March 26, 2021

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

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

U.S. Cannabis Spot Index up 1.7% to $1,528 per pound.

 

The simple average (non-volume weighted) price increased $24 to $1,781 per pound, with 68% of transactions (one standard deviation) in the $990 to $2,572 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $3.37 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 2% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was stable.

The U.S. Spot Index averaged $1,508 in March, down 0.3% from February’s mean national composite price of $1,513 per pound. While we have pointed out that sales typically jump in March relative to February, the U.S. Spot also dropped from February to March 2020, by 3%, from $1,424 to $1,381 per pound. 

 

Looking back to last year at this time, our transaction data shows that the relative volumes of outdoor flower being traded in the West Coast states are smaller this year compared to the final week of March 2020. In addition to smaller proportions of lower-priced outdoor flower helping to lift wholesale prices, rates for all grow types are up compared to a year ago. This is particularly true for indoor-grown product. This week’s price of $1,990 per pound for warehouse flower is up by 14.2% from the rate of $1,742 per pound, documented in the week ending March 27, 2020. 

 

 

High prices in the younger adult-use markets of Michigan, Illinois, and Massachusetts have helped to lift rates for indoor flower from those recorded last year. However, data out of Michigan this week suggests that the notable upward price pressure from newer markets evident over the course of the past year may wane going forward. While sales growth in Michigan continued in February, expanding production is helping to bring down wholesale and retail prices in the state.

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

 

The average reported forward deal size was unchanged at 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 57%, 32%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 59 pounds, 34 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the April Implied Forward represents a discount of 0.2% relative to the current U.S. Spot Price of $1,528 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:

Oregon

Two Bills That Would Increase Cannabis Taxes Being Considered in State Legislature

Michigan

Combined Adult-Use and Medical Sales Decline to $105.8M in February, But Average Daily Revenues Still Show Growth from January

New Mexico

Sales Volume in State’s Medical Market Increased in Q4 2020, Breaking from National Trends

New York

Deal to Establish Legal Adult-Use Cannabis Market Reportedly Reached by Governor and State Lawmakers

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

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

CANADA CANNABIS SPOT INDEX — March 26, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending March 26, 2021
1 12.07.49 PM

*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$5.82 per gram this week, down 0.8% from last week’s C$5.86 per gram. This week’s price equates to US$2,101 per pound at the current exchange rate.

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Last week, Statistics Canada released retail sales data for January 2021. While December 2020 sales were adjusted higher by C$1.3M to C$299.7M, January sales came in lower at C$282.8M. 

Throughout 2020, total average daily sales increased every month except for November 2020; hence the drop in sales in January is a bit unexpected, especially with the continued expansion in stores. 

 

The chart below shows average daily sales per month, with a drop of C$0.54M per day from December 2020 to January 2021. 

Source: Cannabis Benchmarks

We do not see January’s sales decline as the start of a sustained slowdown in cannabis usage, but rather a decrease in spending after the holiday season. A 2018 survey related to alcohol use from Morning Recovery reported, “The average American sees a 100% increase in their alcoholic drinking habits between Thanksgiving and New Year’s.” With cannabis now legal and accessible, we believe that consumer behavior in regard to alcohol was mimicked in the cannabis realm in December. Additionally, sales trends in state-legal cannabis markets in the U.S. have shown that a month-over-month decrease in purchasing in January of any given year has become almost a customary phenomenon.  

 

 

Looking at the month-on-month change in each province, we see that a drop in cannabis sales occurred nationwide without exception. The largest proportional declines were seen in Alberta and the Maritime provinces. 

Source: Cannabis Benchmarks

In Ontario, we did not see as much of a decrease as there was a massive expansion in store counts in the month of December, with the Ontario Government making the licensing process more simplified and streamlined. As we have consistently noted, there is a strong correlation between store counts and sales with better accessibility leading to increased sales.

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

March 19, 2021

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

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

U.S. Cannabis Spot Index up 0.4% to $1,503 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,757 per pound, with 68% of transactions (one standard deviation) in the $987 to $2,527 per pound range. The average reported deal size was 2.3 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.87.

