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.

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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?

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

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

October 9, 2020

CANADA CANNABIS SPOT INDEX — October 16, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published October 16, 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$6.04 per gram this week, up 1.3% from last week’s C$5.96 per gram. This week’s price equates to US$2,073 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 continue to delve into data from the Ontario Cannabis Store’s (OCS) Q1 Cannabis Insights reportThe report contains a wide variety of useful data to show how Ontario’s market is developing. In today’s report, we will focus on expanding cannabis product variety and sales breakdowns by product type.

 

With the introduction of cannabis 2.0 products, consumers seeking more variety presumably have greater reason to purchase products from legal channels. While illegal mail-order-marijuana websites do sell the types of products included in the legal market’s cannabis 2.0 phase, traditional dealers usually only carry a small variety of dried flower. 

 

The latest data from the OCS shows cannabis 2.0 products are already accounting for a significant portion of legal sales just a few months after their launch. For the three-month period starting April 30, cannabis 1.0 products (dried flower and pre-rolls) accounted for 70% of total sales in legal cannabis channels, while cannabis 2.0 products grew to 30% of the total. 

 

As part of the reported data, the OCS broke out sales revenue by product category. Additionally, the OCS calculated a dry cannabis equivalency (DFE) for cannabis 2.0 products, providing an estimate of the number of grams of dried flower represented by the sales of each respective product type. The DFE breakdown shows that while cannabis 2.0 products made up about 30% of all sales revenue for the period, they only accounted for 23.5% of all grams sold. This means that, overall, cannabis 2.0 products commanded a greater per-gram premium relative to dried flower. 

Source: Cannabis Benchmarks, AGCO

However, the overall premium commanded by cannabis 2.0 products is not distributed equally across the various product types. Taking the total sales with the DFE for each product category gives us a rough idea of which cannabis 2.0 products achieved a premium compared to the same gram of cannabis sold as dried flower. In other words, how much did a gram of cannabis sell for as dried flower versus being converted to a cannabis 2.0 product? Keep in mind we did not assess the cost to produce each product, which varies across – and within – product categories.

 

As the chart below shows, topicals, vapes, and capsules received the greatest premiums. On the other side of the spectrum, edibles, concentrates, and beverages commanded the lowest price for a gram of cannabis, based on the OCS’s DFE. It should also be noted that lower-grade cannabis plant material is typically used in the manufacture of cannabis 2.0 products, enhancing the premiums commanded by some of the products.

Source: Cannabis Benchmarks, AGCO

Lastly, we look at where these products were sold – through the provincial online store or at brick-and-mortar retailers. This dynamic has likely already shifted with 78 more stores opening between the end of June and the end of September, but this data gives us a good snapshot in time. 

 

As can be seen in the charts below, almost every product had a greater proportion of sales through retail stores. However, oils saw online sales make up a greater percent of the total, while the proportions of capsules, concentrates, and beverages sold online versus in-store were roughly or nearly equal. All of the products that saw a greater or almost equal proportions of online sales are highly finished and standardized. Consumers may feel more confident selecting such products online, compared to dried flower or even an edible product, which buyers might prefer to inspect in person before purchasing. It should be noted that availability issues at some store locations may have skewed sales somewhat, as cannabis 2.0 products were still being rolled out during the period under discussion.

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

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

U.S. Cannabis Spot Index — October 9, 2020

U.S. Cannabis Spot Index — Published October 9, 2020

U.S. Cannabis Spot Index down 0.7% to $1,623 per pound.

 

The simple average (non-volume weighted) price increased $31 to $1,800 per pound, with 68% of transactions (one standard deviation) in the $1,045 to $2,556 per pound range. The average reported deal size was nominally unchanged at 2.0 pounds. In grams, the Spot price was $3.58 and the simple average price was $3.97.

 

The relative frequency of trades for greenhouse flower decreased by 2% this week. The relative frequency of transactions for indoor product increased by the same proportion, while that for deals involving outdoor flower was unchanged.  

 

The relative volume of warehouse product contracted by 1%. The relative volume of outdoor flower expanded by the same proportion, while that for greenhouse product was unchanged.

September sales data released this week 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.

 

With rules tightening in some states with more mature markets, the establishment and expansion of younger ones will capture demand that was likely supplied previously by illicit sellers. The sizable markets of Los Angeles and Michigan both announced new opportunities to apply for cannabis business licenses this week. Meanwhile, adult-use sales began today in Maine and a new law set the stage for a regulated commercial cannabis market in Vermont in the future.

November Forward up $30 to $1,545 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%, 39%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 24 pounds, 17 pounds, and 25 pounds, respectively.

 

At $1,545 per pound, the November Forward represents a discount of 4.8% relative to the current U.S. Spot Price of $1,623 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

Los Angeles to Accept License Applications for Several Business Types Later this Month

Arizona

Sales Volume Declines for Second Straight Month in September, but Remains Elevated from Pre-COVID Levels

Illinois

September Adult-Use Sales Approach $68 Million

Maine

Adult-Use Market Opens, but Only a Few Businesses Licensed to Make Sales Businesses

 

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

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