November 5, 2021

CANADA CANNABIS SPOT INDEX — November 5, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending November 5, 2021
CCSI image 1 2021-11-05

*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$5.07 per gram this week, down 1.3% from last week’s C$5.14 per gram. This week’s price equates to US$1,856 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 the increase in retail storefronts across Canada. As of October 31, we are tracking 2,702 licensed retailers, with an average monthly growth rate of 7% in 2021.

SOURCE: Cannabis Benchmarks

As seen in the chart, the growth in Canada’s retail stores has been driven primarily by Ontario’s quest to make legal cannabis more accessible. In 2021 Ontario opened an average of 90 stores per month, a trend we expect to slow down slightly next year as certain pockets of the Greater Toronto Area become saturated with stores.

SOURCE: Cannabis Benchmarks

According to an article in The Toronto Star, a new bill is being introduced to specify the minimum distance between cannabis retailers in an effort to prevent over-saturation. Bill 29 is unlikely to pass, but it addresses a growing issue in some Toronto neighborhoods. With Ontario modifying its process of issuing retail licenses, the province quickly started handing out licenses without any rules to enforce business spacing. Due to the quick roll-out of licenses, business owners signed leases in busy areas, often unaware that another store might be opening on the same block. This has been frustrating for retailers, since such local competition can cut into each other’s profits. At the moment, the Ontario government apparently believes that the best approach is to allow competition and the consumer to determine winners and losers.

 

In Alberta, the provincial government has set certain minimum distance requirements between cannabis retailers and other enterprises such as schools, but it has not provided guidelines on the distance between cannabis retailers. Distance requirements between cannabis retailers are set by the municipal government, and those requirements differ in Alberta’s two major cities. The City of Edmonton requires a 200-meter minimum distance requirement, while the City of Calgary requires a 300-meter separation. With Alberta having the most stores per capita, this regulation has protected cannabis business owners from having another retailer opening up next door.

 

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

5 November 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

October 29, 2021

CANADA CANNABIS SPOT INDEX — October 29, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending October 29, 2021
CCSI image 1 2021-10-29

*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$5.14 per gram this week, down 0.2% from last week’s C$5.15 per gram. This week’s price equates to US$1,885 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 August 2021, with nationwide legal cannabis sales reaching a new monthly high of C$356.9M. This is the first month where sales have exceeded the C$350M threshold, which puts the current annual run rate at C$4.3B. At this rate, we estimate the illicit market still controls nearly half of the total retail cannabis market.

 

To correct for the different number of days in each month, we look at average daily sales. As seen in the chart below, August 2021 sales reached C$11.5M per day. This is a significant increase from the previous month, which was at C$10.9M per day. We have observed seasonality in consumption, with August typically being a strong sales month; hence we believe September sales might ease from these levels. The strong August sales are easily explainable, with good weather and summer holidays leading to more opportunities to consume cannabis.

SOURCE: Cannabis Benchmarks, StatsCan

This week, as we did this past July, we sliced up the above data 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. With the last quarterly survey being conducted in Q4 2020, we made some adjustments to this baseline to account for new cannabis users, as well as better accessibility to cannabis; a factor that allows customers to transfer their purchasing habits from the illicit market to the legal markets. Overall, we estimate 17% of the Canadian population consumes cannabis.

 

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.
SOURCE: Cannabis Benchmarks, StatsCan
Alberta continues to lead the way with its spending habits. We estimate a typical Alberta cannabis user who purchases cannabis from the legal market spends C$8.20 each month. This is approximately C$1.10 or 15% more than they spent last year. The strong Alberta spending rate makes sense, as the province boasts the largest retail footprint per capita in Canada. With Ontario picking up the pace on opening retail stores, we see that Ontario cannabis users are also spending  more in licensed stores as they move their buying habits away from the illicit market. We estimate that the average Ontario cannabis user now spends C$6.80 each month in licensed stores.

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

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

October 22, 2021

CANADA CANNABIS SPOT INDEX — October 22, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending October 22, 2021
CCSI image 1 2021-10-22

*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$5.15 per gram this week, up 1.0% from last week’s C$5.10 per gram. This week’s price equates to US$1,890 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 examine the number of cannabis processing licenses issued in Canada. This data comes from the same data set we looked at last week, which showed the number of cultivation licenses that have been issued. As with the cultivation licenses, we see a steady growth trend for both standard and micro-processing licenses. As a reminder, a standard processor has no production limits, while a micro-processor can process up to 600 kilograms of dried cannabis in a calendar year. If a micro-processing licence holder also holds a micro-cultivation licence for the same site, the processing limitation does not apply since the license holder will be processing cannabis plant material from its own integrated grow operation.
 

Regardless of processing license type, Health Canada takes a uniform approach in reviewing the applications. As a prerequisite, the applicant must have a production-ready facility prior to submitting a license application. The application has numerous requirements, including municipal permits, property details and layouts, executive team security clearances, and approvals from local fire and police departments. 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 448 active processing licenses split amongst standard and micro operations. A little under one-fifth of the licenses are micro-processing licenses. As with the cultivation licenses, we do not believe most of the licensees are operational.

SOURCE: Cannabis Benchmarks, Health Canada
As illustrated in the chart below, the micro-processing license is a relatively new phenomenon that really kicked off last year.
SOURCE: Cannabis Benchmarks, Health Canada
Lastly, we break down the licenses by province. This looks very similar to the provincial distribution of cultivation licenses, as most processing facilities are being built alongside cultivation sites.
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

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

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.