August 27, 2021

U.S. Cannabis Spot Index — August 27, 2021

U.S. Cannabis Spot Index — Published August 27, 2021

U.S. Cannabis Spot Index decreased 2.5% to $1,476 per pound.

 

The simple average (non-volume weighted) price decreased $50 to $1,793 per pound, with 68% of transactions (one standard deviation) in the $975 to $2,612 per pound range. The average reported deal size was nominally unchanged at 2.6 pounds. In grams, the Spot price was $3.25 and the simple average price was $3.95.

 

The relative frequency of transactions for indoor flower increased by 1% this week. The relative frequency of trades for greenhouse product decreased by the same proportion, while that for deals for outdoor flower was stable.   

    

 

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

 

The U.S. Spot Index fell below the $1,500 per pound threshold for the first time since January of this year. In fact, this week’s assessed national composite price is $1 below that observed in the week ending January 15, 2021, which ended up being the lowest observed U.S. Spot price in the wake of 2020’s autumn harvest. 

 

That prices are already dipping below those documented after last year’s crop was brought in, with this year’s full-term plants yet to be cut down, suggests that wholesale flower rates could slide significantly lower. As we have noted in recent weeks, the drop in the overall national price is being driven largely by a reported glut of available supply in California and Oregon, consisting of both inventory harvested in 2020 and introduced in commerce recently and fresher product from this summer’s light-deprivation crops. 

 

The current situation appears somewhat reminiscent of that documented by Cannabis Benchmarks beginning in the summer of 2016. At that time, cultivation capacity that had begun to be set up in the wake of legalization in Colorado and Washington hit its stride, while California and Oregon growers were being typically prolific. The overbuilding of production capacity was compounded by large summer and fall harvests in 2017 and the U.S. Spot experienced a prolonged and dramatic erosion from mid-2016 through nearly all of 2018. 

 

 

Whether the current situation will play out in a similar manner remains to be seen. While California’s situation recalls that observed previously in Colorado and Washington in some ways – in terms of planned cultivation capacity coming online and producing at scale in the years after the licensed market opened – the Golden State’s retail side has significantly more room to grow and absorb additional supply. Recently-released sales and tax data from California shows taxable sales increasing by 11% from Q1 to Q2 of this year; Q2 2021’s sales figures are also up almost 25% from the same period last year.

September 2021 Implied Forward closes down $40 to $1,535 per pound.

 

The average reported forward deal size was 71 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 38%, and 16% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 92 pounds, 63 pounds, and 30 pounds, respectively.

Headlines from this week's Premium Report:

California

Volume of Flower and Other Product Sold into Wholesale Market in Q2 2021 Up Significantly YoY, But Down Slightly from Q4 2020

Arizona

Sales Data from January – June Shows Share of Total Made up by Adult-Use Market Increasing as Sales Plateaued Overall in Latter Months

New Jersey

Rules for Adult-Use Market Adopted, Setting Up First Sales to Commence in February 2022

New Mexico

State Adopts Rules for Adult-Use Producers, Including Production Capacity Limits

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

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

CANADA CANNABIS SPOT INDEX — August 27, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 27, 2021
CCSI image 1 2021-08-27

*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$5.28 per gram this week, up 1.1% from last week’s C$5.22 per gram. This week’s price equates to US$1,886 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

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Last week Statistics Canada released retail sales data for June 2021, with nationwide legal cannabis sales reaching a new monthly high of C$318.7M. June was also the third month where sales have exceeded the C$300M threshold, marking a new baseline for the industry. The growing retail footprint is helping the sector’s growth by expanding the consumer base to new cannabis users, while also drawing in more consumers who would otherwise have purchased cannabis from the illicit marketplace.

 

The latest data point shows sales in the first half of 2021 totaling C$1.78B, which is 68% of  total 2020 sales. Average daily sales in June 2021 reached C$10.6M.

