February 26, 2021

CANADA CANNABIS SPOT INDEX — February 26, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending February 26, 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$5.86 per gram this week, up 1.5% from last week’s C$5.77 per gram. This week’s price equates to US$2,107 per pound at the current exchange rate.

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Last week, Statistics Canada released retail sales data for December 2020. December sales reached C$298.4M, up C$37.4M from November. On a monthly basis, sales have been increasing steadily across Canada; with the latest data point we now have a complete look at 2020. Total 2020 legal cannabis sales amounted to C$2.6B, which is C$1.43B or 120% higher than 2019’s revenue tally.

Source: Cannabis Benchmarks

The country’s legal cannabis market looks to be on the right trajectory, as sales have increased almost every month since they began. Nationwide, the number of stores increased by 701 in 2020, to 1,369 by the end of the year, despite some delays in approving and opening new businesses associated with COVID-19. 

 

In the larger provinces, better accessibility to the regulated market has equated to higher sales. December’s numbers show a bump in daily sales across all the major provinces. Ontario’s sales continued to expand at an exponential rate, while revenues in the other three major provinces maintained their linear growth rate.

Source: Cannabis Benchmarks

In Ontario, we saw the largest expansion of stores last year, as the licensing process was simplified and streamlined. The number of stores increased from 26 to 288, a trend that certainly contributed to December sales exceeding C$3M per day in Ontario. We expect that number to grow to C$4.8M per day by the end of 2021.

 

With this additional data for the last quarter of 2020, we revised our 2021 forecast higher this week. At the December 2020 run rate, sales would exceed C$3.5B in 2021. But with the continued expansion in store counts, increased product variety as cannabis 2.0 products develop and diversify, and additional customers as legal channels become more price competitive with illicit sellers, we are now forecasting that the legal market will exceed C$4.1B this year.

Source: Cannabis Benchmarks

In the upcoming Nasdaq Cannabis Market Insights report, we will break out our 2021 projections for the major provinces. Click the link below to subscribe.

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

26 February 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

February 25, 2021

U.S. Cannabis Spot Index — February 26, 2021

U.S. Cannabis Spot Index — Published February 26, 2021

U.S. Cannabis Spot Index up 0.4% to $1,522 per pound.

 

The simple average (non-volume weighted) price increased $7 to $1,789 per pound, with 68% of transactions (one standard deviation) in the $1,009 to $2,568 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.35 and the simple average price was $3.94.

 

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

 

 

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

After declining since early November, the U.S. Spot Index has shown modest upward movement in recent weeks. With February drawing to a close, historical sales trends across most states tell us that next month will see a jump in demand, as sales typically spike in March after slowing in January and February of any given year. The further expansion of already strong demand – while sales have slowed they are still up significantly year-over-year in most markets – could continue to push the U.S. Spot higher. 

 

National wholesale price trends from recent years paint a mixed picture, however. The monthly average U.S. Spot price rose by 5.2% from February to March 2018, but declined in the same period in both 2019 and 2020, by 5.3% and 0.7%, respectively. While strong demand has reportedly strained supplies in several major markets, recently-released data and reports from market participants indicate that 2020’s outdoor harvest yielded significantly more product than the prior year, despite the historic wildfires that ravaged the West Coast. Growing conditions prior to the fires were reportedly ideal, according to statements from market participants at the time.

 

 

Ample supplies from the autumn crop may cushion the impact of March’s expected seasonal increase in demand in states where outdoor growing is prevalent. However, other markets, especially newer, developing ones such as Michigan and Illinois, could see wholesale prices on the rise again if sales trends there follow those observed in other states.

March 2021 Implied Forward closes unchanged at $1,525 per pound.