 

The relative frequency of trades for outdoor flower decreased by 2%. The relative frequencies of deals for indoor and greenhouse product increased by 1% each. 

 

 

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

After a turbulent 2020, marked by the disruption of previously-established trends in sales and wholesale price movements during the COVID-19 pandemic, the U.S. Spot Index and monthly revenue figures out of numerous markets have shown stability through the early months of this year. In this week’s Premium Report, we examine adult-use sales figures out of Massachusetts in the first two months of 2021, which exhibited continued growth, albeit at subsiding rates compared to the end of 2020. Wholesale activity in Alaska’s relatively small adult-use market also saw a boost in January. We noted in last week’s report that an uptick in sales in Colorado in January broke with behavior observed in prior years, suggesting the possibility of the persistence of strong demand growth documented in 2020. 

 

Meanwhile, revenue figures from the first 10 days of adult-use sales in Arizona, released by state officials this week, are significantly lower than those seen in the early days of Illinois’ recreational system, which launched a bit over a year ago. This despite Arizona’s more robust retail and production footprint relative to those in Illinois at the outset of 2020. 

 

Looking ahead, how supply and demand trends will play out with the end of the coronavirus crisis seemingly within sight has yet to be determined. Federal stimulus payments were distributed to millions of individuals this week, providing an increase in disposable income to some. Such disbursements last year did not coincide noticeably with changes in monthly sales figures, however, and March is typically a month that sees a surge in purchasing in both adult-use and medical markets regardless. 

 

Increased employment as COVID-related restrictions are eased and eventually eliminated should provide a more regular source of expanded income to those whose jobs have been impacted negatively by or lost to the virus. On the other hand, though, there will also be more outlets for disposable income apart from cannabis, as businesses such as movie theaters, theme parks, and sports and entertainment venues are permitted to reopen and operate at full capacity. Additionally, a shrinking number of individuals will presumably be working from home as this year wears on, curtailing opportunities for increased cannabis consumption that presented themselves in 2020.

  

 

Finally, the cessation of the stress and anxiety generated by COVID-19 and its attendant effects on society could conceivably have divergent impacts on the robust demand for cannabis observed last year. Many have attributed 2020’s record-breaking cannabis sales in part to consumers attempting to self-medicate with cannabis products to mitigate the negative psychological impacts caused by the coronavirus. Without that impetus, consumption may stabilize or even decline, although there is also the possibility that use habits developed in 2020 could persist even as day-to-day life returns to “normal.”

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

 

The average reported forward deal size was unchanged at 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 58%, 32%, and 10% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 59 pounds, 32 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the April Implied Forward represents a premium of 1.5% relative to the current U.S. Spot Price of $1,503 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

Vertically Integrated Adult-Use Cultivators Will See 24% Decrease in Tax on Internal Transfers of Flower in Q2

Arizona

Recreational Sales Reached $2.9 Million in Final 10 Days of January, a Slower Start Than Some Other States

Massachusetts

State Data Shows Adult-Use Demand Continued to Expand in January and February, But Rate of Growth Slowed

Oklahoma

Bill Approved by State House of Representatives Would Set Cap on Licenses

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

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

CANADA CANNABIS SPOT INDEX — March 19, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending March 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$5.86 per gram this week, up 0.3% from last week’s C$5.84 per gram. This week’s price equates to US$2,132 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 the still-growing gap between supply and demand in Canada’s legal cannabis market. By combining our estimate on monthly demand with Statistics Canada’s production estimates, we can get a clearer understanding of the dynamics of the country’s regulated cannabis system.

Cannabis Benchmarks estimates that the total implied demand for legal cannabis in December 2020 was 30,318 kg, a 212% increase over the same month in 2019, as shown in the following table.

Source: Cannabis Benchmarks, Statistics Canada

Even though demand has grown at a rapid rate, December’s demand is still less than 18% of the 165,189 kg of unpackaged production reported by Statistics Canada for the month of November. The mismatch is creating a huge oversupply of both packaged (finished) and unpackaged (unfinished) products across the country. Statistics Canada’s most recent data for November 2020 shows unpackaged and packaged inventory ballooning to 1,165,725 kg. This represents 38 months worth of supply at current demand levels, and inventory is continuing to increase. The intent is that this inventory will ultimately be sold either as dried flower, converted into a cannabis derivative product, or exported, but there is a chance that the quality of the product degrades to a point where it is not sellable. 

Source: Cannabis Benchmarks, Statistics Canada

The issue of high production and growing inventory has been amplified by the seasonal supply increase coming to market from the outdoor harvest. The typical outdoor harvest for annual cash crops is in October and November, with cannabis following the same grow cycle. The Statistics Canada data confirms the noticeable influx of unpackaged cannabis during those months in 2019. The supply surge from sun-grown product was especially visible in 2020 as outdoor production capacity expanded last year. We anticipate a trend of expanding Q4 inventory increases going forward as more cultivators turn to outdoor cultivation.

Source: Cannabis Benchmarks, Statistics Canada

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

March 12, 2021

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

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

U.S. Cannabis Spot Index down 0.3% to $1,497 per pound.

 

The simple average (non-volume weighted) price decreased $23 to $1,769 per pound, with 68% of transactions (one standard deviation) in the $981 to $2,557 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.30 and the simple average price was $3.90.

 

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 transactions for greenhouse flower was unchanged.

  

 

The relative volume of greenhouse flower expanded by 2% this week. The relative volumes of warehouse and greenhouse product each contracted by 1%.

As we have noted in previous reports, officials and economic analysts in many states have stated that they expect sales growth to slow in 2021, relative to the boom in demand seen last year during the COVID-19 pandemic. Sales in numerous markets did see a downturn from December 2020 to January 2021, which at this point has come to be expected in any given year. 

 

However, sales figures published by Colorado officials this week – discussed in more detail below – show an uncharacteristic increase in demand from December 2020 to January 2021, a phenomenon not observed in the state since January 2015. The figures out of Colorado raise the possibility that demand could continue to expand in some markets at rates comparable to, or even greater than those observed in 2020. Time will tell whether this trend is borne out. 

 

Also in this week’s Premium Report, we analyze February’s medical cannabis sales out of Arizona. February is the first full month in which adult-use and medical cannabis sales have taken place simultaneously in the state and the data shows that the commencement of the former is having a major impact on the latter. February’s medical cannabis sales volumes represent significant declines from the month prior, as well as the same month a year ago, the first time that an annual contraction in monthly sales has occurred since the opening of Arizona’s medical cannabis system in 2011. 

 

While not completely unsurprising, previous examples of established medical cannabis programs that added adult-use markets have not shown such a dramatic and immediate impact on purchasing by patients. In Colorado for example, medical cannabis patient counts and sales continued to grow through 2014 and 2015, the first two years of adult-use sales in the state, before beginning to decline in subsequent years. When adult-use sales began in Illinois in 2020, monthly medical cannabis sales still saw significant increases compared to 2019 and only began to plateau in the latter portion of the year. 

 

 

Arizona cannabis business operators are working to bring additional production capacity online to meet the new demand created by the unexpectedly fast start to adult-use sales, but when such projects will start producing significant amounts of new supply is not yet clear.

April Implied Forward unchanged at $1,540 per pound.

 

The average reported forward deal size was unchanged at 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 59%, 31%, and 10% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 61 pounds, 29 pounds, and 25 pounds, respectively.

 

At $1,540 per pound, the April Implied Forward represents a premium of 2.9% relative to the current U.S. Spot Price of $1,497 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

January 2021 Sales See Small Increase from Prior Month, Breaking with Behavior Observed Over Previous Five Years

Washington

Bill Advancing Through State Legislature Would Exempt Registered Patients from 37% Retail Excise Tax

Arizona

February Medical Cannabis Sales See Significant Declines in First Full Month of Adult-Use Market Being Open

Maine

Adult-Use Sales and Store Openings Stagnate in February, Just a Few Months After the Market Opened

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

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