Canada Cannabis Spot Index (CCSI) 

Published January 18, 2019

The CCSI jumped 3.9% this week to C$6.64 per gram, from C$6.38 per gram last week. The index has been stable over the past 4 weeks. C$6.64 per gram equates to US$2,271 per pound at current exchange rates.

On January 15th, Health Canada released preliminary data on sales, finished inventory and unfinished inventory for October and November, 2018. The Canadian government has instituted the Cannabis Tracking System to ensure illegal supply does not cross into legalized markets. This data snapshot gives the industry a fundamental view of the first complete month of non-medical cannabis sales in Canada with lots of interesting nuggets to consider.

With recreational cannabis being legalized on October 17th, Cannabis Benchmarks made adjustments to the reported October non-medical sales quantity to normalize for a full month of sales. This takes the reported non-medical sales quantity for October from 4,511 kg to 9,323 kg. Surprisingly, November non-medical sales dropped by 45% to 5,146 kg. There are many potential reasons for this massive sales decline but possibilities include:

1. Initial sales rush upon legalization leading to a higher October sales volume;

2. The lack of product availability at online and retail locations impacted November sales; and

3. High prices pushed customers back to the black market.

We’ll get a better perspective on the primary drivers for demand as we get more monthly data from Health Canada.

The reported amount of finished dried cannabis inventory, or product that is ready of sale, as of the end of November is also interesting. The combined inventory of Federal licence holders (inventory held by cultivators and processing facilities) and Provincial distributors/sellers (inventory held by government and privately run online and brick-and-mortar stores) was 25,607 kg., or 2.9x the total dried cannabis actually sold in November to medical and non-medical customers. Is there really a supply shortage?

The last piece of information provided is the end of month unfinished dried cannabis inventory, or product that has been cultivated but not packaged or labelled. According to monthly reported data, there was 93,254 kg of dried cannabis or 10.5x November consumption sitting at either cultivation or processing operations. Can the current reported supply shortage be resolved quickly?