July 9, 2021

U.S. Cannabis Spot Index — July 9, 2021

U.S. Cannabis Spot Index — Published July 9, 2021

U.S. Cannabis Spot Index increased 0.6% to $1,578 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,841 per pound, with 68% of transactions (one standard deviation) in the $1,056 to $2,627 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.48 and the simple average price was $4.06.

 

The relative frequencies of transactions for each grow type were largely stable from last week.  

    

 

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

Early reports out of several states indicate that demand in legal cannabis markets is continuing to stabilize and even decrease slightly. Data issued by regulators in Oregon, Massachusetts, and Illinois, examined in this week’s Premium Report, all show declines in monthly retail sales from May to June. This is a departure from historical trends, which have seen monthly revenue figures generally climb from the late spring and through the summer months in prior years. 

 

Plateauing demand is occurring as some cultivators in more mature markets such as Oregon ramped up production compared to last year, while growers in newer adult-use markets like Illinois have expanded to serve demand from general consumers over the past 18 months or so. These dynamics may put downward pressure on, or at least moderate the U.S. Spot Index in the coming months, as opposed to the summer wholesale price rise that Cannabis Benchmarks has observed in each of the past two years. 


Still, the monthly average U.S. Spot price for June 2021 was $1,609 per pound, up 2.4% from May and up 16.4% compared to June 2020. The first two weeks of July have seen the national composite price average $1,574 per pound month-to-date. 

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 54%, 33%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 73 pounds, 48 pounds, and 31 pounds, respectively.

 

At $1,655 per pound, the August Implied Forward represents a premium of 4.9% relative to the current U.S. Spot Price of $1,578 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

Extension of Provisional Licenses Included in Legislation Recently Sent to Governor

Oregon

Demand Declined for the Second Straight Month in June; Harvest Volume Increased

Massachusetts

Adult-Use Sales Reach $105 Million in June, Down 5% from May

Illinois

June Adult-Use Sales Slip Slightly from Prior Month; Data Indicates Retail Prices Are Declining

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

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

July 8, 2021

CANADA CANNABIS SPOT INDEX — July 9, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 9, 2021
CCSI image 1 2021-07-09

*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$5.52 per gram this week, up 1.0% from last week’s C$5.47 per gram. This week’s price equates to US$2,014 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 the Ontario Cannabis Store (OCS), the organization that regulates the province’s cannabis market, released their annual Cannabis Insights report for the period from January through March 2021. The report contains a wide variety of useful data, detailing how Ontario’s market has developed.

 

In the first few years of cannabis deregulation, the legal Canadian cannabis market has faced strong competition from illicit supply chains, due in part to high product prices and few stores. That story has changed dramatically, however, especially in Ontario, Canada’s largest province by population.

 

The most recent report shows that not only did Ontario’s brick-and-mortar retail footprint grow substantially, but also that the price of dried flower as listed at the OCS online store dropped even further below the price of cannabis sold through illegal mail-order marijuana sites.

 

 

In today’s report, we focus specifically on the market share of the legal markets. The latest report shows the legal cannabis market in Ontario makes up 44% of total cannabis sales. Meanwhile the average price of legal dried flower, including sales taxes, dropped by 3% from the previous quarter to C$6.17 per gram. 

Source: OCS

While the legal market has continued to build market share over the past two years, growth slowed significantly during the past quarter. Even though the legal cannabis industry appears to be moving in the right direction, by lowering cannabis prices and providing better access with more retail stores, illicit cannabis channels have maintained a strong presence. Up until this last OCS report, the growth of the legal cannabis sector has had a very strong correlation to the number of storefronts open for business. The chart below, which combines the average number of stores in each province in the past nine quarters as tracked by Cannabis Benchmarks, versus the share of the legal cannabis market, shows the legal cannabis market share seems to have plateaued despite an increase in store counts. 

Source: OCS, Cannabis Benchmarks

The slowdown in market penetration is a cause for concern for the legal cannabis sector. For the government, this change could undermine its goal of legalizing cannabis to stamp out the illicit market altogether and to generate taxable legal sales. For the Canadian LPs and other market participants, the slowdown will impact projected revenues from domestic sales, as the export market is also facing growing competition from producers in Europe, Africa, and Colombia.
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

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

July 2, 2021

U.S. Cannabis Spot Index — July 2, 2021

U.S. Cannabis Spot Index — Published July 2, 2021

U.S. Cannabis Spot Index decreased 2.3% to $1,569 per pound.