Source: Cannabis Benchmarks, StatsCan

Ontario’s share of total sales continues to grow, as the province gets closer to its target of 1,000 retail stores by September. In June 2021 Ontario’s sales exceeded C$120M, accounting for 38% of Canada’s total sales. The Ontario Cannabis Store (OCS) puts out a report every quarter detailing activity in the province’s cannabis market. In the last report, which covers Q2 2021, the OCS reported that the legal market accounted for 44% of total cannabis sales, while the rest came from illicit markets. If we slightly increase that figure to 45% and apply that to the June 2021 sales figure, the total Ontario cannabis sales for the month are estimated to be C$239M. From the historical data we can go back and calculate the historical figures and market trends, as seen in the chart below. The most striking statistic is that from Q2 2020 to Q2 2021, total cannabis sales increased by C$66M, or 38%. This shows that not only is more cannabis being bought in the legal market, but that cannabis is becoming more mainstream. In other words, overall growth of that magnitude suggests more people are using cannabis, and potentially using more of it.

Source: Cannabis Benchmarks
Taking this Ontario data and interpolating it to assess the full Canadian market, we estimate that total cannabis sales from legal and illicit sources would have been C$557M during June 2021. At an annual run rate that would equate to C$6.6B in cannabis 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

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

August 20, 2021

U.S. Cannabis Spot Index — August 20, 2021

U.S. Cannabis Spot Index — Published August 20, 2021

U.S. Cannabis Spot Index decreased 2.0% to $1,515 per pound.

 

The simple average (non-volume weighted) price decreased $27 to $1,843 per pound, with 68% of transactions (one standard deviation) in the $1,007 to $2,679 per pound range. The average reported deal size was 2.6 pounds. In grams, the Spot price was $3.34 and the simple average price was $4.06.

 

The relative frequencies of trades for each grow type were relatively stable from last week.  

    

The relative volumes of each grow type were also virtually unchanged from last week.

 

An increase in late summer supply – as well as supply from last year’s autumn harvest, in some cases – is pushing down assessed flower prices in California and Oregon. Meanwhile, surging demand in newer adult-use markets such as Michigan is lifting or stabilizing wholesale flower prices in those states. 

 

In some states, such as Illinois, the state’s Spot Index has recently climbed above $4,000 per pound, a milestone that it tested, but did not exceed in all of 2020, the first year of adult-use sales in the state. In Massachusetts, observed wholesale flower prices have stabilized at around $3,500 – $3,550 per pound in recent weeks. 

 

Arizona has also seen its Spot price remain steady. Despite Arizona’s adult-use market being only about seven months old, the state’s Spot has tracked at prices roughly half those observed in Massachusetts recently. Arizona’s medical cannabis program already boasted robust production, which operators have been able to expand upon in recent months, as the state has no capacity limits on individual cultivators. 

 

Still, surging sales and higher prices in newer markets have not yet reached a magnitude sufficient to direct the course of the U.S. Spot as a whole. This is due to the fact that significantly higher prices in those states belie significantly smaller volumes traded. For example, in Massachusetts, Cannabis Benchmarks projects that around 110,000 pounds will be sold to consumers in the state’s adult-use market by the end of 2021. This figure is less than half the 250,000 pounds of flower we estimate were sold in Oregon last year.

September 2021 Implied Forward assessed down $15 to $1,600 per pound.

 

The average reported forward deal size increased 6% to 67 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 47%, 40%, and 13% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 85 pounds (up nearly 8% from 79 pounds last week), 52 pounds, and 29 pounds, respectively.

 

 

At $1,600 per pound, the September Implied Forward represents a premium of 3.5% relative to the current U.S. Spot Price of $1,546 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:

Oklahoma

Oklahoma Cannabis Sales Down 6% in June, Even as Patient Count Rose

Michigan

Michigan Cannabis Sales Jump 17.8% in July

Illinois

Report: Illinois Cannabis License Lotteries Plagued by Lawsuits – No Licenses Yet Awarded

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

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

CANADA CANNABIS SPOT INDEX — August 20, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 20, 2021
CCSI image 1 2021-08-20

*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$5.22 per gram this week, down 1.7% from last week’s C$5.31 per gram. This week’s price equates to US$1,871 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 some further analysis on the optimal number of recreational cannabis stores in Canada. The Canadian cannabis industry continues to open new retail outlets across the country at a steady pace. As of the end of July we counted 2,277 licensed retailers, with an average monthly growth rate of 7.2% in 2021. This growth rate has been very consistent throughout the year, which gives us confidence that the cannabis industry will continue to grow for the remainder of 2021.

