April 29, 2022

U.S. Cannabis Spot Index — April 29, 2022

U.S. Cannabis Spot Index — Published April 29, 2022

The U.S. Cannabis Spot Index decreased 0.4% to $1,277 per pound.

 

The simple average (non-volume weighted) price increased $9 to $1,515 per pound, with 68% of transactions (one standard deviation) in the $677 to $2,353 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $2.82 and the simple average price was $3.34.

 

The relative frequency of transactions for indoor flower fell by 1%. The relative frequency of trades for greenhouse flower rose 2% while that for deals for outdoor product fell 1%.    

 

 

The relative volume of indoor flower was unchanged, as were those of greenhouse and outdoor flower.

 

The U.S. Spot Index slipped just over $5 this week even as legacy states mostly saw prices decline by greater amounts. Oregon fell over $23 per pound basis spot, but the 10-week average of weekly losses has narrowed to -$4.45 per pound. The California Spot index fell nearly $21 per pound on a narrowing 10-week average loss of just -$6.89 per pound. Colorado Spot fell $11.82 per pound, but the 10-week average weekly losses remain low at $6.24 per pound. Narrowing average losses typically presage a steady, if not rallying market. Washington state tacked on $29 per pound on a 10-week average gain of $3.03 per pound. 

 

Large population states newer to the adult use market have undergone significant price erosion even amid unflagging demand as growers jockey for market position, including Illinois where the spot price fell more than $91 this week. New cannabis business licenses in Illinois remain mostly mired in lawsuits, while craft cultivators granted licenses earlier this year are not yet up and running, making the rapid spot market price deterioration more likely a function of competition among multi-state operators for market share. Illinois Spot is down 19.6% since October 2021 and down 13% in 2022. 

 

Massachusetts Spot fell nearly $73 per pound this week, but the 10-week average loss is just under $40 per pound. In 2021, Massachusetts saw spot cannabis prices hew closely to the $3,500 level, but price has fallen 32.6% this year amid a well-supplied market and strong demand, again suggesting competition among growers is likely responsible for lower prices.  

 

Michigan Spot rose over $12 per pound this week, amid a shrinking 10-week average loss per pound of $36. Michigan Spot is down 54% from the end of November 2021, some of which has been attributed to outdoor-grown crops entering the market and some of which is likely due to the state’s uncapped licensing scheme. That said, Michigan Spot has steadied over the past several weeks, trading in within a $27 range. 

 

New Jersey opened their adult use market last week and other states in the Northeast are likely to begin sales near year-end or just after the new year. Demand will likely push prices higher in the first months of legalization, but the rapid deterioration of spot prices in new states is signaling a much faster uptake of price trends. With cannabis available literally across the nation, the price increases seen in early adopter states may be fleeting in the Northeast. 

May 2022 Implied Forward assessed up $20 to $1,300 per pound.

 

The average reported forward deal size increased to 78 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 45%, and 14% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 86 pounds, 77 pounds, and 58 pounds, respectively.

 

 

At $1,300 per pound, the May 2022 Implied Forward represents a premium of 1.8% relative to the current U.S. Spot Price of $1,277 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

Business License Moratorium in Effect, But Current Market Conditions Likely to Persist

Michigan

4/20 Saw 3X Revenue, 6X Flower Sales Volume of Typical Day

New Jersey

$1.9 Million in Revenue Generated on First Day of Adult Use Sales

New York

Report: Regulators Expect Some Adult Use Sales to Begin by Fall 2022

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

29 April 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — April 29, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending April 29, 2022
CCSI image 1 2022-04-29

*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$5.16 per gram this week, up 0.6% from last week’s C$5.13 per gram. This week’s price equates to US$1,830 per pound at the current exchange rate.

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Statistics Canada recently released retail sales data for February 2022, showing nationwide legal cannabis sales dropping from the previous month due to fewer total days. Sales in February slid to C$336.4M but increased on a daily basis. From January to February daily sales grew from an average of C$11.2M per day to C$12.0M per day, or a 7.5% increase. After relatively flat daily sales over the past six months, average daily sales grew to over C$12M per day for the first time.

Another interesting aspect of this month’s data was the revisions. For 2021, total sales were revised down by C$62.6M. While we are uncertain of the exact reason for the restatement, Ontario made up the majority of the revision, with annual sales revised down by 4%, or C$60.6 to C$1.38B. The table below shows the monthly sales change by province.

After the revisions, Canadian recreational cannabis sales totaled C$3.83B for 2021. In light of the restatement, stagnant sales in the back half of 2021, and lower recreational cannabis prices, we have lowered our projection of total recreational cannabis sales for 2022 to C$4.3B.

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

29 April 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

April 22, 2022

U.S. Cannabis Spot Index — April 22, 2022

U.S. Cannabis Spot Index — Published April 22, 2022

The U.S. Cannabis Spot Index increased 1% to $1,283 per pound.

 

The simple average (non-volume weighted) price decreased $4 to $1,506 per pound, with 68% of transactions (one standard deviation) in the $665 to $2,346 per pound range. The average reported deal size declined to 2.2 pounds. In grams, the Spot price was $2.83 and the simple average price was $3.32.

 

The relative frequency of transactions for indoor flower increased by 2%. The relative frequency of trades for greenhouse flower decreased by 2%, while that for deals for outdoor product was unchanged. 

  

 

The relative volume of indoor flower increased by 3%, while that of greenhouse flower decreased by 2%. Outdoor flower’s relative volume declined 1%.

 

The U.S. Spot Index continued its bumpy April, a month that has seen the national average price alternately rise and fall each week thus far. While previous rises have been due largely to expanded observations of trading in higher-priced markets, this week saw the country’s two largest legal cannabis systems – California and Colorado – both experience increases in their overall composite prices. Massachusetts’ Spot price also bucked its recent downtrend to rise this week, which saw the industry and consumers celebrate the 4/20 “holiday.” 

 

The big sales day was not enough to push prices upward in numerous markets, however, with spot prices in Oregon, Washington, and Michigan, among others, maintaining their dramatic and ongoing declines this week. Still, the downtrends in Illinois, Michigan, and Arizona have leveled off in recent weeks, though not before the latter two markets saw their composite prices fall below the U.S. Spot. 

 

Also this week, the industry celebrated the commencement of adult use sales in New Jersey, where Reuters reports that 13 medical dispensaries were given approval to open their doors to general consumers on Thursday, April 21. The stores that have so far been permitted to sell to the adult use market are all operated by existing, vertically integrated businesses that previously served the state’s medical cannabis system and that have been building up expanded production capacity in the wake of adult use legalization. Consequently, there is likely little, if any, wholesale activity taking place in New Jersey at this time, with the approved stores likely receiving their supply almost exclusively from associated cultivation and product manufacturing operations. This situation will change once new businesses are licensed and operating, though when exactly that might occur is not entirely certain at this point.

 

May 2022 Implied Forward unchanged at $1,280 per pound.

 

The average reported forward deal size declined to 77 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 40%, 46%, and 14% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 82 pounds, 77 pounds, and 60 pounds, respectively.

 

 

At $1,280 per pound, the May 2022 Implied Forward represents a discount of 0.2% relative to the current U.S. Spot Price of $1,283 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

March Sales Decline from February as Downtrend in Wholesale Price Continues

State’s Top Regulator Sees Strong Demand, Stability in Market Despite Price Drop – Interview

Arizona

February Sales Tick Down for Second Straight Month as Adult Use Sector Increases Market Share

New Jersey

Adult Use Sales Opened this Week, But Vertically Integrated Operators Mean Little Wholesale Activity Until New Businesses Enter

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

22 April 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — April 22, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending April 22, 2022
CCSI image 1 2022-04-22

*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$5.12 per gram this week, up 1.1% from last week’s C$5.07 per gram. This week’s price equates to US$1,846 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.

In this week’s report we review data released by Statistics Canada, which expands our understanding of the state of cannabis market fundamentals. The data set we focus on this week shows monthly dry cannabis unit production and sales data through September 2021. We discover the dynamics are changing rapidly with this latest installment of data, which spans from April 2021 to September 2021.

The chart below shows monthly dry cannabis packaged production alongside total cannabis sales. Both monthly data sets are reported on a packaged unit basis rather than volume.

As the chart illustrates, both production and sales were increasing at a steady rate in the first few years of legalization. However, with the exception of the COVID shutdown periods during Q2 2020, production consistently outpaced sales, with the excess production each month either being destroyed or pushed into storage facilities. As with most commodity markets, a steady increase in inventory leads to weakening wholesale prices. While declining prices typically result in an increase in sales in the short term, over the longer term producers need to cut production to correct the imbalance. As of last September, the data indicates that production cuts are finally being made to move supply closer in line with demand, with a number of cultivators closing production facilities. A better supply/demand balance should be good news for the cannabis markets as a whole, and should be seen as another sign of a maturing market.

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

22 April 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

April 15, 2022

U.S. Cannabis Spot Index — April 15, 2022

U.S. Cannabis Spot Index — Published April 15, 2022

The U.S. Cannabis Spot Index decreased 2.4% to $1,269 per pound.

 

The simple average (non-volume weighted) price decreased $25 to $1,510 per pound, with 68% of transactions (one standard deviation) in the $684 to $2,336 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $2.80 and the simple average price was $3.33.

 

The relative frequencies of transactions for each grow type were unchanged this week. 

 

 

The relative volume of indoor flower was unchanged, while that of greenhouse flower rose 1%. Outdoor flower’s relative volume fell 1%.

 

Legacy state spot prices are mostly lower this week with Colorado off nearly $16 per pound, with a 10-week average weekly loss of just $2.46 per pound. California shed just over $39 per pound basis spot with an average weekly loss of nearly $11 per pound, up sharply from last week’s average weekly loss of $5.01 per pound. Oregon Spot slipped another $38 per pound with a 10-week average weekly loss of $9.35 per pound. Washington State jumped $9.00 per pound with an average weekly gain of just under $1. 

 

High population states newer to the market have been undergoing a price transformation as new growers enter and competition heats up. Massachusetts spot prices have undergone a shellacking this year, losing over 32%. That said, Massachusetts Spot losses this week were just over $4 per pound; the 10-week average weekly loss has narrowed to -$65.54 per pound versus $95.46 per pound last week. 

 

Despite Illinois massive location advantage and highly concentrated production landscape, spot prices there are down over 23% this year. However, this week Spot gained better than $26 per pound, the second uptick in price in the past 10 weeks. The 10-week average weekly loss is just -$16.93 per pound versus -$27.41 per pound last week. 

 

Michigan managed to eke out gains this week, rising just under $7 per pound. The 10-week average of weekly losses narrowed from -$71.86 to -$58.62 per pound this week. 

 

 

Outdoor-grown flower in legacy states – Washington, Oregon, California, and Colorado – averaged $474 per pound this week. Price convergence among these states points to a recently emerging trend in cannabis prices that is worth paying attention to; it suggests, again, the propensity of prices of like commodities to converge at some point and, for outdoor flower in legacy markets, that point is now. Using the law of one price, with a nod to fundamental differences, we might expect rapid convergence of prices on the East Coast among the most prevalent grow types to occur rather quickly once markets in northeastern states are fully functioning. Growers know to make hay while the sun shines, which is good advice to legal states without significant competition.

 

May 2022 Implied Forward assessed up $15 to $1,280 per pound.

 

The average reported forward deal size declined to 76 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 48%, and 13% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 80 pounds, 77 pounds, and 62 pounds, respectively.

 

 

At $1,280 per pound, the May 2022 Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $1,269 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:

Colorado

February Sales Slip Again

Massachusetts

March Cannabis Sales Rebound, up 9.4% 

Cannabis Control Commission Chairman – Interview

New Mexico

First Week Adult Use Sales Exceed Expectations

Oklahoma

February Cannabis Sales Rebound

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

15 April 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved