Canada Cannabis Spot Index (CCSI) 

Week Ending July 2, 2021

CCSI image 1 2021-07-02

*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$5.47 per gram this week, down 1.5% from last week’s C$5.55 per gram. This week’s price equates to US$2,008 per pound at the current exchange rate.

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As competition intensifies in the cannabis cultivation sector, and a supply surplus continues to depress wholesales prices, Licensed Producers (LPs) continue to shut down already-built indoor growing facilities and scrap future development plans. As part of the move away from indoor capacity, many Canadian cannabis cultivators are shifting to outdoor operations. 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 or HVAC needs. 

The latest data from Statistics Canada shows outdoor cannabis cultivation capacity expanding at a consistent rate, while indoor space has been on a decline since early last year. As of March 2021, there were 772 hectares licensed to grow cannabis outdoors. This is a massive jump relative to the same period last year.  Over the past 12 months, outdoor cannabis cultivation capacity grew by 495 hectares or 179% while indoor cannabis cultivation space has dropped by 10%.

Source: Cannabis Benchmarks

As we have outlined in the past, outdoor cultivation’s lower production costs make it more competitive with illicit supply, but the resulting cannabis is frequently perceived to be of lower quality. As a result, significant portions of outdoor-grown product might not be as marketable for smoking in its raw form, relative to indoor-grown flower. However, outdoor-grown cannabis is very suitable as raw material, particularly for manufacturing cannabis 2.0 products such as edibles, beverages, and vapes. Such products are also typically less readily available from illicit sources, and could bring existing consumers seeking more novel products and experiences into the legal market. 

With more farmland dedicated to cannabis, we can expect a larger jump in unpackaged supply come the autumn harvest. In the past few years, we have seen a 66% month-over-month jump in nationwide production due to the outdoor harvest from September to October. This year, with 772 hectares dedicated to outdoor cannabis growing, we can expect even more production that will put pressure on prices.

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.