September 30, 2022

U.S. Cannabis Spot Index — September 30, 2022

U.S. Cannabis Spot Index — Published September 30, 2022

The U.S. Cannabis Spot Index decreased 2.2% to $966 per pound.

 

The simple average (non-volume weighted) price decreased $10 to $1,204 per pound, with 68% of transactions (one standard deviation) in the $540 to $1,869 per pound range. The average reported deal size increased to 2.8 pounds. In grams, the Spot price was $2.13 and the simple average price was $2.66.

 

The relative transaction frequency of indoor product was unchanged this week, as were those of greenhouse and outdoor product.  

 

 

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

 

The Cannabis Benchmarks U.S. Spot Index fell $21 this week, making a new all-time low on net losses of $25 per pound across legacy states. In the interview this week about Colorado companies’ requests to state officials for a license moratorium and a tax holiday, the interviewee reminds us that the brutal sell-off in cannabis prices in 2017 and 2018 in his state should have caused a cannabis business shakeout. Instead, the pandemic sales surge saved untold numbers of cannabis businesses in legacy states.

Now, however, the post-pandemic fallout may prove to be the final straw in some legacy state markets. States that implement license moratoriums may save most cannabis businesses for a time, but as more states come online in the adult use space, competition will heat up across state borders and price convergence will start occurring, even at the higher end of the market. The outdoor market will move toward the price of production and new businesses will have to predicate business plans based on lower prices and profit margins.

It is worth tracking the price spread between contiguous western states and noting that convergence is already taking place at the high end of the market with Arizona indoor flower prices dipping below those of California, while Colorado indoor prices have breached the $900 per pound level. Nevada and New Mexico indoor prices are still well above those of legacy states, but Nevada indoor is already down over 17% this year. New Mexico indoor prices are down over 23% this year and production is still ramping up in the state. 

October 2022 Implied Forward assessed down $30 to close at $965 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 34%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 81 pounds, 68 pounds, and 64 pounds, respectively.

 

 

At $965 per pound, the October 2022 Implied Forward represents a discount of 0.1% relative to the current U.S. Spot Price of $966 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

Colorado Tax and Cultivation Moratoriums on Deck? – Interview

Arizona

Sales Remain Soft, Down 3.8% in July

New Mexico

August Sales Inch Higher

Illinois

Repeat Plaintiffs Want to Sell Licenses – IDFPR says Not so Fast

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

30 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 30, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 30, 2022
CCSI image 1 2022-09-30

*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$5.38 per gram this week, down 0.8% from last week’s C$5.42 per gram. This week’s price equates to US$1,781 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.

SOURE: Cannabis Benchmarks, Health Canada
  • This week Cannabis Benchmarks analyzed Statistics Canada’s data on household spending to determine the trends in the country’s cannabis market. The data is released every quarter and the most recent dataset provides an overview of consumer spending patterns through Q2 2022. The data set continues to demonstrate strong growth in overall cannabis sales in both legal and illegal markets. Canadians spent C$1.97B on cannabis products in Q2 2022. This is an increase of C$119M, or 6%, from the previous year.
  • Taking a deeper look at the statistics, we can see that legal recreational cannabis sales account for all of the growth. Legal recreational sales increased by 23% between Q1 2022 and Q2 2022, while illicit recreational sales decreased by 15% and sales for medical use decreased by 7% over the same time frame. Better accessibility, cheaper prices, and higher quality are driving growth in the legal recreational market, with that growth coming at the expense of both the legal medical and illicit sectors. In Q2 2022, more than two-thirds of all cannabis sales (recreational + medicinal) were legal. As more shop licenses are issued by provincial governments like British Columbia and Ontario, we believe that this trend will continue.
  • Since the adult use cannabis market opened in October 2018, the medical cannabis market has been contracting steadily. Though the medical cannabis market was relatively small before the opening of the adult use market, sales have shrunk by 30% to C$109M in Q2 2022. For the most recently reported quarter, medical sales made up just 6% of all sales. As noted above, more varied and price competitive product offerings in the recreational market has clearly had an impact on the medical sector, to the detriment of large cultivators that invested extensive capital and resources in developing their medical cannabis business.
  • Cannabis Benchmarks estimates that the total Canadian cannabis market in 2023 will exceed C$8.3B, inclusive of the legal adult use and medical sectors, as well as the illicit market. Of this amount, the pie for legal supply continues to grow with 69% of sales expected to be generated by the legal recreational market next year.

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

30 September 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

September 23, 2022

U.S. Cannabis Spot Index — September 23, 2022

U.S. Cannabis Spot Index — Published September 23, 2022

The U.S. Cannabis Spot Index decreased 2.3% to $987 per pound.

 

The simple average (non-volume weighted) price decreased $29 to $1,215 per pound, with 68% of transactions (one standard deviation) in the $529 to $1,901 per pound range. The average reported deal size increased to 2.7 pounds. In grams, the Spot price was $2.18 and the simple average price was $2.68.

 

The relative transaction frequency of indoor product fell 1%, while that of greenhouse product rose 1%. Outdoor transaction frequency was unchanged this week. 

 

 

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

 

U.S. Spot market prices were mostly lower this week, with the weighted average spot index down $23. The national greenhouse flower price fell $12 to $763 per pound wholesale and indoor flower fell $34 to $1,231. Only the outdoor U.S. spot ticked up this week, gaining $26 to trade at $466 per pound. Recent price improvements are likely to be transitory with an increasing number of states undergoing price adjustments to the downside. 

 

U.S. indoor spot price underwent a bit of a summer bump with price improving from the high $1,200s to the mid $1,300s per pound from early July to early August. With the end of summer, however, demand looks to have dropped with price again reaching an all-time low. Greenhouse product has similarly started back on a downward trend after trading up to the $800 per pound level in early August. 

 

The outdoor price rise this week perhaps reflects new product coming to market. Cannabis Benchmarks contacts have noted fresh outdoor supply in the market beginning in August. Given the vast oversupply in outdoor product and the upcoming harvest season, prices are likely to remain under pressure, though that pressure may be relieved somewhat during the holiday season. It seems growers are generally aware the market is oversupplied but are loath to decrease crop size in any meaningful way. 

 

Oregon, perhaps the most oversupplied market in the U.S., shows little sign of reigning in production. As we have covered recently, the state has implemented its second moratorium in the hope of reducing the number of licenses, with a knock-on effect of eventually lowering supply.

 

October 2022 Implied Forward unchanged at $995 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 34%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 83 pounds, 64 pounds, and 64 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $987 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

Market “Bloodbath” Prompts Some Growers to Leave for Other States – Interview

Washington

State Economists Reduce Cannabis Tax Revenue Forecasts, Expect Lower Demand

Michigan

CRA Meeting Discusses Possible License Moratorium, Other Changes

Colorado

State Releases New Average Market Rates for Q4

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

23 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 23, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 23, 2022
CCSI image 1 2022-09-23

*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$5.42 per gram this week, up 0.7% from last week’s C$5.38 per gram. This week’s price equates to US$1,834 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.

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

23 September 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

September 16, 2022

U.S. Cannabis Spot Index — September 16, 2022

U.S. Cannabis Spot Index — Published September 16, 2022

The U.S. Cannabis Spot Index increased 0.1%, nominally unchanged at $1,010 per pound.

 

The simple average (non-volume weighted) price decreased $3 to $1,243 per pound, with 68% of transactions (one standard deviation) in the $541 to $1,946 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.23 and the simple average price was $2.74.

 

The relative transaction frequency of indoor product was unchanged, as were those of greenhouse and outdoor product. 

  

 

The relative volume of indoor product was unchanged on the week, while that of greenhouse product rose 3% and that of outdoor product fell 3%.

 

Cannabis Benchmarks U.S. Spot Index was unchanged this week largely on the back of legacy states netting zero price change. The weighted average spot price is hanging on to the $1,000 per pound level at $1,010, just $7 over the all-time low of $1,003 per pound wholesale, made on September 2, 2022. 

 

The U.S. Indoor spot price made a new all-time low this week at $1,257 per pound, down $8 from last week and marking a resumption of the downtrend after the market had rallied from $1,286 in mid-July 2022 up to $1,364 in early August. 

 

U.S. Greenhouse spot is also at an all-time low down at $763, having shed $33 in the week.  Sources around the country are estimating the average greenhouse production price around $350 per pound in states with high utility costs, while states with lower utility costs appear to be around $300 per pound, perhaps slightly less. 

 

U.S. Outdoor spot, heavily weighted by legacy state spot prices, jumped $24 this week to trade at $463 per pound after making an all-time low at $411 per pound in the first week of September. Given the myriad differences in states’ climates, taxes, regulations, and production input prices, outdoor production price per pound reportedly ranges from $50 for product headed to biomass to $150 for product destined for retail. 

 

 

As states become ever more efficient at standing up cultivation, manufacturing and retail, the price of cannabis appears headed toward the price of production in legacy markets, mimicking other agriculture products that are in abundant supply in the U.S. While there is a good bit of volatility in grain and grass markets, pound prices are typically measured in cents. Cannabis is an agricultural product and, while the price is unlikely to sink to cents per pound, it is probably time to predicate business plans on hundreds, rather than thousands of dollars per pound.

 

October 2022 Implied Forward unchanged at $995 per pound.

 

The average reported forward deal size was 75 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 34%, and 13% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 84 pounds, 65 pounds, and 62 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a discount of 1.5% relative to the current U.S. Spot Price of $1,010 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

Medical Market Share Slips Below 10%

Alaska

Growers Thread the Needle on Tax Categories – Interview

Arizona

Cannabis Market Competition Heating Up – Interview

New Mexico

Adult Use Sales Uptick in August, Medical Sales Slip

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

16 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved