June 25, 2021

CANADA CANNABIS SPOT INDEX — June 25, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending June 25, 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$5.55 per gram this week, up 0.4% from last week’s C$5.53 per gram. This week’s price equates to US$2,055 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 turn our attention to supply and demand dynamics for cannabis 2.0 products in Canada’s legal cannabis market. The three main product categories that fall under the cannabis 2.0 umbrella are edibles, extracts, and topicals. See the definitions of each category in our past report covering this topic. 

 

In today’s report, we provide an update on the supply and demand associated with edibles and extracts, which are the two larger categories. To date, Health Canada has compiled and published monthly data for production, consumption, and inventory of packaged units through March 2021.

 

Below are two charts showing the monthly supply and demand for edibles and extracts from the introduction of cannabis 2.0 products in October 2019 through March 2021. 


Starting with edibles, we see the production of packaged units by licensed producers ramping up through the end of Q3 2020, and then declining slightly since. The production of packaged units increased at a greater rate than non-medical and medical sales, leading to excess production going into inventory at the federal, provincial, or retail level. The current inventory of edible packaged units sits at 16M, which is approximately 7.1 months’ worth of supply at March’s consumption rate.

Source: Cannabis Benchmarks, Statistics Canada

The story for extracts is somewhat similar. Both production, as well as medical and non-medical sales, increased at relatively steady rates throughout 2020, but eased in Q1 2021. Still, production outpaced domestic consumption, leading to growing inventories. The current inventory of packaged units of extracts has not grown as quickly as edibles, but still sits at 12.6M, which is approximately 6.6 months’ worth of supply at March’s consumption rate.

Source: Cannabis Benchmarks, Statistics Canada

Typically, inventory level is a barometer for the health of a commodity. Inventories are closely tracked for major agricultural commodities, metals, and energy. A growing level of inventory signals a continuous mismatch between supply and demand, and ultimately leads to lower wholesale prices. The lower wholesale price diminishes the economics to produce at the same strong rate, and also increases demand for the commodity by providing consumers an incentive to purchase more. Ultimately the change in price helps bring the market back into equilibrium. 

Source: Cannabis Benchmarks

The yellow lines in the charts above denote the typical timing of the autumn harvest of outdoor-grown cannabis, which provides a good deal of feedstock from which extracts and edibles are manufactured. Increased supply of raw materials for these products from expanding outdoor cultivation is likely helping to push down prices. Since 2020’s fall harvest, the total packaged inventory of edibles and extracts looks to be on a corrective path, as increased inventory and lower prices signal to producers of these derivative products to pull back on manufacturing.

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

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

June 24, 2021

U.S. Cannabis Spot Index — June 25, 2021

U.S. Cannabis Spot Index — Published June 25, 2021

U.S. Cannabis Spot Index decreased 0.8% to $1,605 per pound.

 

The simple average (non-volume weighted) price decreased $15 to $1,844 per pound, with 68% of transactions (one standard deviation) in the $1,049 to $2,640 per pound range. The average reported deal size decreased to 2.3 pounds.  In grams, the Spot price was $3.54 and the simple average price was $4.07.

 

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

    

 

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

The U.S. Spot Index in June continued its recent upward trend, suggesting that the now-expected summer uptick in demand is getting underway, even as sales data published recently by several states showed that retail revenues subsided uncharacteristically from April to May. The recent rise in the national wholesale cannabis flower price is being driven primarily by climbing rates in California, Colorado, and Oregon. 

 

In Michigan, on the other hand, wholesale flower prices have been trending downward for months. This is occurring even as adult-use and medical retailers in the state have posted impressive sales figures. However, state data for May, examined in detail in today’s Premium Report, shows that licensed cultivators appear to be hitting their stride and have expanded production capacity consistently in recent months, while monthly revenue figures declined from April. 

 

Similar trends appear to be taking place in other younger adult-use markets. For example, the state Spot Indices of Illinois and Massachusetts, while still the highest amongst the markets covered by Cannabis Benchmarks, have plateaued recently at lower levels than those observed at the end of 2020. Additionally, in Arizona, the state’s wholesale flower price declined in May even as reported adult-use sales continued to increase, suggesting that licensed producers have begun to bring in expanded harvests after the unexpectedly early opening of the recreational market in late January.

July 2021 Implied Forward closes unchanged at $1,630 per pound.

 

The average reported forward deal size was 59 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 55%, 34%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 71 pounds, 48 pounds, and 33 pounds, respectively.

 

At $1,630 per pound, the July Implied Forward represents a premium of 1.5% relative to the current U.S. Spot Price of $1,605 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

Report: State Officials Making Efforts to Ensure Provisional License Holders are Not Forced Out of Regulated Market, But Some Fear Proposals Are Insufficient

Michigan

May Sales Revenue Subsides Month-Over-Month in Part on Lower Prices, as Flower Sales Volume in the Adult-Use Sector Continues to Expand

Arizona

Reported Adult-Use Sales Rise Over 40% from March to April; State Data Shows that Medical Cannabis Sales Volume Continued to Decline in May

Connecticut

Cannabis Legalized by Adult-Use in the State this Week, Sales Expected to Begin by the End of 2022

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

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

June 11, 2021

U.S. Cannabis Spot Index — June 18, 2021

U.S. Cannabis Spot Index — Published June 18, 2021

U.S. Cannabis Spot Index increased 1.4% to $1,618 per pound.

 

The simple average (non-volume weighted) price increased $41 to $1,859 per pound, with 68% of transactions (one standard deviation) in the $1,045 to $2,673 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.57 and the simple average price was $4.10.

 

The relative frequency of transactions for indoor flower increased by almost 3% this week. The relative frequency of trades for greenhouse product decreased by the same proportion, while that for deals for outdoor flower was steady.  

    

 

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 unchanged. 

The U.S. Spot Index was generally on the rise last month, as well as being up relative to April. The national composite price averaged $1,572 per pound in May, an increase of 2.9% from the prior month. May 2021’s mean U.S. Spot price is also up 17.7% year-over-year, from $1,336 per pound in May 2020. 

 

We noted in a recent report that retail sales in the 10 largest markets for which Cannabis Benchmarks assesses wholesale prices were up over 50% year-over-year in both March and April 2021. Early May sales data out of some states indicates that elevated demand is persisting. However, there are some signs that demand could be leveling off based on recently-released sales figures. 

 

 

In Oregon, for example, retail revenues fell from April to May 2021, breaking with the trend of increasing monthly sales in that span in each year from 2017 through 2020. Meanwhile, in Illinois, although total monthly adult-use sales increased month-over-month in May, average daily retail revenues in that sector of the state’s market declined last month for the first time in over a year.

July 2021 Implied Forward unchanged at $1,630 per pound.

 

The average reported forward deal size was 59.6 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 55%, 35%, and 10% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 72 pounds, 48 pounds, and 33 pounds, respectively.

 

At $1,630 per pound, the July Implied Forward represents a premium of 0.7% relative to the current U.S. Spot Price of $1,618 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

Tax Department Data Shows Volume of Wholesale Flower Entering the Licensed System Expanded by 69% from 2019-2020

Colorado

Consumer and Patient Demand Remained Strong in April, with Combined Sales Off Only Slightly from March

Massachusetts

Adult-Use Sales Climb to a New Record of $110 Million in May, but Growth in Average Daily Sales Slowed

Oklahoma

Medical Cannabis Dispensaries Tally over $85 Million in Sales in April; Sales and Patient Counts Have Stabilized Recently

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

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

CANADA CANNABIS SPOT INDEX — June 18, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending June 18, 2021
61821

*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$5.53 per gram this week, down 0.8% from last week’s C$5.57 per gram. This week’s price equates to US$2,073 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 dive further into household expenditure data from Statistics Canada, issued quarterly. The data shows some very interesting and positive trends for the legal cannabis sector. As we have noted in the past, major alcohol and tobacco companies have made significant investments in cannabis operations over the last few years. They have made these investments as a hedge, to ensure their current business operations do not lose market share to the growing cannabis usage that is being captured gradually by legal businesses. 

 

Some of the notable cannabis partnerships include: 

 

·       Constellation Brands + Canopy

·       Molson/Coors + Hexo

·       Anheuser-Busch InBev + Tilray

·       Altria + Cronos

·       Imperial Brands + Auxly

Soda, energy drinks, and sports drink markets are also studying the growth of this emerging industry. Several mainstream consumer packaged goods (CPG) heavyweights, including Coca-Cola and PepsiCo, are reportedly considering the launch of THC and / or CBD infused products, but nothing has materialized yet from major CPG firms. 


So, should traditional players be threatened by the cannabis movement? 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 only slightly impacted those categories negatively. As seen in the chart below, the overall category of spending related to tobacco, alcohol, and cannabis has grown over the past three years by 15% to C$13.4B. Over 25% of that growth comes from cannabis. 

Source: Cannabis Benchmarks, Health Canada

In the chart above, we also show the percentage of spending devoted to cannabis. Although cannabis’ share is not significant yet at only 12.6% of total spending, it is an emerging category that continues to expand with new product offerings and a growing consumer base. We estimate cannabis will grow to 14-15% of total spending by the end of 2021, with accelerated adoption amongst the younger generation and growing accessibility in major provinces such as Ontario.

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

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

CANADA CANNABIS SPOT INDEX — June 11, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending June 11, 2021
61121

*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$5.57 per gram this week, up 0.8% from last week’s C$5.53 per gram. This week’s price equates to US$2,090 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 stores open for business reached 2,046 as of the end of May. This is up by 1,143 stores, or 126%, compared to May 2020. As can be seen in the chart below, we expect the trend to continue throughout this year.

Source: Cannabis Benchmarks

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

Source: Cannabis Benchmarks

Of the top four provinces, Alberta’s store count seems to be plateauing, at least for the moment. We do not expect much additional new store growth and also anticipate  some stores to close, due to strong competition with stores being located close to each other in major cities. British Columbia (BC) increased its store count at a steady pace in 2020, but we expect that growth rate to slow in 2021. At the moment, the BC government only reports 22 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 and most of the Maritime provinces, provincial governments control the retail environment, with each 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 68 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 to 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. The Ontario government has announced a target of 1,000 total stores by September 2021, and it appears the provincial government will meet that goal.

 

Overall,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

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