 

All of Canada’s provinces are seeing store counts grow, but at different rates. Alberta remains an outlier, with stores continuing to open despite it having the smallest population of the four major provinces. In our opinion, Alberta is the only province where retail locations may have been overbuilt. British Columbia’s store count is growing at a steady rate, while Ontario’s has been growing exponentially. Ontario, however, is playing a bit of catch-up to the rest of the provinces on this front. While Ontario is close to achieving its goal of opening 1,000 stores by September, the second most populous province, Quebec, lags quite a bit in that store tally.

 

The table below shows the average number of people each store serves in all the major provinces. As we alluded to above, Alberta looks to have opened more stores than expected by our analysis, which ultimately ends up with consumer cannabis spending in the province spread out across too many locations. On the opposite extreme is Quebec, with 89 stores that serve, on average, 95,000 people each. 

 

To better understand the number of stores required, we looked to Colorado and Oregon – two mature legal cannabis markets in the U.S. In Colorado there is one recreational retailer for about every 9,600 residents while in Oregon there is one legal store for about every 6,150 people. Using that example, we assume one store should ideally serve 7,500 people. Based on this analysis, Canada as a whole would require a total of 4,959 stores, or 2.2 times the current number of retailers.

Source: Cannabis Benchmarks, StatsCan

In the chart below we show how each province is performing relative to the optimal store count. Other than Alberta, every province is still far behind its optimal level.

Source: Cannabis Benchmarks
This level of accessibility would almost certainly minimize illicit market activity and shift a significant portion of the overall cannabis sales volume to legal channels – something the regulated industry is very much looking forward to.
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

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

August 13, 2021

U.S. Cannabis Spot Index — August 13, 2021

U.S. Cannabis Spot Index — Published August 13, 2021

U.S. Cannabis Spot Index decreased 3.9% to $1,546 per pound.

 

The simple average (non-volume weighted) price decreased $16 to $1,870 per pound, with 68% of transactions (one standard deviation) in the $1,031 to $2,709 per pound range. The average reported deal size was 2.5 pounds. In grams, the Spot price was $3.41 and the simple average price was $4.12.

 

The relative frequencies of trades for each grow type were relatively stable from last week.

  

 

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

 

The U.S. Cannabis Spot Index saw a notable drop this week, breaking with the gradual uptrend that had been observed previously. Based on reports from the field and our analysis of state sales data, it appears that there are currently two countervailing pressures on the national wholesale flower price: Surging supply from light-deprivation crops and other expanded production, particularly in California and Oregon, and sales rebounding in July after stagnating across many state markets in Q2. 

 

At the moment, the former is ascendant and is pushing down wholesale prices in the large Western markets, which in turn are pulling down the U.S. Spot. In addition, and perhaps in response to expanded summer light-deprivation crops coming in, growers in Oregon and California may be trying to move last year’s harvests so as not to be stuck with months-old inventory with fresher product entering the market. We have in the past documented that Oregon growers in 2020 harvested 37% more wet weight than in 2019, with much of that increase generated by outdoor cultivators. While Cannabis Benchmarks did see a post-harvest price decline in the state, we did not observe one commensurate with such a large year-over-year supply increase. That product may be coming to market now, with this year’s fall harvest set to begin next month for some growers.

September 2021 Implied Forward assessed down $15 to $1,600 per pound.

 

The average reported forward deal size increased 6% to 67 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 47%, 40%, and 13% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 85 pounds (up nearly 8% from 79 pounds last week), 52 pounds, and 29 pounds, respectively.

 

 

At $1,600 per pound, the September Implied Forward represents a premium of 3.5% relative to the current U.S. Spot Price of $1,546 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: Mendocino County Growers Seeing Lower Prices Now & In the Future

Colorado

Colorado Sales Downdraft Slows in June

Oregon

Growers Report Downward Price Pressure, but Market Conditions Vary Regionally

Massachusetts

July Gross Sales Continue Strong Uptrend

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

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