July 30, 2021

U.S. Cannabis Spot Index — July 30, 2021

U.S. Cannabis Spot Index — Published July 30, 2021

U.S. Cannabis Spot Index increased 0.5% to $1,598 per pound.

 

The simple average (non-volume weighted) price increased $27 to $1,881 per pound, with 68% of transactions (one standard deviation) in the $1,063 to $2,699 per pound range. The average reported deal size increased to 2.6 pounds. In grams, the Spot price was $3.52 and the simple average price was $4.15.

 

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

     

 

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

 

The U.S. Spot Index has been back on the upswing in recent weeks. However, for July as a whole it averaged $1,581 per pound, down 1.7% from June’s mean national composite price. The downturn from June to July 2021 is in contrast to the 6.4% rise in the U.S. Spot observed in the same period last year, although July 2021’s monthly average price remains up 7.6% year-over-year. As we have covered in recent reports, sales growth is slowing in legal cannabis markets across the country after the dramatic and unexpected surge in demand that occurred in the late spring and summer last year. 

 


A report from New Cannabis Ventures expects Q2 2021 earnings reports from Multi-State Operators (MSOs) in the U.S. cannabis industry to be “strong,” with smaller MSOs also expected to show “robust growth.” According to the report, Curaleaf’s annual growth rate is expected at 164%, Greenthumb Industries’ and Trulieve’s annual growth rates are projected at 72%, and Cresco Labs’ is estimated at 102%. It must be noted that the robust year-over-year upticks are due in part to the fact that such companies have stronger presences in younger legal cannabis markets – including Illinois, Massachusetts, and Florida – that are experiencing more substantial overall growth rates than mature markets. Still, the analysis illustrates how much demand captured by state-licensed cannabis businesses has expanded in the past year, fueled both by new and growing legal markets, as well as the surge of sales that coincided with the COVID-19 pandemic’s arrival in the U.S.

August 2021 Implied Forward down $10 to close at $1,605 per pound.

 

The average reported forward deal size was 62.5 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 53%, 35%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 78 pounds, 50 pounds, and 30 pounds, respectively.

 

At $1,605 per pound, the August Implied Forward represents a premium of 0.4% relative to the current U.S. Spot Price of $1,598 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

State Health Department Report Shows Cannabis Usage Prevalence and Frequency Increasing Among Adults, While Consumption Methods Are Shifting

Washington

Regulators Reiterate Licensed Processors Are Not Allowed to Manufacture THC from Hemp-Derived CBD

Illinois

State Issues New Conditional Retail Licenses After Holding Lottery This Week

New Mexico

Report: Officials Expect Product Shortages Upon Commencement of Adult-Use Sales

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

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

CANADA CANNABIS SPOT INDEX — July 30, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 30, 2021
CCSI image 1 2021-07-30

*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$5.39 per gram this week, down 2.2% from last week’s C$5.51 per gram. This week’s price equates to US$1,953 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 2,277 as of the end of July. This is up by 1,255 stores, or a jump of  123%, compared to July 2020. As can be seen in the chart below, we expect that trend to continue throughout this year.

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

We expected Alberta’s store count to plateau in the second quarter of this year, but the store count there has continued to grow. We do not expect additional new store growth and anticipate some stores will close before the end of the year due to strong competition with other closely-located stores in major cities. British Columbia (BC) has increased its store count at a steady pace in 2021 so far and we expect that growth to continue through the end of the year. At the moment, the BC government reports 25 stores in the queue that are licensed and ready to open. We anticipate approximately 10 stores will open in BC each month through the rest of 2021. 

 

In Quebec and most of the Maritime provinces, provincial governments control the retail sector, with each province owning both the distribution and retail parts of the supply chain. The rollout has been relatively slow with the provinces in control. In June and July, however, the pace picked up in Quebec, a trend which we project will continue throughout the year. Quebec currently has 89 cannabis retail locations, which is a 106% increase from last year, and we expect the store count there will expand to 104 retail locations by the end of the year. The rising store count should drive significant growth in retail sales revenue across the province for 2021. 

 

Ontario continues to be the biggest driving force for new cannabis retail stores. After the slowest initial rollout of licensed stores among all provinces, it now has a target of 1,000 stores by September 2021. Ontario store counts are not fully visible, as the provincial government there reports the number of stores that are “Authorized to Open.” The Ontario Cannabis Store website also has provided a store locator tool, but this store count is usually substantially lower than the actual figure. We estimate that 891 stores are currently open in Ontario, a figure we expect to increase to 1,241 by the end of the year.

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

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

July 23, 2021

U.S. Cannabis Spot Index — July 23, 2021

U.S. Cannabis Spot Index — Published July 23, 2021

U.S. Cannabis Spot Index increased 1.4% to $1,591 per pound.

 

The simple average (non-volume weighted) price increased $29 to $1,854 per pound, with 68% of transactions (one standard deviation) in the $1,057 to $2,651 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.51 and the simple average price was $4.09.

 

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

    

 

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

 

While the “Dog Days” of summer have brought scorching temperatures to many parts of the country, the previous upward momentum of the U.S. Spot Index has cooled. As we have discussed in recent reports, the recent downward trend in the national wholesale flower price has coincided with reports of plateauing or slightly decreasing sales in many major markets during the May-June period. Data examined in this week’s Premium report out of Arizona, Oklahoma, and Illinois’ medical cannabis sector is in line with stagnant sales trends observed in other states, which we noted in each of the past two weeks.

 

The arrival of the COVID-19 pandemic last year brought with it significant uncertainty for legal cannabis markets, with many expecting to be on firmer footing this year as vaccination rates increased and restrictions on businesses and individuals were lifted. However, supply and demand dynamics for legal cannabis remain in flux and numerous factors could impact wholesale prices in the coming months. On the supply side, extreme weather in the form of excessive heat and drought – accompanied by wildfires – appear poised to again threaten outdoor cultivation on the West Coast and in Colorado. As for demand, we pointed out last week that the Consumer Price Index has been on the rise, potentially squeezing discretionary spending. Americans also currently have more options for recreational spending than they did last year due to the lifting of virus-related restrictions. Finally, the coronavirus remains in the mix as a factor to consider as U.S. vaccination rates plateau and variants spread.

August 2021 Implied Forward assessed down $40 to $1,615 per pound.

 

The average reported forward deal size was 61.5 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 76 pounds, 50 pounds, and 31 pounds, respectively.

 

At $1,615 per pound, the August Implied Forward represents a premium of 1.5% relative to the current U.S. Spot Price of $1,591 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

Drought Prompts Humboldt County to Declare State of Emergency, Discuss Possibility of Further Water Restrictions on Cannabis Farmers

Arizona

Combined Monthly Adult-Use and Medical Sales Relatively Stagnant During March – May Period

Illinois

Medical and Adult-Use Sales Both Saw Downturns from May to June

Oklahoma

May Medical Cannabis Sales Reach Nearly $86 Million, Up Slightly from April; Wholesale Prices Stabilized in May After Declining Sharply in Prior Months

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

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

July 16, 2021

CANADA CANNABIS SPOT INDEX — July 16, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 16, 2021
CCSI image 1 2021-07-16

*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 0.5% from last week’s C$5.52 per gram. This week’s price equates to US$2,011 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.

Last week, Statistics Canada released retail sales data for April 2021, with nationwide legal cannabis sales reaching a new monthly high of C$309.7M. This is the first month where sales have exceeded the C$300M threshold, which marks a major milestone for the industry. All this while the illicit market still controls over half the total retail cannabis market, as we reported last week.

 

To correct for the different number of days in each month, we look at average daily sales in the chart below, which shows April 2021 sales reaching C$10.3M per day.