 

The average reported forward deal size was 39.2 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 37%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 53 pounds, 24 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the March Implied Forward represents a premium of 0.2% relative to the current U.S. Spot Price of $1,522 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

Bill Would Allow Provisional Licenses to Be Extended to 2028; Over 80% of Cultivation Licenses are Provisional

Oregon

Proposed Rules Would Streamline Licensing Process, May Lead to Significant Increase in Producer Licenses

Nevada

October 2020 Sales Exceed $82 Million, a New Record for the State, As Las Vegas Tourism Saw its Highest Visitor Numbers of 2020

New Jersey

Governor Signs Enabling Legislation Into Law, Initiating Adult-Use Legalization; But No Definite Timeline for Licensing, Sales

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

26 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

February 19, 2021

U.S. Cannabis Spot Index — February 19, 2021

U.S. Cannabis Spot Index — Published February 19, 2021

U.S. Cannabis Spot Index up 0.8% to $1,515 per pound. The simple average (non-volume weighted) price increased $3 to $1,782 per pound, with 68% of transactions (one standard deviation) in the $1,007 to $2,556 per pound range. The average reported deal size decreased to 2.4 pounds. In grams, the Spot price was $3.34 and the simple average price was $3.93.

 

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

 

 

The relative volume of warehouse flower expanded by about 2% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was unchanged.

This week’s Premium Report analyzes new January sales data out of Oregon, Michigan, and Oklahoma. Although the aforementioned state markets are quite disparate (an over four-year-old licensed system serving both adult-use consumers and patients; regulated medical and adult-use markets that are mostly segregated and still developing; and a large, loosely-regulated medical-only system, respectively) they all reveal similar trends in demand in the opening month of 2021. Specifically, the elevated sales that manifested during the COVID-19 pandemic are persisting, albeit at levels lower than those observed in summer 2020. 

 

While strong demand in legal cannabis systems has continued, wholesale prices are depressed relative to 2020’s peak of $1,665 per pound, observed in late October. Data from Oregon regulators shows that outdoor growers in the state boosted production volume by over 30% from 2019 to 2020. This despite the record-breaking wildfires that burned areas of Oregon home to intensive cannabis cultivation right as the harvest period was approaching. Given this data, as well as previous anecdotal reports from other West Coast states, it is likely that outdoor growers in California and Washington were also able to bring in their fall crops for the most part and that 2020’s outdoor harvest was robust overall in terms of volume. Still, it should be noted that retail sales revenue in Oregon increased at a significantly faster rate than production volume from 2019 to 2020 – sales rose about 45% compared to the over 30% expansion in harvest volume – which may lead to rising supply side rates in the months to come as demand picks up in the spring and summer.

March 2021 Implied Forward down $15 to $1,525 per pound.

 

The average reported forward deal size was 39.8 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 36%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 53 pounds, 24 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the March Implied Forward represents a premium of 0.6% relative to the current U.S. Spot Price of $1,515 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

Recently-Introduced Bill Projected to Expand Licensed Cannabis Market by Providing Regulatory Support to Local Governments

Oregon

January 2021 Sales Rise 4% from December 2020 to Over $100 Million; Production Also Up Significantly YoY

Michigan

Both Adult-Use and Medical Sales Rose in January 2021 to Reach Combined Tally of Over $108 Million; Retail Flower Prices Drop in Both Market Sectors

Oklahoma

Steady, Strong Demand Continued Into 2021 with Almost $75 Million in Medical Cannabis Sales in January

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

19 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — February 19, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending February 19, 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$5.77 per gram this week, down 0.5% from last week’s C$5.80 per gram. This week’s price equates to US$2,066 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.

We continue to keep a close eye on the expansion of cannabis retail stores across Canada, but most importantly in Ontario, the country’s most populous province where the establishment of licensed retailers initially got off to a slow start. As of the end of January 2021, we showed 317 active stores in Ontario. Last year at this time, only 26 stores were open for business in the province. Significant progress has been made with Ontario streamlining the licensing process, even as COVID-19 lockdowns last year raised barriers to new businesses opening generally.  

 

As noted, Ontario had the slowest rollout of licensed stores among all provinces, but that has drastically changed since Q2 2020. The speed at which new stores are coming to market is helping drive strong sales growth in the province, a trend that looks as if it will persist for the foreseeable future. 

