January 15, 2021

CANADA CANNABIS SPOT INDEX — January 15, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 15, 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$5.87 per gram this week, down 1.6% from last week’s C$5.96 per gram. This week’s price equates to US$2,095 per pound at the current exchange rate.

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This week we employ our updated expectations for nationwide retail expansion, detailed in last week’s report, to recalculate sales revenue projections for 2020 and 2021. We projected that by the end of 2021 Canada will be home to 2,540 physical cannabis storesThis figure would represent an increase of 1,171 licensed shops compared to the end of 2020, but still falls short of our optimal projected level of 4,638 storesThat being said, the large number of additional new retailers, mainly in Ontario, will add tremendously to Canada’s overall cannabis sales figures.

 

 

The latest data from Statistics Canada shows October 2020 sales at C$270M. This new monthly record is up C$13.0M from the month prior and C$140M from the same month last year. This level of sales was achieved with 1,225 stores. If the number of retailers continues to expand at the rate we anticipate, monthly sales will easily cross C$300M early this year.

 

Below is our monthly Canada-wide cannabis sales projection through the end of 2021. We expect to conclude 2021 with a record monthly sales level of C$345M in December.

Source: Cannabis Benchmarks

All in all, the legal industry is steadily growing and becoming more established. With our new store count projection, we recalculated our complete 2020 and 2021 sales projections. We now expect cumulative 2020 sales totaling C$2.6B and cumulative 2021 sales totaling C$3.8B. The 2021 sales represent a 46% increase from 2020.

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

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

January 8, 2021

CANADA CANNABIS SPOT INDEX — January 8, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 8, 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$5.96 per gram this week, down 1.9% from last week’s C$6.08 per gram. This week’s price equates to US$2,121 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 provide an update on store counts nationwide. This is a very important metric to track, as each new store contributes to higher sales. The better accessibility of recreational cannabis will help reduce consumer spending in illicit supply chains and further establish cannabis as a customary part of Canadian society.

 

The Canadian cannabis industry has continued to open new retail outlets across the country at a strong pace. As of the end of December, we counted 1,369 licensed retailers, with an average monthly growth rate of 6.0% in 2020. December saw one of the largest individual monthly growth rates last year with 93 new stores, or 7.3% more than the month before. This growth rate continues to be very consistent, which gives us confidence that the cannabis industry will continue to expand at a stable rate in 2021.

 

In the chart below we show our expectations for store count growth throughout 2021. We forecast that Canada will end 2021 with 2,540 stores across the country. At the national level, the increase in store counts looks to be growing linearly, but drilling down into each province shows a very different picture.

Source: Statistics Canada, Cannabis Benchmarks

We expect Alberta store counts to plateau in late summer and even start to decrease in the latter part of the year as the province begins to exceed its saturation point. Store counts in BC and Quebec are expected to increase at a modest rate, while Ontario’s are projected to expand at a higher rate based in part on recent announcements by regulators that we have covered previously.

Source: Statistics Canada, Cannabis Benchmarks

Our final projected 2021 store count of 2,540 is still quite far from the optimal level we calculated in previous reports. We have previously estimated that Canada will require 4,638 stores to reach a per capita store count that lies between two of the more mature legal cannabis markets in the U.S.: Colorado and Oregon. In Colorado, there is one recreational retailer per roughly 9,600 residents. In Oregon, there is one legal store for about every 6,150 people. 4,638 stores will get Canada to one legal store per 8,000 people.

 

We do not expect store counts to reach that level until 2024.

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

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

U.S. Cannabis Spot Index — January 8, 2021

U.S. Cannabis Spot Index — Published January 8, 2021

U.S. Cannabis Spot Index down 2.6% to $1,491 per pound.

 

The simple average (non-volume weighted) price decreased $22 to $1,777 per pound, with 68% of transactions (one standard deviation) in the $1,041 to $2,514 per pound range. The average reported deal size increased to 2.6 pounds. In grams, the Spot price was $3.29 and the simple average price was $3.92.

 

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

 

 

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

Several states have reported full-year sales figures for 2020, which we examine in detail below. Overall, states with existing, more mature adult-use markets saw demand growth accelerate last year.  Newer markets such as Illinois and Michigan posted impressive total retail revenue figures, which slightly exceeded and approached $1 billion in each state, respectively. 

 

In the face of elevated sales, the U.S. Spot Index closed 2020 by declining by 9.5% from its annual peak on October 23 to the final week of the year. Despite apprehensions concerning the state of the fall harvest due to wildfires on the West Coast, wholesale prices are trending downward in all three of those states, as well as Colorado, mainly on the introduction of larger amounts of lower-priced outdoor flower into commerce. Anecdotal reports out of Oregon and California have so far told of crops escaping major damage or contamination from the fires. Prior to the wildfires reaching their peak in September and October, reports from market participants stated that growing conditions were excellent. 

 

 

Western markets are still largely steering the direction of the U.S. Spot, as the volumes of flower being traded remain much higher than those in newer markets. For example, although Illinois’ retail revenue figures were comparable to those of Oregon’s in 2020, Cannabis Benchmarks estimates that Oregon retailers sold roughly 250,000 pounds of flowers to consumers and patients last year, while we estimate total flower sales volume in Illinois – both adult-use and medical – reached about 75,000 – 80,000 pounds.

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

 

The average reported forward deal size increased from 36.5 pounds to 38.9 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 $1,525 per pound, the February Implied Forward represents a premium of 2.3% relative to the current U.S. Spot Price of $1,491 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:

Washington

FY 2020 Sales Up 20% from Prior FY

Michigan

Combined Adult-Use and Medical Cannabis Sales Near $900 Million in First 11 Months of 2020

Massachusetts

Adult-Use Retailers Generated Almost $700M in Revenue in 2020, Despite Being Ordered Closed for 2 Months Due to Coronavirus

Illinois

Total Legal Sales in 2020 Top $1 Billion in First Year of Adult-Use Legalization

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

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