January 29, 2021

U.S. Cannabis Spot Index — January 29, 2021

U.S. Cannabis Spot Index — Published January 29, 2021

U.S. Cannabis Spot Index up 0.2% to $1,489 per pound.

 

The simple average (non-volume weighted) price increased $13 to $1,762 per pound, with 68% of transactions (one standard deviation) in the $998 to $2,526 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.28 and the simple average price was $3.88.

 

The relative frequency of trades for greenhouse flower decreased by 1%. The relative frequency of deals for outdoor product increased by the same proportion, while that for indoor flower was unchanged. 

 

 

The relative volume of outdoor flower expanded by almost 3% this week. The relative volume of greenhouse product contracted by the same proportion, while that for indoor flower was unchanged.

The U.S. Spot Index averaged $1,495 per pound in January to open 2021, down by 1.9% from December 2020’s mean composite price of $1,524 per pound. The overall decline has been driven by downturns in California, Colorado, and Oregon, with increased trading volumes of outdoor product from the fall harvest largely behind the downward trend that commenced in early November. However, national wholesale prices have stabilized in recent weeks, coinciding with reports of lower trading volumes for outdoor-grown flower. 

 

Even with the U.S. Spot trending downward over the last three months, it remains elevated compared to a year ago. January 2021’s monthly mean price represents a year-over-year increase of 5.7%, from $1,415 per pound in January 2020. As we documented over the course of last year, a surge in demand during the COVID-19 pandemic boosted sales to record levels in many states, straining supplies in both new and more mature markets.

February Implied Forward closes unchanged at $1,500 per pound.

 

The average reported forward deal size was unchanged at 39.6 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 34%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 55 pounds, 21 pounds, and 26 pounds, respectively.

 

At $1,500 per pound, the February Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $1,489 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:

Arizona

Adult-Use Market Opened One Week Ago, With Over 100 Medical Dispensaries Approved to Sell to General Consumers

California

San Diego County Votes to Allow Licensed Cannabis Businesses in Unincorporated Areas, Reversing Previous Ban

Oregon

Proposed Changes to Required Testing Would Lower Frequency of Mandatory Screenings for Cultivators

Illinois

Officials Reportedly Moving Forward to Issue New Adult-Use Licenses Delayed Since Last Year

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

29 January 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 29, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 29, 2021
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$5.89 per gram this week, down 1.0% from last week’s C$5.95 per gram. This week’s price equates to US$2,097 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 November 2020. November’s sales reached C$261.4M, down by C$8.5M from October. On a monthly basis, sales have been increasing steadily across Canada up until the most recently released data. The monthly figures are a bit misleading in this case, however, due to October having 31 days to November’s 30. When looking at the same data on a daily basis, as shown in the bar chart below, we see that sales began to plateau after September. After strong growth through the first 8 months of the year, we see daily sales holding at C$8.7M per day across the country. 

Source: Cannabis Benchmarks, Statistics Canada

When drilling into each province individually, the data reveals divergent trends. In most cases, consumers gaining better accessibility to the regulated market due to an expanding retail footprint did not equate to sales growth. From September to November, we counted 198 additional stores open across Canada, an increase of 18%, yet there was no increase in average daily sales on the national level or for most provinces. The exception was Ontario, which saw daily sales increase by 6% from September to November. The rest of the provinces saw either flat sales or a decline, with daily sales dropping 6% in the Maritime provinces. 

Source: Cannabis Benchmarks, Statistics Canada

November’s data suggests that Canada’s legal cannabis market may have reached a momentary baseline in much of the country, although Ontario’s slower-to-develop provincial market is still seeing expansion. On the national level, though, instead of the relatively steady, consistent growth in monthly revenues that has been recorded through the first two years of legal sales, we may begin to see more monthly and seasonal fluctuations in consumer demand. Similar trends have been observed in the numerous state markets in the U.S. as they have developed. 

 

However, this does not mean that overall growth has ceased, nor does it mean that annual growth rates will necessarily subside in the future. In Colorado, for example, the most mature legal cannabis market in the U.S., annual sales growth slowed in 2018. After four years of significant year-over-year increases in retail revenues from 2014 through 2017, 2018 saw a less than 3% uptick in annual sales. Total retail revenues then rose by 13% in 2019. Full sales data for 2020 is not yet complete, but should represent a roughly 20% jump from 2019 once December’s figures are tallied. 

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

29 January 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

January 22, 2021

CANADA CANNABIS SPOT INDEX — January 22, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 22, 2021
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$5.95 per gram this week, up 1.5% from last week’s C$5.87 per gram. This week’s price equates to US$2,128 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 once again touch on the changing cultivation landscape in Canada. Overbuilt cultivation capacity has forced numerous Licensed Producers (LPs) to close indoor cultivation facilities and scrap plans for future developments. As the cannabis market matures, cultivators realize that price wars are inevitable, just as in any other commodity. With that realization, an increasing number of Canadian cannabis cultivators are shifting production capacity outdoors. Outdoor cultivation has significantly lower operating costs relative to growing indoors or in a greenhouse, including lower infrastructure and labor costs, and no energy costs for lighting, heating, and ventilation.

 

The latest data from Statistics Canada shows outdoor cannabis cultivation capacity expanding at a rapid rate. As of October 2020, there were 576 hectares licensed to grow cannabis outdoors. This is a massive jump relative to the first data point from October 2019. Over the 12 month period, outdoor cannabis cultivation capacity grew by 344 hectares, or 148%. This increase comes as three of the largest indoor and greenhouse producers, Aurora, Canopy Growth, and Tilray, announced closures of large facilities last year along with major inventory write-downs.

 

Source: Cannabis Benchmarks

The next chart takes the same data and standardizes the units to square feet. It is important to note that this chart does not represent a direct comparison of actual cannabis production by each cultivation type, since indoor operations are able to harvest multiple times annually. Additionally, while the dramatic increase in outdoor cultivation capacity – along with plateauing indoor production – points to significant volumes of new supply in the coming years, a greater proportion of indoor production ends up being sold as smokable flower, while significant amounts of outdoor-grown cannabis are devoted to extraction and product manufacturing. The controlled environments of indoor growers enable the production of flower that has greater consistency and aesthetic appeal to consumers looking for smokable product by virtue of sheltering the cultivation process from weather and pest pressures. 

Source: Cannabis Benchmarks

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

22 January 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

January 21, 2021

U.S. Cannabis Spot Index — January 22, 2021

U.S. Cannabis Spot Index — Published January 22, 2021

U.S. Cannabis Spot Index up 0.6% to $1,486 per pound.

 

The simple average (non-volume weighted) price decreased $29 to $1,749 per pound, with 68% of transactions (one standard deviation) in the $1,013 to $2,484 per pound range. The average reported deal size decreased to 2.4 pounds. In grams, the Spot price was $3.28 and the simple average price was $3.86.

 

The relative frequency of trades for greenhouse flower decreased by 1%. The relative frequency of deals for outdoor product increased by the same proportion, while that for indoor flower was unchanged.

  

 

The relative volume of warehouse flower expanded by 4% this week. The relative volumes of greenhouse and outdoor product contracted by 1% and 3%, respectively.

The city of Detroit began accepting applications for adult-use retailers this week, on Tuesday, January 19. Applications will initially only be accepted from “legacy residents” who meet certain criteria under a social equity program, according to the Detroit News. To this point, Detroit has not permitted any adult-use cannabis businesses to open in the city. We noted previously that licenses could be issued as soon as June 2021. 

 

The Detroit News report notes, “only a handful of the city’s 46 medical marijuana dispensaries … are owned by [Detroit] residents.” This suggests that, for the most part, sales to adult-use consumers will not begin through existing stores as soon as licenses are issued and most new licensees will have to get up and running from scratch.

February Implied Forward declined $25 to $1,500 per pound.

 

The average reported forward deal size was 39.6 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 35%, and 13% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 55 pounds, 21 pounds, and 26 pounds, respectively.

 

At $1,500 per pound, the February Implied Forward represents a premium of 1.0% relative to the current U.S. Spot Price of $1,486 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:

Michigan

Combined Adult-Use and Medical Cannabis Sales Reach Almost $985 Million in 2020

Arizona

New Adult-Use Market May Open in Coming Days, About Two Months Ahead of Expectations

New Mexico

Medical Cannabis Sales Expanded Significantly in Q3 2020, Even as Growth in Patient Count Slowed

Massachusetts

Adult-Use Delivery Businesses Expected to Come Online this Year, but May Be Delayed by Litigation

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

22 January 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

January 15, 2021

U.S. Cannabis Spot Index — January 15, 2021

U.S. Cannabis Spot Index — Published January 15, 2021

U.S. Cannabis Spot Index down 0.9% to $1,477 per pound.

 

The simple average (non-volume weighted) price was unchanged at $1,777 per pound, with 68% of transactions (one standard deviation) in the $1,032 to $2,523 per pound range. The average reported deal size decreased to 2.5 pounds. In grams, the Spot price was $3.26 and the simple average price was $3.92.

 

The relative frequency of trades for indoor flower decreased by 1%. The relative frequency of deals for outdoor product increased by the same proportion, while that for greenhouse flower was unchanged.  

 

The relative volume of outdoor flower contracted by 1% this week.

 

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

The early weeks of 2021 have seen the U.S. Spot Index’s downward trend, which commenced in November with the fall harvest, continue. The current price erosion is being driven almost exclusively by falling rates in California, Colorado, and Oregon. Additionally, states in which prices had previously been climbing – namely Massachusetts, Michigan, and Illinois – have seen that upward momentum level off in recent weeks.

 

We have pointed out previously that the winter months typically see lower demand relative to the spring and summer, with the exception of a sales boost in December in many cases. One of the most notable findings in this week’s Premium Report is that total sales in Colorado in November dropped sharply, by over 12% compared to the prior month. A downturn in retail revenue from October to November is customary; however, this year’s decrease was more than twice the magnitude of that observed last year, indicating a significant pullback in purchasing that month.

 

 

On the other hand, Arizona’s Spot Index is trending upward as the beginning of adult-use sales draws closer. The state’s medical market saw almost 190,000 pounds of flower retailed to patients in 2020 – the fifth-largest flower sales volume in the country last year by our estimates – up by about 25% from the year prior. Notably, however, wholesale prices in the state trended downward for much of the year even in the face of strong demand, and only began to rise in the closing months of 2020 with the imposition of required product testing and the approval of adult-use legalization by voters, which both occurred in November.

February Implied Forward unchanged at $1,525 per pound.

 

The average reported forward deal size increased from 38.9 pounds to 40.1 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 34%, and 14% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 56 pounds, 21 pounds, and 26 pounds, respectively.

 

At $1,525 per pound, the February Implied Forward represents a premium of 3.3% relative to the current U.S. Spot Price of $1,477 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

YTD 2020 Sales Exceed $2 Billion as of November, Even as Monthly Tallies Have Declined Since August

Arizona

Medical Dispensaries Sold Almost 190,000 Pounds of Flower to Patients in 2020, the Fifth-Largest Sales Volume Total of Any State Market

Maine

December Adult-Use Sales Top $1.9 Million, Up 50% from November

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

15 January 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved