September 17, 2021

U.S. Cannabis Spot Index — September 17, 2021

U.S. Cannabis Spot Index — Published September 17, 2021

U.S. Cannabis Spot Index increased 0.4%% to $1,463 per pound.

 

The simple average (non-volume weighted) price decreased $18 to $1,724 per pound, with 68% of transactions (one standard deviation) in the $895 to $2,552 per pound range. The average reported deal size decreased to 2.3 pounds. In grams, the Spot price was $3.23 and the simple average price was $3.80.

 

The relative frequency of transactions for indoor flower were unchanged this week at 58%. The relative frequency of trades for greenhouse product was also unchanged, but outdoor flower transaction slipped by 1%. 

       

 

The relative volume of indoor product increased by 2% this week. The relative volume of greenhouse flower was was down by 1% versus last week, while outdoor flower’s relative volume decreased by 1%. 

 

U.S. Spot is still under pressure but ticked up about $6 this week, as legacy states continue to see falling prices. Spot is currently trading at $1,463 per pound, near its lowest level since July 2020. The spot market rallied from $1,322 in May 2020 to a peak at $1,665 in October 2020, reflecting widespread demand during the initial phase of the pandemic. As noted previously, California and Oregon prices have been under persistent pressure, due primarily to ongoing oversupply issues. Indeed, growers see little reprieve on price. Some cultivators say they expect oversupply to remain a permanent condition, as states prepare for federal legalization within, possibly, the next two years. The sell-off in U.S. spot price may slow as new adult use states see increasing consumer demand. That process is expected to be slow, however,  as demonstrated in high-population states like Connecticut — where initial adult-use sales were pushed out to the end of 2022.

 

Economists were somewhat vindicated by this week’s lower-than-expected Consumer Price Index (CPI) data, with overall annual inflation falling 0.1% to 5.3% and monthly core inflation falling to 0.1%, the smallest increase since February 2021. As noted previously, retail sales have been falling and consumer spending has been slipping, with personal consumption expenditures falling from 1.1% in June to 0.3% in July; another indication that consumers are paring back spending. When consumers decide to cut spending, discretionary spending is first — and cannabis is largely a discretionary item. That being said, Alaska, Arizona and Colorado all reported sales increases month-over-month.

 

October 2021 Implied Forward unchanged at $1,500 per pound.

 

The average reported forward deal size was 68 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 39%, and 16% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 91 pounds, 58 pounds, and 29 pounds, respectively.

Headlines from this week's Premium Report:

Colorado

Colorado on Pace to Exceed 2020 Cannabis Sales

Connecticut

Connecticut First Adult Use Retail Sales Pushed to End of 2020

Arizona

Arizona Adult Use and Medical Sales Turn Higher

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

17 September 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 17, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 17, 2021
CCSI image 1 2021-09-17

*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$5.10 per gram this week, down 1.4% from last week’s C$5.17 per gram. This week’s price equates to US$1,824 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 report our current estimate of the total dry cannabis sold in the legal Canadian marketplace, to give a better perspective of the growing gap between supply and demand. Statistics Canada had been reporting the total kilograms of dry cannabis sold up until September 2019, and since then they have only reported the total packaged units of cannabis sold. That being said, even the packaged units data is incomplete; with the last data point for that category being for March 2021. In today’s analysis we release the output of our in-house models, which estimate the total cannabis sold for medical and non-medical consumption. 

 

Cannabis Benchmarks estimates that the total dry cannabis consumed in August 2021 was 31,314 kg. This modeled estimate takes into consideration the average size of a packaged unit sold, consumption seasonality, and the growing accessibility through retail stores opening to recreational cannabis. Last month’s figure represents an increase of 4,700 kg,or 17.6%, from August 2020.

Source: Cannabis Benchmarks, Statistics Canada

As seen in the chart above, cannabis usage has been following a steady growth trajectory since legalization, which is positive for the industry. There are concerns, however, that current monthly supply levels are well beyond these demand levels. According to Statistics Canada, the last reported unpackaged dry cannabis production for March 2021 was 112,252 kg. Unpackaged production is defined as the amount of cannabis produced from activities conducted onsite by cultivators and/or processors. The unpackaged production is either sold as dry cannabis flower, converted to a cannabis 2.0 type product, or destroyed – with any excess then pushed into the growing Federal and Provincial inventory. We do not have a good estimate regarding how much of that unpackaged supply was produced for smokeable products, but we do know that a good portion of it ends up in inventory — with those reported levels expanding almost every month. From the Statistics Canada data, we can see that total inventory (unpackaged and packaged) grew by 445,870 kg from March 2020 to March 2021. Even though that level is likely higher today, if the total inventory was used to only supply the smokeable market there would be 35 months worth of supply available.

