Total Market View

This Total Market layout shows different cannabis prices across the top:

Soybean Vs Cannabis Correlation Study

In this chart, the price of cannabis is correlated with the price of soybeans.

This correlation study can be done with cannabis vs. any other agricultural commodity, and just as easily with energy, weather, equity prices, etc. Traders use correlations to create proprietary trading algorithms. A farmer or trader that finds a positive or negative correlation can use that knowledge to hedge against a price drop of the underlying commodity or to make a speculative trade. More simply, if ice cream sales correlate with warm sunny weather, those that produce and sell ice cream could hedge by buying and selling umbrellas, which have an inverse correlation with warm sunny weather.

Spread – Indoor Grown Vs Greenhouse Grown

One of the many strengths of the MarketView platform is the ease with which users can create and plot spreads or differentials… the difference between two different geographic locations, two different commodities, two different time periods, etc.

In this example, we see the revenue per pound for cannabis grown indoor (white line) with the revenue per pound for cannabis grown in a greenhouse (blue line).

Why is this important and useful?

Spreads provide an indication of relative price strength between two different items. This has wide application. Traders use spreads to find arbitrage opportunities. Investors and lenders can use the different revenue streams in their pro forma analyses to evaluate which might be a better investment.

Spread – Volume Weighted California Vs. Volume Weighted Colorado

In this example, we see the revenue per pound for cannabis grown in California (white line) with the revenue per pound for cannabis grown in Colorado (blue line).

Why is this important and useful?

As noted above, spreads have wide applications for traders and investors. If a multi-facility grower has operations in both states and has enough capital to expand just one facility, which one should it be? The owner knows the cost of goods sold, but how much will they get for their product? This answers their question. Same for any investor looking to build a portfolio of grow operations. The flip side applies to dispensaries. They can evaluate retail prices in California and Colorado to gauge how much revenue they can generate, but what is their cost of goods? We answer this question, helping them determine which states are best for entry or expansion.

Yield Analysis – An Acre Of Cannabis Vs. An Acre Of Wheat (And Moving Average)

In this chart we see the revenue generated from one acre of cannabis in Colorado minus the revenue generated from one acre of wheat (green line) and the moving average (red line). This analysis shows us that at current market prices, an acre of cannabis in Colorado produces over $4 million more revenue per harvest than an acre of wheat.

Why is this important and useful?

In MarketView, users can conduct yield analysis across a multitude of crops. If they know the cost of their inputs, then yield analyses can be used to calculate the margin on an acre for each crop and determine whether or not they should switch or rotate crops. Besides industrial hemp—which we will start tracking later this year—the return on cannabis is orders of magnitude larger than all of the other crops, at current market prices.