December 28, 2021

U.S. Cannabis Spot Index — December 31, 2021

U.S. Cannabis Spot Index — Published December 31, 2021

The U.S. Cannabis Spot Index increased 3.7% to $1,349 per pound.

 

The simple average (non-volume weighted) price increased $41 to $1,652 per pound, with 68% of transactions (one standard deviation) in the $843 to $2,460 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $2.97 and the simple average price was $3.64.

 

Cannabis Benchmarks’ U.S. Spot Index has been in a steep downtrend since early August 2021, with legacy states’ overproduction of outdoor cannabis weighing on the market such that the pace of price contagion has picked up over the past several months. U.S. spot greenhouse flower price broke down through $1,000 per pound in early November and indoor flower price is trading near $1,700 per pound, down nearly 16% from its year-high level. 

 

Legacy states are not the only ones coming under seasonal and / or fundamental price pressures.  Michigan spot prices have undergone a sharp sell-off in the wake of several events, with the individual impact of each not easily discerned. Namely: A massive cannabis recall that was partially reversed in court proceedings between the Michigan Marijuana Regulatory Authority and the state’s largest testing facility, growers bringing in the state’s first significant outdoor harvest, and price competition from new cultivators entering the market. Michigan’s Spot has fallen significantly in just three weeks time.

 

Illinois too has undergone a nearly 8% sell-off in the state’s spot market, despite a large in-state population supplemented by multi-state demand for their adult use cannabis marketplace. Legal wranglings are delaying more licensing and there is room for many more retail outlets to create a competitive market and soak up demand. 

 

Massachusetts’ Spot has fallen 4% since mid-October; a development that may be seasonal – harvest related, although the amount of outdoor growing in the state is not yet particularly large – or the beginning of a more competitive market. 

 

 

High population states with strong demand and legal medical and adult use markets are likely to see cannabis commoditization develop at a faster clip than states with medical use only or states that grow mostly indoor and greenhouse flower. Moreover, states supplying their neighbors will see their price advantage quickly eroded when nearby states open adult use markets. The future of cannabis prices, a great reset, may already be underway.

 

January 2022 Implied Forward closed up $10 at $1,345 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 36%, 48%, and 16% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 97 pounds, 52 pounds, and 36 pounds, respectively.

 

 

At $1,345 per pound, the January 2022 Implied Forward represents a discount of 0.3% relative to the current U.S. Spot Price of $1,349 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:

Michigan

Spot Price Crashes as Sales Continue to Soften

Alaska

October Flower Sales, Tax Collections Fall

Illinois

Court Dates for Craft Cultivator Licensing Snarl Moved to 2022

New York

Local Opt-Outs Surge

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

31 December 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — December 31, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending December 31, 2021
CCSI image 1 2021-12-31

*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$5.05 per gram this week, flat from last week’s C$5.05 per gram. This week’s price equates to US$1,777 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.

Statistics Canada recently released retail sales data for October 2021, with nationwide legal cannabis sales reaching a new monthly high of C$365.1M. This is the first month where sales have exceeded the C$360M threshold, which puts the current annual run rate at C$4.32B. While illicit sales currently make up nearly half of the nation’s total retail cannabis market, the proportion of the illicit market is quite different from province to province. Last week we reported on the size of Ontario’s illicit market, which was 45.8% of total cannabis sales, according to the Ontario Cannabis Store’s latest quarterly report.

 

To correct for the different number of days in each month, we look at average daily sales. As seen in the chart below, October 2021 sales reached C$11.75M per day. This is slightly lower than the previous month, which was at C$11.8M per day.

SOURCE: Cannabis Benchmarks, Statscan

As we did this past October, we sliced up the above data 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. With the last quarterly survey being conducted in Q4 2020, we made some adjustments to this baseline to account for new cannabis users, as well as better accessibility to legal cannabis; a change that has enabled customers to transfer their purchasing habits from the illicit market to the legal markets. Overall, we estimate that 17% of the Canadian population consumes cannabis.

 


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

The results of these calculations are shown by month in the chart below.
SOURCE: Cannabis Benchmarks, Statscan
Alberta continues to lead the way with its spending habits. We estimate a typical Alberta cannabis user who purchases cannabis from the legal market spends C$8.50 each month. This is approximately C$0.90 or 11.5% more than they spent last year. The strong Alberta spending rate makes sense, as the province boasts the largest retail footprint per capita in Canada. However we also see Ontario spending picking up, with the rapid roll-out of retail stores. We estimate that the average Ontario cannabis user now spends C$7.20 each month in licensed stores.

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

31 December 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

December 23, 2021

U.S. Cannabis Spot Index — December 24, 2021

U.S. Cannabis Spot Index — Published December 24, 2021

The U.S. Cannabis Spot Index increased 0.2% to $1,301 per pound.

 

The simple average (non-volume weighted) price decreased $3 to $1,611 per pound, with 68% of transactions (one standard deviation) in the $836 to $2,385 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $2.87 and the simple average price was $3.55

 

The relative frequency of transactions for indoor product decreased 1%, that for deals for greenhouse product increased by the same proportion, and that of outdoor flower was unchanged.  

         

 

The relative volumes of indoor and greenhouse flower each fell by about 1%. Outdoor flower’s relative volume increased by roughly 1%.

 

Cannabis Benchmarks’ U.S. Spot Index has been in a steep downtrend since early August 2021, with legacy states’ overproduction of outdoor cannabis weighing on the market such that the pace of price contagion has picked up over the past several months. U.S. spot greenhouse flower price broke down through $1,000 per pound in early November and indoor flower price is trading near $1,700 per pound, down nearly 16% from its year-high level. 

 

Legacy states are not the only ones coming under seasonal and / or fundamental price pressures.  Michigan spot prices have undergone a sharp sell-off in the wake of several events, with the individual impact of each not easily discerned. Namely: A massive cannabis recall that was partially reversed in court proceedings between the Michigan Marijuana Regulatory Authority and the state’s largest testing facility, growers bringing in the state’s first significant outdoor harvest, and price competition from new cultivators entering the market. Michigan’s Spot has fallen significantly in just three weeks time.

 

Illinois too has undergone a nearly 8% sell-off in the state’s spot market, despite a large in-state population supplemented by multi-state demand for their adult use cannabis marketplace. Legal wranglings are delaying more licensing and there is room for many more retail outlets to create a competitive market and soak up demand. 

 

Massachusetts’ Spot has fallen 4% since mid-October; a development that may be seasonal – harvest related, although the amount of outdoor growing in the state is not yet particularly large – or the beginning of a more competitive market. 

 

 

High population states with strong demand and legal medical and adult use markets are likely to see cannabis commoditization develop at a faster clip than states with medical use only or states that grow mostly indoor and greenhouse flower. Moreover, states supplying their neighbors will see their price advantage quickly eroded when nearby states open adult use markets. The future of cannabis prices, a great reset, may already be underway.

 

January 2022 Implied Forward unchanged at $1,335 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 36%, 48%, and 16% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 98 pounds, 53 pounds, and 36 pounds, respectively.

 

 

At $1,335 per pound, the January 2022 Implied Forward represents a premium of 2.6% relative to the current U.S. Spot Price of $1,301 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:

Michigan

Spot Price Crashes as Sales Continue to Soften

Alaska

October Flower Sales, Tax Collections Fall

Illinois

Court Dates for Craft Cultivator Licensing Snarl Moved to 2022

New York

Local Opt-Outs Surge

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

24 December 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — December 24, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending December 24, 2021
CCSI image 1 2021-12-24

*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$5.05 per gram this week, up 0.6% from last week’s C$5.02 per gram. This week’s price equates to US$1,779 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 Statistics Canada released retail sales data for October 2021, with nationwide legal cannabis sales reaching a new monthly high of C$365.1M. This is the first month where sales have exceeded the C$360M threshold, which puts the current annual run rate at C$4.32B. While illicit sales currently make up nearly half of the nation’s total retail cannabis market, the proportion of the illicit market is quite different from province to province. Last week we reported on the size of Ontario’s illicit market, which was 45.8% of total cannabis sales, according to the Ontario Cannabis Store’s latest quarterly report.

 

To correct for the different number of days in each month, we look at average daily sales. As seen in the chart below, October 2021 sales reached C$11.75M per day. This is slightly lower than the previous month, which was at C$11.8M per day.

SOURCE: Cannabis Benchmarks, Statscan

This week, as we did this past October, we sliced up the above data 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. With the last quarterly survey being conducted in Q4 2020, we made some adjustments to this baseline to account for new cannabis users, as well as better accessibility to legal cannabis; a change that has enabled customers to transfer their purchasing habits from the illicit market to the legal markets. Overall, we estimate that 17% of the Canadian population consumes cannabis.

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

The results of these calculations are shown by month in the chart below.
SOURCE: Cannabis Benchmarks, Statscan
Alberta continues to lead the way with its spending habits. We estimate a typical Alberta cannabis user who purchases cannabis from the legal market spends C$8.50 each month. This is approximately C$0.90 or 11.5% more than they spent last year. The strong Alberta spending rate makes sense, as the province boasts the largest retail footprint per capita in Canada. However we also see Ontario spending picking up, with the rapid roll-out of retail stores. We estimate that the average Ontario cannabis user now spends C$7.20 each month in licensed stores.

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

24 December 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

December 17, 2021

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

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

The U.S. Cannabis Spot Index decreased 1.4% to $1,298 per pound.

 

The simple average (non-volume weighted) price decreased $10 to $1,613 per pound, with 68% of transactions (one standard deviation) in the $830 to $2,396 per pound range. The average reported deal size decreased to 2.3 pounds. In grams, the Spot price was $2.86 and the simple average price was $3.56

 

The relative frequency of transactions for indoor product rose 1%, that for deals for greenhouse product was unchanged, and that of outdoor flower fell 1%.  

          

 

The relative volume of indoor flower was unchanged this week. Greenhouse relative volume fell 1% and that of outdoor flower was unchanged.

 

U.S. spot price has given back nearly 60% of the gains made last week on the back of accumulating losses in legacy markets. Washington indoor flower fell over $25 per pound this week, while outdoor flower fell $16. California outdoor fell nearly $40 per pound and indoor flower fell over $23 per pound. Colorado losses continue to narrow with outdoor slipping $13.70 per pound and indoor flower shedding $6.50 per pound. Oregon outdoor fell $19.53 per pound and indoor prices fell $10.75 per pound. 

 

Oregon growers have seen steep price losses on outdoor product in the post-harvest environment, but the trajectory in this market was set early last summer when large quantities of 2020 flower started hitting the market amid a pick-up in employment that likely curbed some consumer demand. Oregon outdoor flower prices have fallen nearly 40% since June 2021. Growers are seeing myriad factors weighing on price as delineated in the interview below. 

 

California’s Spot price is down over 34% since early summer 2021. Week-to-week losses have narrowed and that can be a sign downside momentum is fading. Fundamentally, oversupply is the biggest factor weighing on price. This situation is exacerbated by a relatively low number of retailers per capita in major population centers and a majority of municipalities continuing to ban adult use retailers altogether. 

 

Colorado spot price losses have narrowed as well, slipping just $0.62 this week. While the downtrend is still intact, Colorado spot price behavior suggests the downtrend may be ending, which is not the same as an uptrend starting. Trading sideways within a tight range – as the market is doing currently – drains downside momentum and lays the groundwork for steadier, if not immediately higher, per pound prices. 

 

 

Of all the factors weighing on legacy state outdoor prices, market commoditization, succinctly demonstrated by outdoor growers selling almost exclusively to processors for extraction, is the most inevitable and least reversible.

 

January 2022 Implied Forward unchanged at $1,335 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 37%, 47%, and 16% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 98 pounds, 52 pounds, and 38 pounds, respectively.

 

 

At $1,335 per pound, the January 2022 Implied Forward represents a premium of 2.8% relative to the current U.S. Spot Price of $1,298 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:

Oregon

“The market is dead in the water;” Interview

Nevada

Retail Cannabis Sales Decline in 5 of Last 6 Months

Arizona

Steady Erosion in Medical Cannabis Sales Volume

Oklahoma

Continued Growth in Medical Cannabis Program, but October Sales Lag

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