 

This is overall a growing concern for the Canadian cannabis industry. Cultivators are experiencing a severely oversupplied market, leading to a decline in wholesale selling prices. In addition, the inventory of products they house becomes a liability on their balance sheet that continuously drops in value, with the lower current wholesale prices and degradation of stored products.

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

17 September 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

September 10, 2021

U.S. Cannabis Spot Index — September 10, 2021

U.S. Cannabis Spot Index — Published September 10, 2021

U.S. Cannabis Spot Index down 3.3% to $1,457 per pound.

 

The simple average (non-volume weighted) price decreased $46 to $1,741 per pound, with 68% of transactions (one standard deviation) in the $928 to $2,554 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.21 and the simple average price was $3.84.

 

The relative frequency of transactions for indoor flower increased by 1% this week. The relative frequency of trades for greenhouse product and outdoor product were essentially unchanged this week.  

      

 

The relative volume of indoor product fell by 1% this week. The relative volume of greenhouse flower was unchanged versus last week, while outdoor flower’s relative volume increased by 1%.

 

U.S. Spot Prices ticked up at the end of last week, after having sold off rather sharply since June 2021, losing $170 per pound after large volume, legacy state pricing came under pressure. Given recent developments in such states, Cannabis Benchmarks inquired after current and expected price trends in Oregon, an especially hard-hit state. We learned there may not be a reprieve in downward price pressures from upcoming holiday sales, as we discuss in more detail in this week’s Premium Report. In California, some members of our Price Contributor Network have reported prices for greenhouse and outdoor-grown product falling sharply. As a result, they stated that some growers are choosing to store their recent harvests due to decreasing interest from buyers and in hope of rebounding prices. 

 

This week, the U.S. Spot returned to its downward trend after last week’s momentary interruption. We have already seen employment and consumer spending pull back as the Delta variant of the coronavirus has gained increasing traction, resulting in economic uncertainty. Retail sales fell in May and July and eked out only a 0.7% gain in June. When consumers pullback due to economic uncertainty, they cut discretionary spending. Cannabis is a primarily discretionary purchase, so it is reasonable to guess cannabis purchases could fall off, prompting lower prices if the economy does not regain its footing in Q4 2021. 

 

While the pandemic and associated economic uncertainty did not dent cannabis sales in 2020, at this point federal programs that were in place last year to support individuals and the economy – e.g., stimulus checks, enhanced unemployment protections, and the eviction moratorium – have been allowed to lapse by the Biden administration.

 

The U.S. Spot remains driven mainly by states with higher trading volumes, but newer markets with high prices are in the mix and growing rapidly. The uptick in the U.S. Spot price may not last if large state markets continue to see prices trend lower and the Delta variant causes a more significant pullback in consumer discretionary spending. 

 

October 2021 Implied Forward down $15 at $1,500 per pound.

 

The average reported forward deal size was 70 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 39%, and 16% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 92 pounds, 59 pounds, and 30 pounds, respectively.

Headlines from this week's Premium Report:

National

U.S. Spot Cannabis Price Returns to Downward Trend

Oregon

Oregon Market Oversupply Here to Stay

Maine

Maine Adult-Use Sales Vault Over $10 million in August

Illinois

Illinois’ Adult-Use Sales Tick Down in August

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

10 September 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 10, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 10, 2021
CCSI image 1 2021-09-10

*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$5.17 per gram this week, down 0.2% from last week’s C$5.18 per gram. This week’s price equates to US$1,860 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 look into the latest household expenditure data from Statistics Canada, issued quarterly. The data continues to show a positive trend for the legal cannabis sector, which is encouraging news for the three-year-old industry. The first thing to note from the data is that the total dollars spent on cannabis has been on a steady rise since legalization. Statistics Canada estimates a total of C$1.91B was spent on cannabis in Q2 2021 from both the legal medical and recreational markets, as well as the illicit market. This figure is 36% higher than the amount spent in the same quarter in 2018, which shows the increase in mainstream adoption of cannabis use since the onset of legalization.

