Canada Cannabis Spot Index (CCSI)
Week Ending January 22, 2021
*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$5.95 per gram this week, up 1.5% from last week’s C$5.87 per gram. This week’s price equates to US$2,128 per pound at the current exchange rate.
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This week we once again touch on the changing cultivation landscape in Canada. Overbuilt cultivation capacity has forced numerous Licensed Producers (LPs) to close indoor cultivation facilities and scrap plans for future developments. As the cannabis market matures, cultivators realize that price wars are inevitable, just as in any other commodity. With that realization, an increasing number of Canadian cannabis cultivators are shifting production capacity outdoors. Outdoor cultivation has significantly lower operating costs relative to growing indoors or in a greenhouse, including lower infrastructure and labor costs, and no energy costs for lighting, heating, and ventilation.
The latest data from Statistics Canada shows outdoor cannabis cultivation capacity expanding at a rapid rate. As of October 2020, there were 576 hectares licensed to grow cannabis outdoors. This is a massive jump relative to the first data point from October 2019. Over the 12 month period, outdoor cannabis cultivation capacity grew by 344 hectares, or 148%. This increase comes as three of the largest indoor and greenhouse producers, Aurora, Canopy Growth, and Tilray, announced closures of large facilities last year along with major inventory write-downs.
Source: Cannabis Benchmarks
The next chart takes the same data and standardizes the units to square feet. It is important to note that this chart does not represent a direct comparison of actual cannabis production by each cultivation type, since indoor operations are able to harvest multiple times annually. Additionally, while the dramatic increase in outdoor cultivation capacity – along with plateauing indoor production – points to significant volumes of new supply in the coming years, a greater proportion of indoor production ends up being sold as smokable flower, while significant amounts of outdoor-grown cannabis are devoted to extraction and product manufacturing. The controlled environments of indoor growers enable the production of flower that has greater consistency and aesthetic appeal to consumers looking for smokable product by virtue of sheltering the cultivation process from weather and pest pressures.
Source: Cannabis Benchmarks
For more data and analytics like this, subscribe to the Cannabis Market Insights report developed in collaboration Nasdaq. This in-depth monthly report provides exclusive data and analysis on the legal cannabis industry, focusing largely on the Canadian cannabis market, as well as the cannabis equities market in the U.S.