March 12, 2021

CANADA CANNABIS SPOT INDEX — March 12, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending March 12, 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$5.84 per gram this week, down 1.4% from last week’s C$5.93 per gram. This week’s price equates to US$2,102 per pound at the current exchange rate.

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This week, the Ontario Cannabis Store (OCS), the body that regulates the province’s cannabis market, released their Q3 Cannabis Insights report, covering the period from October through December 2020. The report contains a wide variety of useful data to show how Ontario’s market is developing. In today’s CCSI report, we focus specifically on price. 

 

The legal Canadian cannabis market has faced strong competition from illicit supply chains, due to high product prices and relatively few stores. The OCS’s latest report shows that those market dynamics are changing.

 

The report shows that not only did the brick and mortar retail footprint grow to 324 stores (an increase of 298 year-on-year), but the price of dried flower on the OCS online store continued to decline, falling further below the price of cannabis sold through illegal mail-order marijuana (MoM) sites after doing so in Q1 2020 for the first time. The average price of legal dried flower on the OCS online store, including sales taxes, was C$6.24/gram. The reduction was largely a result of discount lines of cannabis released by the big Licensed Producers. In comparison, the average dried flower price on illegal MoM sites dropped to C$7.76/gram. While the quality of the dried flower was not taken into consideration for this price comparison, legal product has some overall advantages in this regard due to required quality assurance and safety testing, prohibitions on pesticide use, and standards for accuracy in labeling, among other regulations.

Source: OCS

Clearly, lower prices have helped legal sellers build market share. The report indicates 40.3% of cannabis sales are now being made through legal channels. We believe that, along with lower prices, COVID lockdowns helped transition more consumers to regulated sales channels and legal products. 

 

Overall, this report once again emphasizes that positive trends for the legal cannabis industry are emerging and being cemented as the regulated market develops.

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

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

March 5, 2021

U.S. Cannabis Spot Index — March 5, 2021

U.S. Cannabis Spot Index — Published March 5, 2021

U.S. Cannabis Spot Index down 1.3% to $1,502 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,792 per pound, with 68% of transactions (one standard deviation) in the $992 to $2,591 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.95.

 

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

 

 

The relative volume of outdoor flower expanded by 4% this week. The relative volumes of warehouse and greenhouse product each contracted by 2%.

In this week’s premium report, February sales figures out of Oregon and Illinois show that demand slowed last month, by significant proportions in both cases. While a decrease in demand from January to February is not necessarily surprising given historical sales trends observed across most state markets, the downturn in Illinois is notable as the state’s adult-use system is just over a year old. 

 

In other cases – as in Massachusetts, as well as in Canada, for example – monthly sales generally increased for about two years after adult-use sales began. However, this is likely due to the fact that retailers opened more gradually in Massachusetts and Canada, whereas in Illinois a significant proportion of the roughly 75 adult-use retailers currently operational were able to begin sales almost immediately or fairly shortly after when they were permitted to at the beginning of 2020. As we have covered previously, an additional 75 adult-use retail licenses were to be issued in Illinois last year, but have been delayed by the COVID-19 pandemic and litigation over the licensing process.

 

Full 2020 sales data out of Nevada also became available this week. Total retail revenues grew by 12% year-over-year, despite a 55% decrease in the number of visitors to Las Vegas. Nevada’s experience is one of the most dramatic examples observed anywhere in the country of how consumers significantly increased spending in legal cannabis markets last year in response to COVID-19.

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

 

The average reported forward deal size increased to 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 59%, 32%, 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 2.5% relative to the current U.S. Spot Price of $1,502 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

Denver Officials Introduce Bills that Include Measures to Allow Cannabis Delivery, License Additional Businesses Under Social Equity Program

Oregon

February Sales Down Almost 12% Compared to January; Annual Growth Rate Slowing as State Budget Officials Predict Demand Will “Cool” this Year

Nevada

2020 Sales Data Shows Retail Revenue Grew 12% YoY Despite 55% Decline in Las Vegas Tourism Due to COVID-19

Illinois

Combined Adult-Use and Medical Cannabis Sales Declined 9% MoM in February to About $110 Million

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

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

CANADA CANNABIS SPOT INDEX — March 5, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending March 5, 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$5.93 per gram this week, up 1.2% from last week’s C$5.86 per gram. This week’s price equates to US$2,126 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 review Canada’s recreational cannabis store count. The number of stores continues to climb steadily across the country, making the legal cannabis system more accessible to consumers. Our latest count shows the number of open stores reached 1,484 as of the end of February. This is up by 742 stores, or 96%, compared to February 2020. As can be seen in the chart below, we expect the trend to continue this year.

With each province having different licensing processes, we see different growth rates.

Source: Cannabis Benchmarks

Of the top four provinces, Alberta seems to have reached its limit, at least momentarily. We do not expect much more growth there and, in fact, expect some stores to close due to strong competition. British Columbia (BC) increased its store count at a steady pace in 2020, but we expect the growth rate to slow in 2021. At the moment, the BC government only reports 25 stores in the queue that are licensed and ready to open. We anticipate approximately 10 stores to open in BC each month through 2021. 

 

In Quebec, along with most of the Maritime provinces, the provincial government controls the retail environment, with the province owning both the distribution and retail parts of the supply chain. With the province in control, the rollout has been quite slow. Quebec currently has 62 cannabis retail locations and we anticipate that will grow at a pace of only three new stores per month this year. 

 

Ontario continues to be the biggest driving force for new cannabis retail stores. Ontario had the slowest initial rollout of licensed stores among all provinces, but that has drastically changed since Q2 2020. The speed at which new stores are opening for business is helping drive strong sales growth in the province, a trend that looks as if it will persist for the foreseeable future. Based only on current applications in the pipeline, it appears that Ontario’s retail rollout will continue at a strong pace in 2021. We anticipate an average of 65 stores opening per month in the province throughout this year.

 

Overall, the current year looks bright for the Canadian cannabis industry. We see substantial, strong growth of the country’s legal market continuing, providing an example for the increasing number of U.S. states contemplating legalization, as well as America’s federal government.

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

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