 

The simple average (non-volume weighted) price decreased $7 to $1,838 per pound, with 68% of transactions (one standard deviation) in the $1,053 to $2,623 per pound range. The average reported deal size increased to 2.4 pounds.  In grams, the Spot price was $3.46 and the simple average price was $4.05.

 

The relative frequencies of transactions for each grow type were largely stable from last week.  

    

 

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

The Heat Dome over the northwestern United States may affect cannabis prices throughout the growing season, with heat damaging plants planned for mid-summer light-deprivation harvests, scrambling the planting and early development of full-term crops, and sparking the early onset of wildfires. Cultivators are adapting by shading outdoor and greenhouse operations to protect plants, avoiding planting in extreme heat, and scheduling workers to avoid the hottest part of the day. The early arrival of wildfires in Northern California was also attributed in part to the Heat Dome, along with lightning strikes which sparked the still-uncontained 13,000-acre fire in Siskiyou County. 

 

As we have covered previously, the past several years have seen record-breaking wildfire activity and drought in regions of California, Oregon, and Washington that are home to significant outdoor cannabis cultivation. However, this year’s extreme heat early in the season is a unique development, while drought is more severe currently along the West Coast than it was a year ago, prompting more – and more stringent – water restrictions for some growers, among other impacts. Many also fear that those factors will result in another record-setting fire season this year. 

 

In recent years, such extreme weather and natural disasters have not significantly dented supply from outdoor production in the West Coast states. Last year, for example, growers in northern California and southern Oregon reported excellent growing season conditions up until the point wildfires threatened their crops close to harvest. However, as climate change continues to exacerbate heat, drought, and wildfires in unprecedented ways, we may see impacts to wholesale cannabis prices in the months ahead. 

 

 

Finally, unprecedented heat may impact indoor growers as well. Increased production costs – or even crop loss or disruptions in the cultivation process – could ensue if strained HVAC systems cannot keep up or power outages occur. 

January 2022 Implied Forward initially assessed at $1,610 per pound.

 

The average reported forward deal size was 60 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 55%, 33%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 73 pounds, 48 pounds, and 31 pounds, respectively.

 

At $1,655 per pound, the August Implied Forward represents a premium of 5.5% relative to the current U.S. Spot Price of $1,569 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:

West Coast

Extreme Heat May Impact Outdoor Crops, Is Reportedly Disrupting Business in Oregon

Colorado

New Average Market Rates In Effect Beginning this Week; Tax on Internal Transfer of Flower by Adult-Use Cultivators Steady from Q2 to Q3

Michigan

Report: Industry-Group Funded Study Says 70% of Total Cannabis Sales in the State Take Place in Illegal Market

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

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

CANADA CANNABIS SPOT INDEX — July 2, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 2, 2021
CCSI image 1 2021-07-02

*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$5.47 per gram this week, down 1.5% from last week’s C$5.55 per gram. This week’s price equates to US$2,008 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.

As competition intensifies in the cannabis cultivation sector, and a supply surplus continues to depress wholesales prices, Licensed Producers (LPs) continue to shut down already-built indoor growing facilities and scrap future development plans. As part of the move away from indoor capacity, many Canadian cannabis cultivators are shifting to outdoor operations. Outdoor cultivation has significantly lower operating costs relative to growing indoors or in a greenhouse, including lower infrastructure and labor costs, and no energy costs for lighting or HVAC needs. 


The latest data from Statistics Canada shows outdoor cannabis cultivation capacity expanding at a consistent rate, while indoor space has been on a decline since early last year. As of March 2021, there were 772 hectares licensed to grow cannabis outdoors. This is a massive jump relative to the same period last year.  Over the past 12 months, outdoor cannabis cultivation capacity grew by 495 hectares or 179% while indoor cannabis cultivation space has dropped by 10%.

Source: Cannabis Benchmarks

As we have outlined in the past, outdoor cultivation’s lower production costs make it more competitive with illicit supply, but the resulting cannabis is frequently perceived to be of lower quality. As a result, significant portions of outdoor-grown product might not be as marketable for smoking in its raw form, relative to indoor-grown flower. However, outdoor-grown cannabis is very suitable as raw material, particularly for manufacturing cannabis 2.0 products such as edibles, beverages, and vapes. Such products are also typically less readily available from illicit sources, and could bring existing consumers seeking more novel products and experiences into the legal market. 

With more farmland dedicated to cannabis, we can expect a larger jump in unpackaged supply come the autumn harvest. In the past few years, we have seen a 66% month-over-month jump in nationwide production due to the outdoor harvest from September to October. This year, with 772 hectares dedicated to outdoor cannabis growing, we can expect even more production that will put pressure on prices.

Source: Cannabis Benchmarks

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

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