November 24, 2021

U.S. Cannabis Spot Index — November 26, 2021

U.S. Cannabis Spot Index — Published November 26, 2021

The U.S. Cannabis Spot Index decreased 1.9% to $1,290 per pound.

 

The simple average (non-volume weighted) price decreased $22 to $1,634 per pound, with 68% of transactions (one standard deviation) in the $826 to $2,443 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.84 and the simple average price was $3.60.

 

 

California Spot prices, which wield significant influence over the U.S. Spot, have undergone a dramatic sell-off in 2021. Outdoor flower is the largest volume product type with plenty of supply to fulfill demand, including the growing demand for extracted products. 

 

Significantly less greenhouse than outdoor product is available, but because the category is bifurcated – some product is very high quality and some product is akin to outdoor-grown – price follows the lesser quality product. Greenhouse flower prices tanked in 2021 in large part due to significant supply generated by light-deprivation operations this past summer. 

 

Indoor-grown product prices remained fairly steady through much of the year, but began to sell off in earnest in September. The sell-off may have been triggered by a larger quantity made available by more growers eager to fulfill high-end demand; price may also have been pulled lower by the more significant losses in greenhouse and outdoor product.

 

 

In fact, the deterioration of outdoor flower’s price started earlier than that of greenhouse product, and greenhouse price deterioration began before that of indoor flower. Within markets with similar, but not necessarily identical commodities, price contagion can spread throughout similar products without respect to particular quality.

 

One takeaway is that a bifurcated market within one growing category has a higher price contagion effect. The other takeaway is that seasonal activity, summer and fall harvests in this instance, has a profound effect on all categories because of a vastly increased supply available of the lowest priced category, thus price contagion spreads upward to the higher priced products. Price contagion does not happen all at once; it spreads across similar, but not identical markets, over time.

 

When there is a physical market for cannabis products, one way growers will be able to hedge against seasonal fluctuation and price contagion is trading the spread between prices.

 

December 2021 Implied Forward closes down $40 at $1,330 per pound.

 

The average reported forward deal size was nominally unchanged at 68 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 40%, 45%, and 15% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 99 pounds, 53 pounds, and 34 pounds, respectively.

 

At $1,330 per pound, the December Implied Forward represents a premium of 3.1% relative to the current U.S. Spot Price of $1,290 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:

Massachusetts

Spot Prices Stable as Cultivator Numbers Jump

Illinois

Medical Cannabis Program Continues to Draw Patients

Alaska

Product for Extraction Demand Jumps 49% Year-on-Year

Arizona

September Cannabis Sales Fall as Employment Rises

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

26 November 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — November 26, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending November 26, 2021
CCSI image 1 2021-11-26

*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$4.97 per gram this week, down 1.3% from last week’s C$5.03 per gram. This week’s price equates to US$1,778 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 September 2021, with nationwide legal cannabis sales reaching a new monthly high of C$354.7M. We continue to see a strong upward trajectory in cannabis sales. To correct for the different number of days in each month, the chart below looks at average daily sales, which shows September 2021 sales reaching C$11.8M per day. This figure is C$3.4M per day more than what was sold the previous September; a year-to-year increase of 38%.

SOURCE: Cannabis Benchmarks, StatsCan

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

26 November 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

November 19, 2021

U.S. Cannabis Spot Index — November 19, 2021

U.S. Cannabis Spot Index — Published November 19, 2021

U.S. Cannabis Spot Index decreased 1.4% to $1,314 per pound.

 

The simple average (non-volume weighted) price increased $7 to $1,656 per pound, with 68% of transactions (one standard deviation) in the $831 to $2,481 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $2.90 and the simple average price was $3.65.

 

The relative frequency of transactions for each grow type was essentially unchanged from last week. 

           

 

The relative volume of indoor product fell 2%, while that of greenhouse flower rose 3%. The relative volume of outdoor product contracted by 1% this week.

 

 

The gap between U.S. Spot prices and those of Midwestern states is widening, with Illinois and Michigan both fully legalized and supplying consumers in contiguous states, some of which have medical cannabis markets. Michigan’s price is $1,100 over the U.S. Spot and Illinois is trading $1,600 over U.S. spot. There are clear advantages of being the only two amid the 12 states that make up the Midwest to have legalized adult use cannabis. As we covered recently, Illinois officials reported that over 30% of sales revenue came from purchases made by out-of-state consumers last month. This situation is likely to persist as surrounding states do not appear inclined to legalize imminently.

 

That said, there are more subtle realities at work. Illinois and Michigan are also enjoying the pricing advantage that comes with new markets, including relative scarcity in their adult use systems. Additionally, growers have yet to be disintermediated from their product. That is, the extraction, product manufacturing, packaging, marketing, and other value-added services have yet to disconnect – disintermediate – growers from the pricing process. Indeed, Illinois’ market is dominated by a handful of large multi-state operators that seek to stop price bleed – at least for a time – by vertical integration, owning the means of growing through retail sales. Whether this situation will persist as state markets, and eventually a national one, develop remains to be seen. At the end of the day, legacy markets underwent the divorce of growers from pricing power such that some in California have told us “growers have no say in price.”

December 2021 Implied Forward assessed down $25 to $1,370 per pound.

 

The average reported forward deal size increased 2 pounds to 68 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 44%, and 16% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 100 pounds, 51 pounds, and 34 pounds, respectively.

 

At $1,370 per pound, the December Implied Forward represents a premium of 4.3% relative to the current U.S. Spot Price of $1,314 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:

Massachusetts

Spot Prices Stable as Cultivator Numbers Jump

Illinois

Medical Cannabis Program Continues to Draw Patients

Alaska

Product for Extraction Demand Jumps 49% Year-on-Year

Arizona

September Cannabis Sales Fall as Employment Rises

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

19 November 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — November 19, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending November 19, 2021
CCSI image 1 2021-11-19

*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$5.03 per gram this week, up 0.6% from last week’s C$5.00 per gram. This week’s price equates to US$1,815 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.

Today we focus our attention on Alberta, one of the stronger performing cannabis provinces when it comes to retail licensing and sales. That trend may be reinforced with the introduction this month of Bill 80, the Red Tape Reduction Implementation Act, 2021. This bill only received its first reading on November 4, but it proposes nine legislative items, including one that allows licensed cannabis retailers in Alberta to develop an online presence. Currently, Alberta has a private model for physical recreational cannabis retail sales and a government-regulated model for online sales. All cannabis retailers must be licensed by Alberta Gaming Liquor and Cannabis (AGLC), an agency of the provincial government that regulates alcoholic beverages, recreational cannabis, and gaming-related activities. The AGLC also plays another critical role in the cannabis sector by purchasing cannabis products wholesale from 17 licensed producers. AGLC is then responsible for warehousing and reselling to licensed retailers and consumers through its online platform. In this model, the government is both the wholesaler and competitor to privately-run retailers. With Bill 80, any existing physical stores will also have the ability to sell cannabis direct-to-consumer via e-commerce. To date, the government-run online stores have a clear advantage as they can cut out many of the overhead costs that retail stores currently face, such as employees, rent, and utilities. This enables the Alberta online store to routinely sell the same products at a lower price point than private brick-and-mortar retailers. That being said, the AGLC’s cannabis operation has been running at a net loss for the past two years. For the year ending March 31, 2021, the Alberta government lost C$12M.

One of the positives that might occur if the bill is passed is a bigger push against the illicit cannabis sector, which currently makes up an estimated 41% of recreational cannabis sales at the national level. We do not have any specific data on Alberta, but we believe that Alberta’s illicit market share is smaller due to its robust retail footprint.

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

19 November 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

November 12, 2021

U.S. Cannabis Spot Index — November 12, 2021

U.S. Cannabis Spot Index — Published November 12, 2021

U.S. Cannabis Spot Index decreased 2.9% to $1,333 per pound.

 

The simple average (non-volume weighted) price decreased $13 to $1,649 per pound, with 68% of transactions (one standard deviation) in the $826 to $2,472 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.94 and the simple average price was $3.64.

 

The relative frequency of transactions for indoor flower rose 1% this week, while that of deals for greenhouse flower fell 1%. The transaction frequency for outdoor flower was unchanged this week.       

     

 

The relative volume of indoor product fell 2%, while that of greenhouse flower rose 1%. The relative volume of outdoor product rose 1% this week. 

 

 

The downtrend in the U.S. Spot has intensified over the past several weeks as legacy state spot prices have been driven lower, owing largely to oversupply in California, Colorado, and Oregon. California Spot is down almost $430 per pound from late July, Oregon is down over $288, while Colorado has shed some $153 from late July, pulling U.S. Spot down $258 per pound. 

 

The convergence of legacy state prices and their subsequent divergence highlights the weakness in California’s market, as price crosses over both Oregon and Colorado prices. The most severe price pressures are coming from massive oversupply of outdoor grown flower, with what looks to be an abundant harvest this year added to inventory held back from last year and that generated this summer. 

 

Growers in Oregon and California have opined on oversupply, but ultimately do not see canopies shrinking in a meaningful way despite current market conditions. In fact, northern California has pinned their prices hopes on marketing product across the U.S. and ultimately around the world, with decades of growing experience and, even now, brands that are recognized across the country. Oregon cultivators are similarly hoping for federal legalization to occur in a timely manner so that the excess supply generated in the state can be exported east.

 

December 2021 Implied Forward assessed down $25 to $1,395 per pound.

 

The average reported forward deal size was nominally unchanged at 66 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 45%, and 16% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 96 pounds, 51 pounds, and 34 pounds, respectively.

 

At $1,395 per pound, the December Implied Forward represents a premium of 4.6% relative to the current U.S. Spot Price of $1,333 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:

National

Inflation Hits 30 Year High; Energy Prices Surge Impacts Consumers & Producers

Colorado

2021 Sales Will Exceed 2020’s, But Recent Monthly Tallies Down Year-on-Year

Maine

Monthly Adult Use Sales sub $10 Million – Again

Oklahoma

Medical Sales Fell in September, Number of Grower Licenses Still Increasing

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

12 November 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved