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

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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

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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

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

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

December 10, 2021

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

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

The U.S. Cannabis Spot Index increased 2.3% to $1,317 per pound.

 

The simple average (non-volume weighted) price decreased $8 to $1,623 per pound, with 68% of transactions (one standard deviation) in the $827 to $2,419 per pound range. The average reported deal size decreased to 2.4 pounds. In grams, the Spot price was $2.90 and the simple average price was $3.58.

 

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

           

 

The relative volume of indoor flower rose 3%, that of greenhouse fell 2%, and that of outdoor fell 1%.

 

 

Outdoor flower prices in legacy states have undergone a rout this year, but there are signs the losses may be slowing in the post-harvest environment. Expanding yields will no doubt weigh on prices, but demand for extracts and manufactured products is growing, which may provide a bit of a counterbalance to oversupplied markets. 

 

U.S. Outdoor Spot price ticked up this week, albeit by just $0.38 to $577.94, on the back of outdoor product price gains in California and Colorado.

 

 

An improvement in outdoor product prices rests in large part with growers’ production and inventory management strategies. In addition to ever-increasing production, some western growers overestimated demand due to the pandemic-related buying surge in 2020. The situation was exacerbated by growers holding back 2020 inventory going into 2021, only to have the floor drop out of the market. Price movement over the next few months will reveal whether large inventories are holding the outdoor market down. One Colorado grower’s pragmatic approach is “it’s a renewable resource” and he does not see a reason to hold inventory hoping for better prices. See his story in the Colorado section of this week’s Premium Report.

 

January 2022 Implied Forward assessed down $15 to $1,335 per pound.

 

The average reported forward deal size declined to 66 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 37%, 47%, and 15% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 98 pounds, 51 pounds, and 34 pounds, respectively.

 

 

At $1,335 per pound, the January 2022 Implied Forward represents a premium of 1.4% relative to the current U.S. Spot Price of $1,317 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:

Illinois

Year-to-Date Adult Use Sales Top $1.2 billion

Oregon

Sales Drop for Fourth Straight Month in November

Colorado

The Pragmatic Grower

Maine

November Adult Use Sales Drop 12%

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

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

December 2, 2021

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

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

The U.S. Cannabis Spot Index decreased 0.3% to $1,286 per pound.

 

The simple average (non-volume weighted) price decreased $3 to $1,632 per pound, with 68% of transactions (one standard deviation) in the $822 to $2,441 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.

 

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

 

 

The Cannabis Benchmarks U.S. Spot Index fell just $3.28 this week, to $1,286 per pound. The 20-week average change in the U.S. Spot is -$13.90 and this week’s departure from the average weekly change is significant. The Oregon Spot 20-week average move is -$16.70; this week Oregon Spot fell just $3.49 per pound. Likewise, in California, the 20-week average weekly change in spot prices is -$24.15; this week the state Spot Index is down $15.68. The average price change in Colorado for the past 20 weeks has been -$7.47; again, losses narrowed to just $4.64 per pound. Washington spot prices have been in a downtrend as well with the 20-week average weekly change at -$7.00. However, this week the Spot downtrend in Washington intensified, with price down $49.17 per pound. 

 

As legacy state weekly average price changes narrow for the most part, the market may be undergoing a post harvest “clearing,” where growers sell into a falling market, but weekly price changes narrow. That is, as the market clears, prices start to stabilize; first by narrowing losses and then by building a base price by repeated sales of crops within a tight range. State spot markets will not “clear” all at once, as illustrated by Washington’s sharp negative departure from the average weekly change. Still, the 20-week average spot price change may be an early signal wholesale flower prices are set to stabilize, at least in the near term.

June 2022 Implied Forward initially assessed at $1,410 per pound.

 

The average reported forward deal size declined to 67 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 38%, 47%, and 15% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 100 pounds, 52 pounds, and 35 pounds, respectively.

 

At $1,350 per pound, the January 2022 Implied Forward represents a premium of 4.9% relative to the current U.S. Spot Price of $1,286 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

Q3 Sales and Tax Revenues Dip

Oregon

Wholesale Prices to Rise in Spring 2022, Grower Say

New York

Report: State All-in on Cannabis; Few Towns Choosing to Ban Adult Use Businesses So Far

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

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