October 15, 2021

CANADA CANNABIS SPOT INDEX — October 15, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending October 15, 2021
CCSI image 1 2021-10-15

*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 0.3% from last week’s C$5.12 per gram. This week’s price equates to US$1,859 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week we re-examine the number of cultivators in Canada’s market, which shows a steady growth trend for both standard and micro-cultivation licenses. As a reminder, the standard license has no size limit on the growing area for the facility, while a micro-cultivator is limited to 200 square meters (about 2,150 square feet) of growing area. Micro-cultivators are likely to focus on quality over quantity, with these smaller growers typically concentrating on unique strains to differentiate their product and receive a premium price. 

 

Regardless of type, Health Canada takes a uniform approach in reviewing cultivation applications. The completed form requires municipal permits, property details and layouts, executive team security clearances, approvals from local fire and police associations, and much more. The average time to receive a license takes anywhere from three to nine months, depending on the completeness of the application. 

 

 

Health Canada shows there are currently 646 active cultivation licenses split amongst standard and micro-cultivation grow operations. A little under two-thirds of the licenses are standard licenses.

SOURCE: Cannabis Benchmarks, Health Canada
As illustrated in the chart below, the micro-cultivation license is a relatively new phenomenon that started in early 2020.
SOURCE: Cannabis Benchmarks, Health Canada
Lastly, we break down the licenses by provinces. Ontario, with its sizable population, and British Columbia, with its favorable climate, have seen the largest numbers of licensed cultivators. We should note that at the moment not all licensees are operational. However, if each license holder builds out their cultivation facility and begins production, we expect Canada’s production capacity will continue to outstrip domestic demand.
SOURCE: Cannabis Benchmarks, Health Canada

Cannabis Benchmarks has a complete, cleaned-up list of Health Canada licensed cultivation operations showing the name, type of operation, issue date, and the products authorized to sell. Email us to get the complete list.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

15 October 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

October 8, 2021

CANADA CANNABIS SPOT INDEX — October 8, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending October 8, 2021
CCSI image 1 2021-10-08

*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$5.12 per gram this week, down 0.7% from last week’s C$5.15 per gram. This week’s price equates to US$1,844 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week we provide an update on our cannabis retail sales estimate for the remainder of this year and next year. Over the past three years, the Canadian cannabis industry saw sales grow each month at a similar pace as the number of new retail outlets opening across the country. At the end of September, we crossed the milestone of 2,500 stores. We recently forecast that monthly retail sales across Canada reached C$333 as of September 2021.

 

For the remainder of 2021 and through 2022, we forecast that sales growth will continue as provinces such as Ontario, British Columbia, and Quebec make legal cannabis more accessible by adding more retail stores. In 2022, however, we expect growth to moderate as certain highly populated pockets of Canada become saturated with cannabis stores, leading to lower sales per store and a continued downtrend in retail prices across the provinces. Additionally, the conversion rate of buyers from the illicit market has slowed as some buyers remain committed to their informal sales channels. Overall, we see sales climbing to C$383M by December 2022, a 12% increase to July 2020, which is the last monthly figure published by Statistics Canada.

SOURCE: Cannabis Benchmarks, StatsCan
 

On a cumulative basis, 2022 sales are expected to grow to C$4.34B which is a 13% increase over our estimated total for 2021.

SOURCE: Cannabis Benchmarks, StatsCan
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.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

8 October 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

October 1, 2021

CANADA CANNABIS SPOT INDEX — October 1, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending October 1, 2021
CCSI image 1 2021-10-01

*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$5.15 per gram this week, up 0.7% from last week’s C$5.12 per gram. This week’s price equates to US$1,845 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week we look at the breakdown of monthly sales volumes between the recreational and medical cannabis markets. Before October 2018, all cannabis was sold only for medical use to registered customers. Individuals needed to obtain authorization from a healthcare professional in order to register to buy products from a licensed cannabis producer. According to Health Canada, there are 764 authorized licensed cultivators, processors, and sellers under the Cannabis Act. These authorized parties can sell plants, seeds, smokable flower, and several derivative products to registered clients. With the onset of legalization, many who had registered as medical cannabis clients have shifted to procuring their supply from the recreational market. The ease of purchasing via a provincial online platform or a local retailer, along with the lower-priced products, has put significant pressure on medical cannabis suppliers. As seen in the chart below, the number of active registered medical cannabis clients has trended downward since October 2018. The latest data from Statistics Canada shows 292,399 active registered medical cannabis clients as of March 2021.

In our September 17 report, we estimated the current total dry cannabis sold in the legal Canadian marketplace. Cannabis Benchmarks estimates that the total dry cannabis sold in August 2021 was 31,314 kg. Today we take that analysis one step further, to break down the monthly volume and show how much was sold in the recreational versus the medical markets. The chart below shows the steep drop in medical purchasing as a percentage of total volume sold. Last month, we estimated that medical dry cannabis sales made up 3% of total sales volumes or 972 kg. To put this number into perspective, this is only 50% of the volume sold for medical use in October 2018.

SOURCE: Cannabis Benchmarks, Statistics Canada
The following chart shows the estimated monthly sales volume for medical use since October 2018. This should be a very concerning trend for those cultivators who specialize in selling a premium product for the medical market, especially as wholesale prices continue to fall in the recreational sector and competition increases.
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.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

1 October 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

September 24, 2021

CANADA CANNABIS SPOT INDEX — September 24, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 24, 2021
CCSI image 1 2021-09-24

*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$5.12 per gram this week, up 0.4% from last week’s C$5.10 per gram. This week’s price equates to US$1,823 per pound at the current exchange rate.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

This week Statistics Canada released retail sales data for July 2021, with nationwide legal cannabis sales reaching a new monthly high of C$338.9M. We continue to see a strong upward trajectory in cannabis sales. To correct for the different number of days in each month, the chart below looks at average daily sales, which shows July 2021 sales reaching C$10.9M per day. This figure is C$3.4M per day more than what was sold the previous July; a year-to-year increase of  45%.

Source: Cannabis Benchmarks, Statscan

We attribute the strong sales to several key factors:

  • Legal accessibility to cannabis continues to get better; specifically in Ontario, where we have seen 86 new cannabis retailers added each month in 2021 so far. This has helped Ontario achieve its 1,000 store goal by mid-August, well ahead of schedule.

 

  • We are noticing seasonality in cannabis sales, with sales stronger during the summer months. July is typically a holiday month for post-secondary students; hence the increased sales can be attributed to that free time, as well as better weather that encourages social gatherings.

  • Lastly, lower prices in the retail markets are pushing consumers to the legal channels and away from illicit sources.

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.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

24 September 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

September 17, 2021

CANADA CANNABIS SPOT INDEX — September 17, 2021

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.

Include your weekly wholesale transactions in our price assessment by joining our Price Contributor Network

If you have not already done so, we invite you to join our Price Contributor Network, where market participants anonymously submit wholesale transactions to be included in our weekly price assessments. It takes two minutes to join and two minutes to submit each week, and comes with loads of extra data and market intelligence.

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.

Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

17 September 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

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