August 12, 2022

CANADA CANNABIS SPOT INDEX — August 12, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 12, 2022
CCSI image 1 2022-08-12

*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$5.43 per gram this week, up 0.9% from last week’s C$5.39 per gram. This week’s price equates to US$1,924 per pound at the current exchange rate.

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

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SOURE: Cannabis Benchmarks, Health Canada
  • Statistics Canada recently released May retail cannabis sales for the country. Sales increased from April by C$2.5M to C$375.8M. To correct for the different number of days per month, we look at the data in terms of average daily sales in the above chart. The latest data shows average daily sales fell to C$12.1M in May, a decrease of 2.6% from April when a record-high figure was established.
  • However, this is the second month we have seen sales hold above the stagnant daily revenues observed from August 2021 through March 2022. In that period, sales were stuck between C$11.2M to C$11.6M per day, all while store counts increased and production variety grew. This raised concerns for the industry by suggesting that sales were reaching a saturation point or average sales prices were falling while sales volumes grew.
  • In May, sales dropped across all provinces from the previous month, with the exception of British Columbia, where sales grew slightly – by 0.5% month-on-month – to C$1.77M per day. All other major provinces saw sales drop by 2.3% – 2.8%.
  • If sales continue at the daily run rate for May, we should exceed C$4.36B in sales for 2022. (That calculation assumes daily sales average of C$12.1M between June and December.) This should paint the low-end expectation for sales this year, as the May figures precede the summer season, which generally sees higher seasonal sales, along with the end-of-year holiday period. Additionally, we continue to see growth in store counts and more online / delivery options, which should continue to pressure the illicit market’s share of total cannabis sales in the country.

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

12 August 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

August 5, 2022

CANADA CANNABIS SPOT INDEX — August 5, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 5, 2022
CCSI image 1 2022-08-05

*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$5.39 per gram this week, up 0.8% from last week’s C$5.34 per gram. This week’s price equates to US$1,898 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.

SOURE: Cannabis Benchmarks, Health Canada
  • Statistics Canada recently released May retail cannabis sales for the country. Sales increased from April by C$2.5M to C$375.8M. To correct for the different number of days per month, we look at the data in terms of average daily sales in the above chart. The latest data shows average daily sales fell to C$12.1M in May, a decrease of 2.6% from April when a record-high figure was established.
  • However, this is the second month we have seen sales hold above the stagnant daily revenues observed from August 2021 through March 2022. In that period, sales were stuck between C$11.2M to C$11.6M per day, all while store counts increased and production variety grew. This raised concerns for the industry by suggesting that sales were reaching a saturation point or average sales prices were falling while sales volumes grew.
  • In May, sales dropped across all provinces from the previous month, with the exception of British Columbia, where sales grew slightly – by 0.5% month-on-month – to C$1.77M per day. All other major provinces saw sales drop by 2.3% – 2.8%.
  • If sales continue at the daily run rate for May, we should exceed C$4.36B in sales for 2022. (That calculation assumes daily sales average of C$12.1M between June and December.) This should paint the low-end expectation for sales this year, as the May figures precede the summer season, which generally sees higher seasonal sales, along with the end-of-year holiday period. Additionally, we continue to see growth in store counts and more online / delivery options, which should continue to pressure the illicit market’s share of total cannabis sales in the country.

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

5 August 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

July 29, 2022

CANADA CANNABIS SPOT INDEX — July 29, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 29, 2022
CCSI image 1 2022-07-29

*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$5.34 per gram this week, up 1.0% from last week’s C$5.29 per gram. This week’s price equates to US$1,881 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.

The following analysis and commentary are repeated from the July 22, 2022, report.

 

This week we review closures of growing areas by the top Canadian cannabis Licensed Producers (LPs). After the legalization of cannabis in December 2018, the Canadian LPs rushed to build out production capacity, resulting in a heavily overbuilt, oversupplied market. Since January 2020, LPs have continued to shutter indoor, greenhouse, and outdoor operations, with the associated write-offs and lay-offs, in an attempt to right-size operations and improve margins. At some point, the drop in production capacity should help relieve the vast amount of cannabis inventory – both unpackaged and packaged – sitting in warehouses across Canada.

 

The chart below only tracks the operations of the major Canadian cultivators, and in some cases the facilities include a cultivation area and processing / warehouse area.

SOURE: Cannabis Benchmarks, Health Canada

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

29 July 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

July 22, 2022

CANADA CANNABIS SPOT INDEX — July 22, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 22, 2022
CCSI image 1 2022-07-22

*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$5.29 per gram this week, down 0.7% from last week’s C$5.33 per gram. This week’s price equates to US$1,861 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 review closures of growing areas by the top Canadian cannabis Licensed Producers (LPs). After the legalization of cannabis in December 2018, the Canadian LPs rushed to build out production capacity, resulting in a heavily overbuilt, oversupplied market. Since January 2020, LPs have continued to shutter indoor, greenhouse, and outdoor operations, with the associated write-offs and lay-offs, in an attempt to right-size operations and improve margins. At some point, the drop in production capacity should help relieve the vast amount of cannabis inventory – both unpackaged and packaged – sitting in warehouses across Canada.

 

The chart below only tracks the operations of the major Canadian cultivators, and in some cases the facilities include a cultivation area and processing / warehouse area.

SOURE: Cannabis Benchmarks, Health Canada

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

22 July 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

July 8, 2022

CANADA CANNABIS SPOT INDEX — July 15, 2022

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 15, 2022
CCSI image 1 2022-07-15

*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$5.33 per gram this week, up 0.3% from last week’s C$5.32 per gram. This week’s price equates to US$1,860 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.

The following analysis is repeated from the July 8th, 2022, report…
SOURE: Cannabis Benchmarks, Health Canada
  • Statistics Canada reports the total licensed indoor and outdoor growing area, with the latest data showing legal cultivation capacity between October 2018 and September 2021. Indoor grow facilities were ready to go for the October 2018 start to adult use legalization, with some facilities built specifically to serve the recreational sector while others converted from the medical cannabis market.
  • From the outset, the industry drastically miscalculated the volume of cannabis required to meet demand and keep the market balanced, resulting in a significant overbuilding of indoor cultivation capacity. With much of that production unsold, sitting in federal or provincial inventories, or destroyed and written off after becoming unmarketable, all the major licensed producers began to close cultivation space at indoor and greenhouse operations. Over time, we believe this will help balance supply and demand, leading to a more sustainable market.
  • One year after legalization, the first outdoor cannabis cultivation site was licensed. The advent of outdoor production coincided with the legalization of so-called “cannabis 2.0” products. Such products include edibles, vapes, and topicals that were not available during the first year of legal sales. Outdoor cannabis has a significantly lower cost of production, but is often considered to be of lower quality and can be difficult to market as smokable flower. That said, outdoor flower is often employed as the raw material for extraction, with the extracted cannabinoids further refined into inhalable products such as vapes or incorporated into manufactured products like edibles.
  • As with the rapid growth in indoor cultivation capacity during the first 18 months after the legal market opened, we see an almost identical situation developing with licensed outdoor production. Also similar to the overproduction of smokable flower by indoor growers, the production harvested from outdoor operations is likely to sit in inventory, as the market for cannabis 2.0 products has not grown as rapidly as anticipated. However, since much of the outdoor production will be processed into extracts and other more shelf-stable forms, the inventory of cannabis 2.0 products can be stored to support future sales and will not have to be written off or destroyed like the large oversupply of raw flower.
  • In most commodity markets, understanding available production capacity usually helps forecast monthly supply. That does not seem to be the case here. Based on typical yields, Cannabis Benchmarks found no reliable relationship between potential production from licensed indoor and outdoor growing areas and the actual monthly unpackaged cannabis production reported by Statistics Canada. We attribute this to cultivation sites and operators having a very wide variance in harvest yields, as well as the fact that indeterminate amounts of licensed production areas were unused at various times.

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

15 July 2022 Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

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