 

From data received from the Alcohol and Gaming Commission of Ontario (AGCO), we can get a glimpse of the number of stores that could be coming online over the next few years. AGCO continues to receive a high volume of applications and is now issuing 30 retail store authorizations (RSA) per week. RSA applications are processed in order of receipt.


The AGCO provides detailed reports of the status of all applications. They are laid out in one of the following categories: 


In Progress: This status indicates that the AGCO has received the application and the evaluation process is underway.

Public Notice: This indicates an application has been successful, and the provincial government is now accepting written submissions for 15 days for a specific location from residents of that municipality.


Authorized to Open
: This indicates that the store has met all regulatory requirements and has passed its pre-opening inspection from the AGCO. 

Based only on current application data (and not taking into account additional new applications that will certainly be submitted), it appears that Ontario could see as many as 1,350 new cannabis stores open in the relatively near future. 

Source: Cannabis Benchmarks, AGCO

Next we look at cannabis purchasing in comparison to that for alcohol and tobacco. Major alcohol and tobacco companies have made significant investments in cannabis operations over the last few years, in part as a hedge to ensure they do not lose out to the latent demand for cannabis that is being captured gradually by legal businesses. The data released by Statistics Canada to date shows that alcohol and tobacco sales remain much stronger than cannabis sales, and that increased cannabis sales have not impacted those categories negatively. As seen in the chart below, both alcohol and tobacco sales remained consistent between Q3 2019 and Q3 2020, with 51% and 37-38% respectively.

Source: Cannabis Benchmarks, Health Canada

The map below from the AGCO website shows the locations of shops currently authorized to open. The vast majority of stores are concentrated in the Greater Toronto area. 

Source: 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

19 February 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

February 12, 2021

U.S. Cannabis Spot Index — February 12, 2021

U.S. Cannabis Spot Index — Published February 12, 2021

U.S. Cannabis Spot Index down 0.5% to $1,503 per pound.

 

The simple average (non-volume weighted) price increased $29 to $1,779 per pound, with 68% of transactions (one standard deviation) in the $1,016 to $2,542 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.92.

 

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

 

 

The relative volume of outdoor flower expanded by about 2% this week. The relative volume of warehouse product contracted by the same proportion, while that for greenhouse flower was unchanged.

We noted last week that reports from Oregon regulators and Washington State academics both predicted that 2021 would see strong sales growth, but rates of increase would subside somewhat compared to the boom in revenues enjoyed by legal cannabis businesses in 2020. New data out of two major markets this week offers some preliminary affirmation of such projections. 

 

In Colorado, the state’s legal market racked up almost $2.2 billion in total retail sales last year. While a customary month-over-month increase in revenues was observed in December to close 2020, it was of a smaller magnitude than that seen in some recent prior years – namely 2017 and 2018, when overall annual growth rates were lower than in 2020. Medical cannabis sales data for January 2021 was also published by Arizona officials this week. Adult-use sales began on January 22 and data for that sector remains to be released. January’s medical cannabis sales show declining patient purchasing coinciding with the opening of the new adult-use market, though whether this trend will persist remains to be seen. 

 

National trends in wholesale prices have shown stability in recent weeks as sales growth has slowed compared to last summer.

Restrictions on businesses and individuals imposed due to the COVID-19 pandemic have been loosened in many states. Children are also returning to in-person school in many areas, which brings with it costs to parents for supplies, clothes, and the like. These developments may be diverting some disposable income away from being spent on legal cannabis compared to when more strict lockdowns were in place last year.

August 2021 Implied Forward initially assessed at $1,650 per pound.

 

The average reported forward deal size was 39.7 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 54 pounds, 22 pounds, and 26 pounds, respectively.

 

At $1,540 per pound, the March Implied Forward represents a premium of 1.9% relative to the current U.S. Spot Price of $1,512 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

Total Retail Sales Approached $2.2 Billion in 2020, Up 26% YoY

Arizona

Medical Cannabis Sales Slip in January; Decline in Patient Purchasing Coincided With Opening of Adult-Use Market

Maine

Adult-Use Sales Growing, But Still Modest at Under $2.5 Million in January

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

12 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved