Canada Cannabis Spot Index (CCSI) 

Week Ending September 17, 2021

CCSI image 1 2021-09-17

*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$5.10 per gram this week, down 1.4% from last week’s C$5.17 per gram. This week’s price equates to US$1,824 per pound at the current exchange rate.

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This week we report our current estimate of the total dry cannabis sold in the legal Canadian marketplace, to give a better perspective of the growing gap between supply and demand. Statistics Canada had been reporting the total kilograms of dry cannabis sold up until September 2019, and since then they have only reported the total packaged units of cannabis sold. That being said, even the packaged units data is incomplete; with the last data point for that category being for March 2021. In today’s analysis we release the output of our in-house models, which estimate the total cannabis sold for medical and non-medical consumption. 

Cannabis Benchmarks estimates that the total dry cannabis consumed in August 2021 was 31,314 kg. This modeled estimate takes into consideration the average size of a packaged unit sold, consumption seasonality, and the growing accessibility through retail stores opening to recreational cannabis. Last month’s figure represents an increase of 4,700 kg,or 17.6%, from August 2020.

Source: Cannabis Benchmarks, Statistics Canada

As seen in the chart above, cannabis usage has been following a steady growth trajectory since legalization, which is positive for the industry. There are concerns, however, that current monthly supply levels are well beyond these demand levels. According to Statistics Canada, the last reported unpackaged dry cannabis production for March 2021 was 112,252 kg. Unpackaged production is defined as the amount of cannabis produced from activities conducted onsite by cultivators and/or processors. The unpackaged production is either sold as dry cannabis flower, converted to a cannabis 2.0 type product, or destroyed – with any excess then pushed into the growing Federal and Provincial inventory. We do not have a good estimate regarding how much of that unpackaged supply was produced for smokeable products, but we do know that a good portion of it ends up in inventory — with those reported levels expanding almost every month. From the Statistics Canada data, we can see that total inventory (unpackaged and packaged) grew by 445,870 kg from March 2020 to March 2021. Even though that level is likely higher today, if the total inventory was used to only supply the smokeable market there would be 35 months worth of supply available.

This is overall a growing concern for the Canadian cannabis industry. Cultivators are experiencing a severely oversupplied market, leading to a decline in wholesale selling prices. In addition, the inventory of products they house becomes a liability on their balance sheet that continuously drops in value, with the lower current wholesale prices and degradation of stored products.

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.