May 27, 2022

U.S. Cannabis Spot Index — May 27, 2022

U.S. Cannabis Spot Index — Published May 27, 2022

The U.S. Cannabis Spot Index increased 0.4% to $1,220 per pound.

 

The simple average (non-volume weighted) price increased $14 to $1,475 per pound, with 68% of transactions (one standard deviation) in the $659 to $2,292 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.69 and the simple average price was $3.25.

 

The relative frequency of transactions for indoor flower was unchanged. Greenhouse flower transaction frequency rose 1% and that of outdoor flower was unchanged.  

 

 

The relative volume of indoor flower fell 2%, while that of greenhouse flower rose 2%. Outdoor flower’s relative volume fell 1%. 

 

U.S. Spot price ticked up by $5 this week to $1,220 per pound, reflecting stabilizing prices in some of the more expensive markets in the country. The top five most expensive cannabis markets in the U.S. are Illinois, Alaska, Maine, New Mexico, and Massachusetts. Michigan fell out of the top price running in November 2021 as the state brought in its first sizable outdoor harvest. New Mexico is now the fourth most expensive market tracked by Cannabis Benchmarks with its adult use market open, consumer demand ramping up, and the absence, for now, of significant amounts of outdoor-grown product. 

 

In April 2021, Massachusetts was the priciest cannabis market in the country. It managed to stay in the top two until December 2021 when prices started softening a bit, trading just over $3,400 per pound. The third week in January 2022 marked the beginning of cascading losses, taking price down $140 in just one week. Price fell over 28% from January to the second week in March, going from the second to the fourth most expensive market tracked by Cannabis Benchmarks in a matter of six weeks. Given the sell-off started just after the new year, one guesses it was a money raising event, a clearing out of inventory and / or a bold attempt at market position. 

 

Alaska retained the number two spot in the top five. While the Alaskan market does have some outdoor product, it is not a significant factor in the state’s Spot price. Contacts in the The Last Frontier state say out-of-state product weighs on local price, as does heavy competition between high THC brands. 

 

Michigan lost its spot as the fifth most expensive wholesale market in December 2021 when price fell below $2,100 per pound, just as New Mexico demand pushed prices up in the months leading up to the April 2022 opening of the state’s adult use market. Prices have steadied somewhat in Michigan, but recent remarks out of the state suggest there is some trepidation ahead of this year’s outdoor grown crop hitting the market in October and November 2022. 

 

Finally, U.S. Spot has remained steady, well below the top five priciest markets as legacy state volume weighs the index down. 

 

June 2022 Implied Forward assessed down $40 to $1,235 per pound.

 

The average reported forward deal size was 80 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 42%, and 15% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 90 pounds, 77 pounds, and 58 pounds, respectively.

 

 

At $1,235 per pound, the June 2022 Implied Forward represents a premium of 1.2% relative to the current U.S. Spot Price of $1,220 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

Entering the “Consequences” Phase – Interview

New York

144 Conditional Cultivator Licenses Awarded So Far

Michigan

Michigan’s Rapidly Evolving Cannabis Market – Interview

Oklahoma

OMMA – Get Compliant with METRC or Get Enforcement

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

27 May 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 27, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending May 27, 2022
CCSI image 1 2022-05-27

*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$5.09 per gram this week, down from last week’s C$5.14 per gram. This week’s price equates to US$1,807 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

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This week we continue to examine data published in the Ontario Cannabis Store’s (OCS) quarterly Cannabis Insights report, which covers the period from October through December 2021. The report contains a wide variety of useful data detailing how Ontario’s market has developed.

This report focuses on the proportion of sales dedicated to cannabis 1.0 and 2.0 products in Ontario. As a reminder, cannabis 1.0 refers to the legalization of combustible cannabis flower, cannabis oils, and cannabis seeds in October 2018.  A year later cannabis 2.0 began, making available to consumers derivative products such as vapes, edibles, beverages, concentrates, and topicals. The data aggregated in today’s CCSI report reviews a series of OCS quarterly reports to compile a complete view of trends following the introduction of cannabis 2.0 products. 

 

Cannabis 2.0 products created a lot of excitement ahead of their availability, and sales from the different product categories were expected to grow quickly. Now that we have over two years of data, we can see cannabis 2.0 products starting to make up a notable share of sales. As seen in the chart below, total cannabis sales in Ontario have been accelerating with the rapid build-out of brick-and-mortar stores. From December 2020 to December 2021, cannabis 2.0 product sales have jumped from making up 26% of total sales to over 30%.

SOURE: Cannabis Benchmarks, OCS

Diving deeper into the cannabis sales mix, we see that most consumers prefer the traditional smokeable or inhalable products (dry flower or vapes, respectively), with all other derivative products making up very small proportions of total sales. That said, modest increases in spending on edibles and concentrates can be seen in the chart below, which compares the sales mix from the end of 2020 and 2021.

Source: OCS, Cannabis Benchmarks
The variety of cannabis 2.0 products is increasing and, as time passes, manufacturers are seeing which products are more popular amongst customers. The cannabis 2.0 products generally command a premium for the same cannabis input; hence we shall see more sales generated by this category as products become more accepted.

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

27 May 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

May 20, 2022

U.S. Cannabis Spot Index — May 20, 2022

U.S. Cannabis Spot Index — Published May 20, 2022

The U.S. Cannabis Spot Index decreased 2.6% to $1,215 per pound.

 

The simple average (non-volume weighted) price decreased $44 to $1,461 per pound, with 68% of transactions (one standard deviation) in the $653 to $2,270 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.68 and the simple average price was $3.22.

 

The relative frequency of transactions for indoor flower fell 2%, while that of greenhouse flower rose 1%. Outdoor transaction frequency was unchanged. 

 

 

The relative volume of indoor flower rose 1%, while that of greenhouse flower was unchanged.  The relative volume of outdoor flower rose 1%.

 

The U.S. Spot market is working off a mini-rally that took price from $1,177 per pound in the first week of March 2022 up to $1,301 in the week of April 8, 2022. Price has already worked off two-thirds of that gain, strongly suggesting a quick trip back to the March 2022 low of $1,177. The price action in March likely reflected purchases ahead of 4/20 and the subsequent losses likely represent discounting ahead of the 4/20 holiday and a return to trend following the event-driven price movement. 

 

The recent sell-off across newer markets was one subject discussed with Leise Rosman, a Montana cannabis entrepreneur with an extensive background in consulting across the country. She floated the notion that price action in new states is likely due, at least in part, to venture-backed firms aggressively shedding inventory to start paying off loans taken out in 2019. 

 

Businesses in states newer to the legal cannabis business undertook large canopy build-outs, along with standing up production and retail facilities. Rosman suspects large operators need to raise funds to start paying off venture loans and noted that once operators start unloading inventory to raise money – sell-offs on the order of Massachusetts, Michigan, Illinois, Arizona, and Oklahoma – it creates a cascade of selling among bigger firms. 

 

 

June 2022 Implied Forward assessed down $25 to $1,275 per pound.

 

The average reported forward deal size was 78 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 41%, and 15% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 87 pounds, 76 pounds, and 58 pounds, respectively.

 

 

At $1,275 per pound, the June 2022 Implied Forward represents a premium of 4.9% relative to the current U.S. Spot Price of $1,215 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

Monthly Sales Set New Record – Top $195 Million

Oklahoma

March Sales down 25% Y-o-Y on Spot Price Erosion

Arizona

Adult Use Share of Total Market Increases as Overall Sales Decline

Alaska

March Sales Up 18%; Flower Demand Jumps

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

20 May 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 20, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending May 20, 2022
CCSI image 1 2022-05-20

*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$5.14 per gram this week, down 1.2% from last week’s C$5.20 per gram. This week’s price equates to US$1,812 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 month the Ontario Cannabis Store (OCS), the body that regulates the province’s cannabis market, released its quarterly Cannabis Insights report for the period from October through December 2021.

 

In this week’s report, we focus particularly on the battle between legal and illicit supply. In the first few years of cannabis legalization, the regulated Canadian market has faced strong competition from illicit supply chains, but that situation is evolving quickly. Falling retail prices, increased product variety, and better accessibility through storefronts, pick-up / delivery options, and online marketplaces are helping legal cannabis gain the upper hand in this battle. 

 

The story is particularly changing in Ontario, where the most recent report estimates the legal market made up 59% of all cannabis sales as of Q4 2021. As can be seen, the trend of legal cannabis capturing increasing proportions of the total market has been quite dramatic over the past two years, and with it we have seen monthly cannabis sales increasing rapidly. For December 2021, legal recreational cannabis sales in Ontario totaled C$127M, 37% higher than a year prior.

SOURE: OCS

The chart below shows the average number of stores in Ontario over the past twelve quarters, as tracked by Cannabis Benchmarks and the OCS, versus the share of the legal cannabis market. The growth of the legal cannabis sector had a very strong correlation to the number of storefronts open for business in 2020 and that positive relationship continued in 2021.

Source: OCS, Cannabis Benchmarks
Based on the 2021 trajectory seen above, we estimate that every additional 100 stores opened will help increase the proportion of total sales from legal channels by about 2%. The Ontario deployment of stores has slowed down in 2022, but our current Ontario store count estimate is 1,503 stores open as of the end of April. Based on that figure we estimate that legal cannabis currently makes up 62% of total Ontario cannabis sales. This is a great feat for the regulated cannabis market.

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

20 May 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

May 13, 2022

CANADA CANNABIS SPOT INDEX — May 13, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending May 13, 2022
CCSI image 1 2022-05-13

*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$5.20 per gram this week, up 0.4% from last week’s C$5.18 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.

This week we examine how legal cannabis sales in Canada have impacted alcohol sales. With the legalization of recreational cannabis in October 2018, some alcoholic beverage companies stated that they feared they would see a reduction in sales, as consumers of legal age may opt to substitute cannabis for alcohol. (In Canada, one must be 18 or older to purchase cannabis; for alcohol, the legal age varies between 18 and 19, depending on the province.) The Canadian government recently released monthly retail sales data for both cannabis and alcohol (beer, wine, and liquor), which gives us a view of whether cannabis has impacted alcohol sales.

 

Below is monthly data from October 2018 through early this year, showing sales of both categories. The chart illustrates that alcohol and cannabis sales were both growing steadily up until 2021. (The spike in alcohol sales in March 2020 was due to bulk buying ahead of COVID-19 lockdowns.) Alcohol sales dropped in early 2021 and leveled off a few months before cannabis sales began to plateau in late summer 2021. That being said, since January 2020, monthly alcohol sales have grown by C$215M to C$2.27B, while cannabis sales grew by a little less – C$182M – to reach C$282M.

With consumers having a finite amount of money to spend in these categories, increased accessibility and education around cannabis has led to a larger proportional expenditure for the new category. As shown in the chart below, cannabis sales’ share of the total dollars spent towards alcohol and cannabis has increased steadily since legalization. Currently, cannabis’ share stands at 12.9% of the total spend of the combined categories.

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

13 May 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved