August 20, 2021

CANADA CANNABIS SPOT INDEX — August 20, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 20, 2021
CCSI image 1 2021-08-20

*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$5.22 per gram this week, down 1.7% from last week’s C$5.31 per gram. This week’s price equates to US$1,871 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 some further analysis on the optimal number of recreational cannabis stores in Canada. The Canadian cannabis industry continues to open new retail outlets across the country at a steady pace. As of the end of July we counted 2,277 licensed retailers, with an average monthly growth rate of 7.2% in 2021. This growth rate has been very consistent throughout the year, which gives us confidence that the cannabis industry will continue to grow for the remainder of 2021.

 

All of Canada’s provinces are seeing store counts grow, but at different rates. Alberta remains an outlier, with stores continuing to open despite it having the smallest population of the four major provinces. In our opinion, Alberta is the only province where retail locations may have been overbuilt. British Columbia’s store count is growing at a steady rate, while Ontario’s has been growing exponentially. Ontario, however, is playing a bit of catch-up to the rest of the provinces on this front. While Ontario is close to achieving its goal of opening 1,000 stores by September, the second most populous province, Quebec, lags quite a bit in that store tally.

 

The table below shows the average number of people each store serves in all the major provinces. As we alluded to above, Alberta looks to have opened more stores than expected by our analysis, which ultimately ends up with consumer cannabis spending in the province spread out across too many locations. On the opposite extreme is Quebec, with 89 stores that serve, on average, 95,000 people each. 

 

To better understand the number of stores required, we looked to Colorado and Oregon – two mature legal cannabis markets in the U.S. In Colorado there is one recreational retailer for about every 9,600 residents while in Oregon there is one legal store for about every 6,150 people. Using that example, we assume one store should ideally serve 7,500 people. Based on this analysis, Canada as a whole would require a total of 4,959 stores, or 2.2 times the current number of retailers.

Source: Cannabis Benchmarks, StatsCan

In the chart below we show how each province is performing relative to the optimal store count. Other than Alberta, every province is still far behind its optimal level.

Source: Cannabis Benchmarks
This level of accessibility would almost certainly minimize illicit market activity and shift a significant portion of the overall cannabis sales volume to legal channels – something the regulated industry is very much looking forward to.
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

20 August 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

August 13, 2021

CANADA CANNABIS SPOT INDEX — August 13, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 13, 2021
CCSI image 1 2021-08-13

*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$5.31 per gram this week, down 1.7% from last week’s C$5.40 per gram. This week’s price equates to US$1,923 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.

Last week Statistics Canada released retail sales data for May 2021, with nationwide legal cannabis sales reaching a new monthly high of C$313.3M. This is the second month where sales have exceeded the C$300M threshold, which marks a new baseline for the industry. All this while illicit commerce still constitutes over half the total retail cannabis market, as we reported in our July 9 report.

 

To correct for the different number of days in each month, we look at average daily sales in the chart below, which shows May 2021 sales reaching C$10.1M per day, slightly lower than April 2021.

Source: Cannabis Benchmarks, StatsCan

As we did last month, we sliced the above data in a slightly different way. Instead of just looking at the provincial sales outright, we have broken down the number to calculate the average monthly sales per cannabis user. Each province has a different usage rate that is estimated by Statistics Canada through a quarterly survey. For the following analysis, we applied the appropriate provincial usage rate.

Alberta continues to have the highest monthly cannabis sales per user in the legal market. A typical Alberta cannabis user, who purchases cannabis from a legal source, spends C$6.20 each month. This is approximately C$1.40 more than they spent last year. The strong Alberta spending rate makes sense with the largest retail footprint per capita. Ontario has the second highest spending rate, while British Columbia and Quebec show the lowest spending rate. If each province had the same monthly spending rate as Alberta, the legal cannabis market would have exceeded C$580M in sales in the month of May 2021, representing roughly 85% of the total estimated cannabis demand in the country.

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

13 August 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

August 6, 2021

CANADA CANNABIS SPOT INDEX — August 6, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 6, 2021
CCSI image 1 2021-07-30

*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$5.40 per gram this week, up 0.2% from last week’s C$5.39 per gram. This week’s price equates to US$1,961 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 once again examine the impact of legal cannabis sales in Canada on the alcoholic beverages industry. Since the legalization of recreational cannabis in October 2018, alcohol companies have feared they would see a reduction in sales, as consumers of legal age might switch in large numbers to cannabis from alcohol. The Canadian government releases monthly retail sales data for both cannabis and alcohol (beer, wine, and liquor), which provides us with a better understanding of whether cannabis has had an impact on alcohol sales.

 

Below is the latest monthly data from the start of 2016 through May 2021, showing sales in both categories. The chart illustrates that alcohol sales have been growing steadily despite the introduction of legal recreational cannabis sales in late 2018. Since January 2020, monthly alcohol sales have grown by C$186M to C$2.24B. Meanwhile, monthly legal cannabis sales have grown by C$159M to reach C$313M. Looking at sales in 2021 alone, alcoholic beverage sales were flat from January to May, while cannabis sales increased C$33.7M per month.

It should be noted that the COVID-19 pandemic, with its associated lockdowns and ongoing restrictions, have worked to boost both alcohol and cannabis sales higher than they might have been otherwise. This can be seen in the spike in alcohol sales that occurred in March 2020, as lockdowns were put in place across Canada. 

 

 

Going forward, we believe cannabis sales will continue to grow while alcoholic beverages will also increase, but not at the same pace. Consumers have a finite amount of money to spend in this category, and increased accessibility and education around cannabis may lead to larger proportional expenditures for the newly legal intoxicant. Indeed, this is occurring already. As shown in the chart below, cannabis sales are starting to represent a larger portion of the total dollars spent on alcohol and cannabis. Currently, cannabis’ share stands at 12.3% of the total spend of the combined categories.

Our current forecast for cannabis sales projects monthly spending to reach C$433M by the end of 2021. If we assume an average annual alcohol sales growth of 1.5% each year, we can expect monthly alcohol sales to reach C$2.33B by the end of the year. At those levels, cannabis sales would grow to represent 15-16% of the total spent on the two categories.

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

6 August 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

July 30, 2021

CANADA CANNABIS SPOT INDEX — July 30, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 30, 2021
CCSI image 1 2021-07-30

*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, down 2.2% from last week’s C$5.51 per gram. This week’s price equates to US$1,953 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 Canada’s recreational cannabis store count. The number of stores continues to climb steadily across the country, making the legal cannabis system more accessible to consumers. Our latest count shows the number of stores open for business reached 2,277 as of the end of July. This is up by 1,255 stores, or a jump of  123%, compared to July 2020. As can be seen in the chart below, we expect that trend to continue throughout this year.

With each province having different licensing processes, we see different growth rates.

We expected Alberta’s store count to plateau in the second quarter of this year, but the store count there has continued to grow. We do not expect additional new store growth and anticipate some stores will close before the end of the year due to strong competition with other closely-located stores in major cities. British Columbia (BC) has increased its store count at a steady pace in 2021 so far and we expect that growth to continue through the end of the year. At the moment, the BC government reports 25 stores in the queue that are licensed and ready to open. We anticipate approximately 10 stores will open in BC each month through the rest of 2021. 

 

In Quebec and most of the Maritime provinces, provincial governments control the retail sector, with each province owning both the distribution and retail parts of the supply chain. The rollout has been relatively slow with the provinces in control. In June and July, however, the pace picked up in Quebec, a trend which we project will continue throughout the year. Quebec currently has 89 cannabis retail locations, which is a 106% increase from last year, and we expect the store count there will expand to 104 retail locations by the end of the year. The rising store count should drive significant growth in retail sales revenue across the province for 2021. 

 

Ontario continues to be the biggest driving force for new cannabis retail stores. After the slowest initial rollout of licensed stores among all provinces, it now has a target of 1,000 stores by September 2021. Ontario store counts are not fully visible, as the provincial government there reports the number of stores that are “Authorized to Open.” The Ontario Cannabis Store website also has provided a store locator tool, but this store count is usually substantially lower than the actual figure. We estimate that 891 stores are currently open in Ontario, a figure we expect to increase to 1,241 by the end of the year.

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

30 July 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

July 16, 2021

CANADA CANNABIS SPOT INDEX — July 16, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 16, 2021
CCSI image 1 2021-07-16

*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$5.55 per gram this week, up 0.5% from last week’s C$5.52 per gram. This week’s price equates to US$2,011 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.

Last week, Statistics Canada released retail sales data for April 2021, with nationwide legal cannabis sales reaching a new monthly high of C$309.7M. This is the first month where sales have exceeded the C$300M threshold, which marks a major milestone for the industry. All this while the illicit market still controls over half the total retail cannabis market, as we reported last week.

 

To correct for the different number of days in each month, we look at average daily sales in the chart below, which shows April 2021 sales reaching C$10.3M per day.

Source: Cannabis Benchmarks, Statscan

This week we sliced up the above data in a slightly different way. Instead of just looking at the provincial sales outright, we have broken down the number to calculate the average monthly sales per cannabis user. Each province has a different usage rate that is estimated by Statistics Canada through a quarterly survey. For the following analysis, we applied the appropriate provincial usage rate.

This is a flow diagram of the calculation we performed for each province.

The result of these calculations is shown by month in the chart below. As seen, the legal market spending rate is increasing for almost every province. This fits the story of lower prices and more accessibility to brick-and-mortar stores. 

 

Alberta is leading the way with its spending habits. A typical Alberta cannabis user, who purchases cannabis from the legal channel, spends C$6.40 each month. This is approximately C$1.80 or 40% more than they spent last year. The strong Alberta spend makes sense with the largest retail footprint per capita. Ontario comes second in line, while British Columbia and Quebec show the lowest spend.

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

16 July 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.