Source: Cannabis Benchmarks, Statscan

This week we sliced up the above data in a slightly different way. Instead of just looking at the provincial sales outright, we have broken down the number to calculate the average monthly sales per cannabis user. Each province has a different usage rate that is estimated by Statistics Canada through a quarterly survey. For the following analysis, we applied the appropriate provincial usage rate.

This is a flow diagram of the calculation we performed for each province.

The result of these calculations is shown by month in the chart below. As seen, the legal market spending rate is increasing for almost every province. This fits the story of lower prices and more accessibility to brick-and-mortar stores. 

 

Alberta is leading the way with its spending habits. A typical Alberta cannabis user, who purchases cannabis from the legal channel, spends C$6.40 each month. This is approximately C$1.80 or 40% more than they spent last year. The strong Alberta spend makes sense with the largest retail footprint per capita. Ontario comes second in line, while British Columbia and Quebec show the lowest spend.

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

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

U.S. Cannabis Spot Index — July 16, 2021

U.S. Cannabis Spot Index — Published July 16, 2021

U.S. Cannabis Spot Index decreased 0.5% to $1,570 per pound.

 

The simple average (non-volume weighted) price decreased $16 to $1,825 per pound, with 68% of transactions (one standard deviation) in the $1,050 to $2,600 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.46 and the simple average price was $4.02.

 

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

 

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

 

Data released this week by officials in Colorado and Michigan tells a similar story to that examined in last week’s Premium Report: Specifically, that the late spring and early summer have seen demand in legal cannabis markets largely plateau or even decline slightly, albeit at levels elevated significantly compared to prior to the COVID-19 pandemic’s arrival in the U.S. last year. 

 

Slowing sales in Michigan are especially notable as the regulated market is still relatively young, with adult-use sales only beginning at the end of 2019. However, if litigation regarding the city of Detroit’s adult-use licensing ordinance is resolved and the city can move forward in approving legal businesses, more significant growth should eventually resume. In Colorado, total retail sales dipped from April to May for the first time since 2018. Notably, May 2021’s combined adult-use and medical cannabis sales in Colorado were essentially flat compared to those of May 2020, the first month that the state saw a big jump in demand coincident with the coronavirus pandemic. 

 

Stepping back to look at U.S. macroeconomic data, the Consumer Price Index rose 0.9% in June after rising 0.6% in May; this is the largest increase in CPI since June 2008. Year-over-year, CPI is up 5.4%, the largest increase since August 2008. While over a third of the rise in the overall index was due to an increase in that for used vehicles, the relatively elevated CPI may indicate that consumer spending on discretionary items such as cannabis products is being squeezed somewhat. 

 

Also of interest to the cannabis industry is the 1.5% increase in energy prices in June, bringing the year-over-year gain to 24.5%. Energy commodities are up 44.2% year-over-year and energy services are up 6.3%, including a 3.8% gain in electricity prices and a 15.6% gain in utility gas services. Growers have likely felt the impact of higher energy prices over the past year. Furthermore, as we noted in a prior report, extreme heat in some parts of the country early this summer is likely leading to elevated HVAC costs for indoor growers.

August 2021 Implied Forward unchanged at $1,655 per pound.

 

The average reported forward deal size was 60 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 53%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 75 pounds, 49 pounds, and 31 pounds, respectively.

 

At $1,655 per pound, the August Implied Forward represents a premium of 5.4% relative to the current U.S. Spot Price of $1,570 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

May 2021 Sales Essentially Flat Year-Over-Year, Indicating Plateauing Demand After Sales Boomed by 25% 2020

Michigan

Retail Revenue Has Leveled Off in Recent Months; Prices Continued to Trend Down in June

Arizona

Contraction in Medical Cannabis Sales Persisted in June as Purchasing Shifts Increasingly to Adult-Use Market

New Mexico

Regulators More Than Double Plant Count Limit for Adult-Use Producers in New Proposed Rules

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

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