October 27, 2020

With Rising Adult-Use Marijuana Prices, Registered Medical Marijuana Patient Count in Illinois Jumps Up in September

Photo by LexScope on Unsplash

The Illinois Department of Public Health (IDPH), which oversees the state’s medical cannabis program, recently issued an update on patient numbers and sales figures for September. Retail sales declined for the second straight month, but cultivator sales grew, with some of that product ultimately sold to adult-use consumers. However, the state’s Spot Index declined in September, while the wholesale price for flower designated as medical rose. There was also a significant increase in the number of new patient registrations in September, but it did not result in a rise in the number of patients that actually purchased from a dispensary that month.

Along with September’s adult-use sales, total retail cannabis revenues in Illinois reached over $99 million, another new record for the state’s young market and up 3.7% from over $95.5 million in combined adult-use and medical cannabis sales recorded in August.

IDPH data shows retail sales of medical cannabis in September totaled over $31.4 million, down by 0.3% compared to August’s revenues of over $31.5 million. September 2020’s retail revenues are up by 39.6% year-over-year, compared to over $22.5 million in sales recorded in the same month in 2019.

Of September’s sales total, 48.3% – or almost $15.2 million – went to purchase flower, a proportion comparable to the month prior, when the percentage was 48%. Flower’s proportion of total medical cannabis sales in Illinois has generally trended upward in 2020.

As of the end of August, IDPH had approved 142,253 patient applications since the opening of the state’s registry in September 2014, up by over 12,600 patients from a month prior. This is an uncharacteristically large increase for Illinois’ medical cannabis system, which has in recent months seen about a third to a quarter of that amount of new patients registered monthly. 55 dispensaries served 63,890 unique patients in August, up by over 700 unique patients compared to the previous month. Interestingly, the big jump in new registered patients did not translate into a comparable increase in those that actually purchased from a medical dispensary.

Each patient purchased, on average, 15.8 grams of flower in September, down sharply from 17.4 grams in August. The average retail price of a gram of flower in Illinois’ medical market in September was $15.06, up sharply from $13.75 in August. Retail flower prices for patients have fluctuated up and down in the past three months, but not to the degree seen in September. The large jump suggests that supplies are continuing to be strained by strong demand in both sectors of the state’s legal cannabis market.

On the wholesale side of the market, Illinois cultivation centers recorded over $30.5 million in revenue in September, up by 10.5% from over $27.6 million in supply side sales documented in August.

October 20, 2020

Maine Adult-Use Marijuana Sales Finally See Daylight

maine recreational marijuana cannabis sales begin

Legal sales of cannabis to adult-use consumers in Maine commenced on October 9th, almost four years after voters legalized a licensed and regulated recreational cannabis market in the 2016 election. However, the supply chain is still developing and reports indicate that sales will be limited due to a shortage of legally prepared product, a situation that will likely persist for a bit.

According to a report from the Portland Press Herald, seven retailers were licensed to sell to the general public as of early October, along with seven growers and four product manufacturers to supply inventory. However, three growers are integrated with licensed retailers, while two other growers are integrated with retailers that were waiting on their final licenses at the time of the report. The report states that at least one licensed retailer did not begin adult-use sales on opening day, citing the shortage of inventory in the new recreational sector.

As we have highlighted in prior reports, adult-use cultivators were only permitted a month ago to begin bringing in plants – not finished product – from the state’s existing medical cannabis program. While plants transferred from medical cultivators or caregivers could be fully mature and harvested immediately by their recipients in the adult-use sector, it still typically takes at least two to three weeks to dry, trim, package, and test product prior to sale. The manufacture and screening of extracts and infused products can take longer in some cases. The Press Herald report notes that there is one lab licensed to test product for Maine’s adult-use market.

Despite the imminent opening of the adult-use market, Maine’s Spot Index has been trending downward in recent weeks. The lack of a hike in wholesale flower prices ahead of adult-use sales could be due to the unique situation in Maine, where only plants were able to be sold from medical to adult-use businesses, rather than finished product. Additionally, with most currently-licensed growers associated with retailers, they are almost certainly keeping their finished flower in-house to stock their own storefronts.

October 13, 2020

Fires in California Continue to Displace Residents While Fall Harvest Ramps Up

Photo by Phoenix7777 / CC BY-SA via Wikimedia Commons 9/30/2020

According to an October 1 update from Cal Fire, 24 major wildfires continue to burn in the Golden State. Wildfires have consumed almost 4 million acres so far this year in California. One of the major fires that has persisted is the record-breaking August Complex, which is threatening the Emerald Triangle region, where a significant amount of California’s outdoor cannabis cultivation takes place.

On September 24, the California Department of Food and Agriculture (CDFA), which licenses and regulates cannabis growers in the state, released a list of resources for cultivators. The information includes how to file a disaster relief request with the state, requirements around relocating product, and other compliance issues.

The persistence of the blazes continues to put the status of California’s fall harvest in question. A clear picture of the situation will likely not emerge until at least next month, once crops are cut down, dried, and tested. Given the significant amounts of smoke and ash that have blanketed parts of the state over the past several weeks, it is likely that this year’s supply of flower for smoking will be dented, though to what degree is not yet clear.

With elevated demand in legal cannabis markets, the current upward price trend may continue with the harvest if supply is tighter than anticipated. Additionally, if supply in the illicit market contracts as well due to the fires, consumers who purchase from such sources may look to the licensed system, increasing demand further for legal sellers.

However, there is likely to be some downward pressure on flower prices as well. Product that is salvageable, but that still has a smokey smell or other evidence of being tainted by the fires, is likely to still be sold if possible, but at lower rates.

Local developments in California could lead to the expansion of the state’s regulated market and increased sales. According to the San Joaquin Valley Sun, Fresno officials are preparing to open an application period for up to 14 adult-use retail licenses in the city, the fifth-most-populous in the state. No adult-use cannabis businesses have been permitted to operate in Fresno to this point. Legal outlets opening in such a large population center should result in a noticeable boost to statewide sales. However, the Sun’s report notes that officials do not expect stores to actually be operational until August 2021.

Additionally, a report from the Monterey Herald notes that the Monterey City Council this week began considering whether to allow licensed cannabis retailers to set up shop. Numerous cannabis industry observers have noted that, in the wake of the COVID-19 pandemic and its devastating impact on municipal budgets, local governments that previously banned legal cannabis businesses are expected to consider allowing them in order to generate revenue.

October 6, 2020

Medical Marijuana Demand in Arizona Persists as Vote on Recreational Legalization Nears

Photo by LexScope on Unsplash

The Arizona Department of Health Services (ADHS) recently released its monthly report on the state’s medical cannabis program for August 2020. Total sales were down slightly from July to August. August missed out on having Labor Day weekend fall within its boundaries this year, a holiday that typically provides a sales bump. Still, July’s record setting demand was maintained for the most part, along with a notable increase in sales volume of extracts and concentrates. Arizona’s Spot Index was elevated slightly in August – it reached its highest monthly average since March – but, unlike in other states, the record-breaking demand generated during the COVID-19 pandemic has not resulted in a notable upward trend in wholesale flower prices.

As of August, Arizona’s medical cannabis program counted 269,030 patients on its rolls. That figure is up by 3.5% from the 259,840 patients registered in the program at the end of July. The number of registered patients in Arizona in August 2020 is also up by 31.7% year-over-year, from 204,271 in August 2019.

According to ADHS numbers, 16,417 pounds of cannabis flower were sold through the state’s dispensaries in August, a figure that is down by 0.6% compared to the 16,518 pounds retailed to registered patients in July. July 2020’s flower sales volume remains the record high for Arizona’s market. August 2020’s flower sales volume is up by 22.8% from 13,367 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. August saw 404 pounds of edibles sold, down by 9.4% from 446 pounds sold the month prior. August 2020’s edibles sales volume is down year-over-year by 18.7%, from 497 pounds in the same month a year ago. An annual downturn in monthly edibles sales volume has been reported for each month so far this year.

“Marijuana other” products saw their sales volume continue to grow in August. 1,696 pounds of “marijuana other” products were retailed in Arizona in August, compared to 1,638 in July, an increase of 3.5%. This product category has experienced massive year-over-year growth, with August 2020’s sales volume up by 92.5%, from 881 pounds in August 2019.

Combined sales volume of all product types reached 18,517 pounds in August, down by 0.7% from July’s total sales volume of 18,647 pounds. As with flower sales volume, July 2020’s cumulative sales volume remains the record high for Arizona’s market. August 2020’s cumulative sales volume is up 25.6% relative to a year prior, when dispensaries sold 14,745 pounds of product to patients.

September 26, 2020

Colorado Continues to See Highest Wholesale Marijuana Prices in Years

Photo by Avery Meeker on Unsplash

The Colorado Department of Revenue (CDOR) recently released its monthly Marijuana Sales Report for July. After sales growth slowed somewhat in June, July saw a big jump in both adult-use and medical revenues, which pushed total sales to a new record high, surpassing the $200 million – as well as the $225 million – mark for the first time. Tax data indicates that the unprecedented demand has resulted in increased wholesale trading and transfer activity, with Colorado’s Spot Index responding by continuing the climb that commenced in June.

In July, combined retail sales of adult-use and medical cannabis totaled over $226.3 million, up by 13.8% compared to June’s combined revenues of over $198.8 million. Historical trends show that sales typically rise from June to July. Still, July 2020’s month-over-month uptick is notable as it represents the third straight month of record-high sales. The magnitude of increase from June to July this year also outpaced that documented last year, which was about 9%.

July 2020’s cumulative sales total represents an increase of 36.1% year-over-year. Prior to May, annual growth rates in monthly sales had been contracting this year, with April 2020 seeing a roughly 9% uptick compared to the same month the year prior. Through the first seven months of 2020, Colorado medical and adult-use retailers have racked up combined sales totaling over $1.2 billion, up by 22.4% compared to over $984 million in total year-to-date sales through the same period last year. For context, in 2019 as a whole, total sales in Colorado grew by over 13% year-over-year.

Adult-use retailers in Colorado tallied over $183.1 million in July, a new record high. Revenues from the state’s adult-use sector in July were up by 15.8% compared to the over $158.1 million in retail sales generated in June. July 2020’s adult-use sales are up 36.9% from those documented for the same month in 2019. Year-to-date sales in the adult-use portion of the market have reached over $954.2 million seven months into 2020, outpacing by 21% the over $788.7 million in recreational revenue through the first seven months of 2019. In 2019, annual revenue generated by recreational retailers grew by 16.2% compared to the year prior.

Medical cannabis revenues in July came to over $43.2 million, up by 6.1% from the over $40.7 million in sales tallied in June in that section of the market. July’s medical cannabis sales represent a new record for the medical market after a downturn in June. Retail sales in Colorado’s medical market in July 2020 are up by 42.4% year-over-year, relative to over $30.3 million in July 2019.

In the wholesale realm, tax collection data for August 2020 – which corresponds generally to wholesale transfers and transactions executed in July – shows that the 15% excise tax on wholesale activity in Colorado’s adult-use system resulted in over $10.47 million accruing to state coffers. August’s wholesale excise tax receipts are up by 11.6% compared to tax collections from the previous month, which amounted to over $9.38 million. They also represent a new record for receipts from this levy for the fifth straight month.

Average Market Rates (AMRs) used by the state to assess the wholesale excise tax on internal transfers of flower, trim, and other plant material between commonly-owned adult-use licenses received their quarterly adjustment at the start of July. (Since August 2017, AMRs are adjusted quarterly by the Colorado Department of Revenue.) Overall, AMRs for the various product types transferred by adult-use cultivators declined for Q3 of this year. Consequently, increased tax collections indicates that wholesale trading and transfers by adult-use growers swelled in July on the record-setting demand that retailers have been facing.

Similar to June, Colorado’s Spot Index rose in each week of July, but at a notably faster pace. The state’s composite rate concluded July up by 9.8% from the start of the month. For July as a whole, the state’s composite price is up by 16.8% from June’s monthly mean.

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