Source: Cannabis Benchmarks, Statistics Canada

In the chart below, we take the same dataset and split out the source and use of the cannabis sale. The chart shows that the legal recreational cannabis sector has been growing substantially over the past few years. The legal recreational market is not only taking market share from the illicit market but also growing overall cannabis expenditures. Statistics Canada estimates illicit recreational sales have fallen 9.7% to C$0.74B from Q2 2020 to Q2 2021.

Source: Cannabis Benchmarks, Statistics Canada
As legal recreational sales have grown to 55% of total cannabis purchases, legal medical sales have declined. Some previously medical consumers have shifted their purchases to the legal recreational markets; this can be confirmed by the drop in active medical client registrations with federally licensed cannabis cultivators. Total registrations stood at 345,520 right before recreational cannabis legalization in October 2018 and dropped to 292,399 by March 2021.
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

10 September 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

September 3, 2021

U.S. Cannabis Spot Index — September 3, 2021

U.S. Cannabis Spot Index — Published September 3, 2021

U.S. Cannabis Spot Index increased 2.1% to $1,507 per pound.

 

The simple average (non-volume weighted) price decreased $6 to $1,787 per pound, with 68% of transactions (one standard deviation) in the $959 to $2,615 per pound range. The average reported deal size was 2.4 pounds. In grams, the Spot price was $3.32 and the simple average price was $3.94.

 

The relative frequency of transactions for indoor flower decreased by 1% this week. The relative frequency of trades for greenhouse product was unchanged and the frequency of outdoor transactions increased by 1%. 

       

 

The relative volume of outdoor product fell by 1% this week. The relative volume of greenhouse flower was unchanged versus last week, while indoor flower’s relative volume increased by 1%.

 

The U.S. Spot Price has been in a downward spiral recently, losing just over $192 in August. Price has come under pressure in legacy legal states with large licensed markets – namely, California, Oregon, and Colorado – all experiencing significant price pressure leading into harvest season. In brief, light-deprivation and outdoor crops are coming to markets over-supplied with last year’s inventory. Over the past several weeks northern California and Oregon growers have noted a large inventory overhang, with price pressure most marked on outdoor-grown flower. Reports from market participants told of outdoor product fetching as low as $200 per pound, while trim was seen trading down at $50 per pound. 

 

As noted in last week’s report, legacy, high production states are weighted more heavily in the U.S. Spot Index by virtue of the larger trading volumes in those markets, thus pushing spot prices sharply lower over the past several weeks as losses accumulate in these states. As of last week, California’s Spot Index was down just over $220 since the third week in July. Oregon’s Spot also fell off over $196 per pound since late July 2021. Colorado prices fell somewhat less, losing $127 from mid-June 2021 to late August 2021. Yet, from a longer term perspective, the U.S. Spot has fallen just $71 from late August 2020 to late August 2021, reflecting the fact that price pressures in legacy states started accumulating in the late spring and early summer of this year.

 

 

The chart below depicts the U.S. spot sell-off accelerating as the year-to-date trendline was tested and did not hold. There is a chance the U.S. Spot will recover in the coming weeks with demand for newly harvested flower ramping up and there is some technical support near current levels dating back to January 2021 and in July 2020. 

The chart illustrates a trading truism: the downside is fast and the upside is slow, meaning falling markets are more volatile than rising markets. It took from January 2021 to June 2021 for the U.S. Spot to gain $142 per pound, but it has taken just over three weeks for it to lose $134 per pound, illustrating the need to hedge downside exposure. As historical data demonstrates, cannabis prices have an element of seasonality that market participants will be able to hedge against, thus locking in price at their chosen level.

March 2022 Implied Forward initially assessed at $1,510 per pound.

 

The average reported forward deal size was 70 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 44%, 39%, and 17% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 93 pounds, 61 pounds, and 30 pounds, respectively.

 

 

The chart below shows the Cannabis Benchmarks® U.S. Spot Index over the past year appended with the Implied Forward Curve.

Headlines from this week's Premium Report:

National

U.S. Spot Prices Catch Up with Legacy State Pricing

Nevada

June Sales Slip Month-on-Month

Oregon

Office of Economic Analysis Publishes Outlook for Cannabis Sales

Washington

State Implementing New Cannabis Traceability System

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

3 September 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved