June 2, 2020

Colorado Reports Decrease in Marijuana Cultivation Licenses While Retail Locations Continue Expansion

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The Colorado Marijuana Enforcement Division (MED) has published its 2019 Annual Update, providing licensing, sales, production, and product testing data for the entirety of last year. Interestingly, flower production expanded as purchasing declined, yet wholesale prices in the state increased, nonetheless. Some flower was undoubtedly directed toward extraction to manufacture concentrates and infused products. The former saw a significant increase in sales in 2019 compared to the year prior. Additional wholesale price data for Colorado – and other states – in 2019 can be found in our recently published 2019 Annual Chart Book.

Colorado’s legal cannabis market generally contracted in terms of the number of active licenses in 2019. The major exception was an increase in the number of adult-use retail licenses, from 549 at the end of 2018 to 572 at the end of 2019. The numbers of licenses active for adult-use product manufacturing facilities and testing labs were also up slightly in the same period. The number of adult-use cultivation licenses decreased to 684 at the end of 2019, down from 735 at the end of 2018. Medical cultivation licenses saw an even larger contraction, but as we have noted in prior reports this was due in part to multiple permits at single addresses being collapsed into single licenses as part of a rule change.

Despite both adult-use and medical cultivation licenses decreasing over the course of 2019, the number of total plants cultivated in both sectors of the market was up compared to 2018. Adult-use cultivation capacity was consistently higher in each month of 2019 compared to the same month the year prior. On the other hand, medical cultivation was down year-over-year through the first six months of 2019, but the number of plants grown by medical growers rose to over 300,000 monthly in the second half of 2019, a threshold that was not surpassed in all of 2018. By December 2019, Colorado cultivators were growing almost 1.08 million total plants at any given time, on average, up about 10% from the same point the previous year.

Along with increased numbers of plants being grown, production of flower, trim, and wet whole plants increased significantly in 2019, although nearly all the expansion took place on the adult-use side.

Pounds of Usable Marijuana by Category Produced in 2019

While total flower production grew in 2019 compared to the year before, the amount of flower purchased by consumers and patients contracted notably. In 2019, consumers and patients bought 350,429 pounds of flower, roughly half the amount produced and down by 19.7% from over 436,000 pounds purchased in both markets in 2018. Proportional reductions in flower purchasing in the adult-use and medical sectors of the market were comparable to the overall downturn.

The MED’s update shows that adult-use consumers shifted to purchasing increased amounts of edibles and concentrates in 2019, while registered patients increased their purchases of concentrates, but not edibles. Total pounds of concentrates sold expanded by 18.4% year-over-year. Most of the uptick occurred in the adult-use market, which saw a 27.5% increase in sales volume from 2018 to 2019. Units of concentrates sold increased by 47% from 2018 to 2019, indicating that product manufacturers are packaging such items in smaller increments. Again, most of the growth in unit sales occurred in the adult-use sector. Additionally, adult-use consumers purchased roughly six times the number of units of concentrates that medical patients did in 2019.

Total units of edibles sold rose by 12.1% from 2018 to 2019, from over 12.7 million to over 14.3 million. The overall growth in sales for edibles took place in the adult-use market, which saw an increase of 15.4% in the number of units sold. Units of edibles sold to medical patients decreased by 7.7% year-over-year in 2019.

Most products in Colorado’s legal market continue to clear the state’s required quality assurance and safety testing at very high rates, frequently above 95%. The major exception remains flower and trim failing microbial contaminant testing. In 2019, about 14% of batches of plant material in the adult-use sector failed this screening, along with 13% of batches in the medical market. Still, those failure rates are down slightly from 2018.

May 26, 2020

Illinois Marijuana Sales Continue Growth in April

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The Illinois Department of Financial and Professional Regulation (IDFPR) recently published adult-use sales figures for April, providing one of the first glimpses of how legal cannabis sales are faring in a full month under the specter of COVID-19. In an May 4 press release, IDFPR announced that adult-use cannabis retailers in the state generated over $37.2 million in gross revenue in April. April’s sales are up 3.6% from March’s $35.9 million. The month-over-month uptick outpaced the 3.2% rise in sales from February to March.

Unsurprisingly, out-of-state customers generated a smaller proportion of sales in April compared to March. However, the proportion of sales to those from outside Illinois remained robust even as state and local governments had stay-at-home orders in place. According to IDFPR, residents from states other than Illinois were responsible for 20% of sales in April, or over $7.5 million of the total. In March, out-of-state shoppers accounted for 25% of the total revenue tallied, down from 36% in February. It is almost certainly the case that fewer individuals were engaging in interstate travel in April due to concerns about the pandemic, leading to fewer out-of-state visitors to Illinois and a lower proportion of total sales from that demographic.

Average daily adult-use sales increased month-over-month for the first time since that sector of the market opened in Illinois. Daily sales figures for the trailing three months are shown in the table below.

April’s average daily sales figures remain below January’s, the month that Illinois’ adult-use market opened, when customers spent over $1.26 million daily, on average. January’s sales were inflated due to consumer enthusiasm over the new market, while tight supply has led to sales trending downward until April. Rising sales suggest that supply is loosening and that consumers continue to patronize cannabis retailers during the pandemic, with such stores having remained open as essential businesses in the state.

The Illinois Department of Public Health (IDPH), which oversees the state’s medical cannabis program, also recently issued an update on patient numbers and sales figures for April. Retail and cultivator revenues continued to climb in April, even after both saw substantial increases in March. The average retail price for flower for registered patients declined for the second straight month, along with wholesale prices, suggesting that cultivators continue to expand their operations and supply is loosening. Yet, rates for medical flower remained higher than the overall state Spot in April.

According to IDPH data, retail sales of medical cannabis in April totaled over $31.1 million, up by 3.8% compared to March’s revenues of just under $30 million. April’s retail sales of medical cannabis represent a new record high for Illinois’ system, topping the previous record established the month prior. April’s sales are also notable for increasing even after March’s saw an over 20% jump from February. April’s 2020’s retail revenues are up by 67.9% year-over-year, compared to over $18.5 million in sales recorded in the same month in 2019. The rate of annual increase in monthly sales in April is slightly smaller than that observed in March.

Of April’s sales total, 46.5% – or almost $14.5 million – went to purchase flower, a proportion comparable to the month prior, when the percentage was 46%. April is the third straight month that flower’s proportion of total sales has increased, after it contracted consistently for several months prior to February 2020.

As of the end of April, IDPH had approved 113,458 patient applications since the opening of the state’s registry in September 2014, up by over 4,700 patients from a month prior, a larger than usual increase. 55 dispensaries served 56,541 unique patients in April, down by almost 1,800 unique patients compared to the previous month. Fewer patients making purchases and rising sales indicates that each patient is buying more, on average. Similar trends have been reported out of other markets as patients and consumers bulk buy rather than make multiple trips due to the pandemic.

Each patient purchased, on average, 17.3 grams of flower in April, up from 15.9 grams in March. The average retail price of a gram of flower in Illinois’ medical market in April was $14.80, down from $14.91 in March. April is the second consecutive month to see the average retail price for flower in the medical market decline, after five straight months of increases before that. Still, flower prices for patients remain quite elevated compared to the most recent low point of $11.70 per gram in September 2019.

On the wholesale side of the market, Illinois cultivation centers recorded over $27.4 million in revenues in April, up by 0.5% from over $27.3 million in supply side sales documented in March. April’s cultivation center sales also represent a new record high for Illinois’ market, exceeding the previous peak established the month before. Similar to retail sales, April’s modest increase in wholesale sales is notable as it follows an over 30% rise the month before.

May 12, 2020

Arizona Medical Marijuana Sales Up 15% in March

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The Arizona Department of Health Services (ADHS) recently released its monthly report on the state’s medical cannabis program for March 2020. Headlines in numerous news outlets attributed a large month-over-month uptick in sales volume figures in March to the COVID-19 pandemic. However, prior years have also seen sales increases of comparable, or even larger, magnitudes recorded in March. Additionally, a breakdown of daily sales volume and transaction figures indicates that coronavirus-related announcements from state officials may have temporarily elevated sales in the middle portion of the month, but appear to have suppressed them in the latter third of March.

As of March, Arizona’s medical cannabis program counted 230,317 patients on its rolls. That figure is up by 1.6% from the 226,677 patients registered in the program at the end of February. The number of registered patients in Arizona in March 2020 is also up by 18.9% year-over-year, from 193,672 in March 2019.

According to ADHS numbers, 15,408 pounds of cannabis flower were sold through the state’s dispensaries in March, a figure that is up by 15.1% compared to the 13,385 pounds retailed to registered patients in February. March 2020’s flower sales volume represents a new record high for Arizona’s market, after this metric had seen consistent declines since peaking previously in November 2019. March 2020’s flower sales volume is up by 32% from 11,674 pounds in the same month the year prior.

The ADHS report also includes sales volume figures for edibles and “marijuana other,” which constitutes extracts and non-edible infused products. March saw 512 pounds of edibles sold, up by 11.8% from 458 pounds sold the month prior. March 2020’s edibles sales volume is actually down year-over-year, by 6.2%, from 546 pounds in the same month a year ago. March is the third straight month in which an annual downturn in edibles sales volume has been reported.

“Marijuana other” products saw their sales volume continue to grow in March 2020. 1,175 pounds of “marijuana other” products were retailed in Arizona in March compared to 1,043 in February, an increase of 12.7%. This product category has experienced massive year-over-year growth, with March 2020’s sales volume up by 64.8%, from 713 pounds in March 2019.

Combined sales volume of all product types reached 17,095 pounds in March, up by 14.8% from February’s total sales volume of 14,886 pounds. As with flower sales volume, March 2020’s cumulative sales volume represents a new record high for Arizona’s market and breaks a streak of downturns that held since the prior peak of 15,714 pounds was achieved in November 2019. March 2020’s cumulative sales volume is up 32.2% relative to a year prior, when dispensaries sold 12,933 pounds of product to patients.

Arizona’s Spot Index was somewhat elevated through the first three weeks of March, reaching its current year-to-date peak in the week ending March 20. For March overall, Arizona’s Spot was up by 4% from February.

We noted March 2020’s sales appear to track with previously-observed growth in the state’s expanding medical market, with an added boost from COVID-19. On a daily basis, the ADHS data shows that there was a spike in sales on March 13, shortly after Arizona Governor Doug Ducey declared a “public health emergency” on March 11. (The March 11 emergency declaration did not include a “stay-at-home” or “shelter-in-place” order.)

On March 13, over 40,000 transactions were recorded at dispensaries statewide, a level that was achieved previously on February 14, 2020, and nearly so on the final day of January 2020. However, on the prior occasions that similar amounts of transactions were documented, only about 800 pounds of all product types were sold. On March 13, over 900 pounds of product was sold to patients, indicating that purchases were larger, on average, and people were stocking up. Another big sales day occurred a week later, on Friday, March 20, when nearly 850 pounds of product was sold to patients. After that, though, daily sales volume dropped off and did not exceed 700 pounds for any day in the remainder of March. For context, daily sales volumes topped 700 pounds on every Friday in both January and February this year. Even on March 31, the day after Arizona’s governor issued a stay-at-home order, only about 550 pounds were sold in roughly 27,000 transactions.

Overall, it appears that COVID-19-related bulk buying did boost sales somewhat, particularly in the period from March 13 to March 20, but it is likely that the month’s sales totals would not have been appreciably different if the pandemic had not occurred, given the downturn later in the month.