begin in Arizona’s market in November for the first time in the history of the state’s medical cannabis program.

November Forward up $15 to $1,560 per pound. The average reported forward deal size was nominally unchanged at 22 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 35%, 40%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 24 pounds, 18 pounds, and 25 pounds, respectively.

 

At $1,560 per pound, the November Forward represents a discount of 5.3% relative to the current U.S. Spot Price of $1,647 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

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

Do you support wholesale market transparency?

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

16 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved