December 3, 2021

CANADA CANNABIS SPOT INDEX — December 3, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending December 3, 2021
CCSI image 1 2021-12-03

*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$5.01 per gram this week, up 0.9% from last week’s C$4.97 per gram. This week’s price equates to US$1,780 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 November 30 we counted 2,810 licensed retailers, with an average monthly growth rate of 127 stores or 7% in 2021. Ontario took the lead last year, as the store licensing process eased and more applications were quickly approved. Since then, Ontario’s cannabis retail footprint exploded and the expansion has not slowed. All other provinces, meanwhile, are still seeing steady growth but are also approaching a point of saturation. That being said, Ontario still has a lot further to go to reach the store concentration levels found in Alberta.

SOURCE: Cannabis Benchmarks
To get a better idea of how saturated the store counts are by city, we aggregated the store counts of each metropolitan area and looked to determine how many customers each store potentially serves. We should keep in mind that roughly 78% of the population is of legal age, and only 20-25% of that population uses cannabis. To simplify the analysis, we are only looking at the number of stores in a city and dividing that number by the full population (i.e., we are not making any adjustments for the number of cannabis users).
SOURCE: Cannabis Benchmarks

As shown in the chart above, cities in Alberta (Calgary, Edmonton, Red Deer, and Lethbridge) have the highest number of stores per capita – even more so than the big college towns in Ontario (Kingston, Waterloo/Kitchener, and London). With Alberta home to 721 stores, the competition is already quite fierce and there is a good likelihood that some stores will fail. Major cities in British Columbia (Vancouver, Kamloops, and Kelowna) are big laggers, with many illegal stores still operating in densely-populated parts of the cities due to strong demand. 

 

Quebec is in the worst shape with a relatively small number of stores, all provincially-owned. The small retail footprint of the legal market is leading to depressed sales in the province. If there was a change in the retail model, we would certainly see a jump in legal sales similar to the change we saw in Ontario after the rapid roll-out of stores that began in April 2020. At the moment, daily sales are hovering at around the same level as Alberta, a province with nearly half the population of Quebec.

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

3 December 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

November 24, 2021

CANADA CANNABIS SPOT INDEX — November 26, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending November 26, 2021
CCSI image 1 2021-11-26

*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$4.97 per gram this week, down 1.3% from last week’s C$5.03 per gram. This week’s price equates to US$1,778 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 September 2021, with nationwide legal cannabis sales reaching a new monthly high of C$354.7M. 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 September 2021 sales reaching C$11.8M per day. This figure is C$3.4M per day more than what was sold the previous September; a year-to-year increase of 38%.

SOURCE: Cannabis Benchmarks, StatsCan

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

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

November 19, 2021

CANADA CANNABIS SPOT INDEX — November 19, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending November 19, 2021
CCSI image 1 2021-11-19

*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$5.03 per gram this week, up 0.6% from last week’s C$5.00 per gram. This week’s price equates to US$1,815 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.

Today we focus our attention on Alberta, one of the stronger performing cannabis provinces when it comes to retail licensing and sales. That trend may be reinforced with the introduction this month of Bill 80, the Red Tape Reduction Implementation Act, 2021. This bill only received its first reading on November 4, but it proposes nine legislative items, including one that allows licensed cannabis retailers in Alberta to develop an online presence. Currently, Alberta has a private model for physical recreational cannabis retail sales and a government-regulated model for online sales. All cannabis retailers must be licensed by Alberta Gaming Liquor and Cannabis (AGLC), an agency of the provincial government that regulates alcoholic beverages, recreational cannabis, and gaming-related activities. The AGLC also plays another critical role in the cannabis sector by purchasing cannabis products wholesale from 17 licensed producers. AGLC is then responsible for warehousing and reselling to licensed retailers and consumers through its online platform. In this model, the government is both the wholesaler and competitor to privately-run retailers. With Bill 80, any existing physical stores will also have the ability to sell cannabis direct-to-consumer via e-commerce. To date, the government-run online stores have a clear advantage as they can cut out many of the overhead costs that retail stores currently face, such as employees, rent, and utilities. This enables the Alberta online store to routinely sell the same products at a lower price point than private brick-and-mortar retailers. That being said, the AGLC’s cannabis operation has been running at a net loss for the past two years. For the year ending March 31, 2021, the Alberta government lost C$12M.

One of the positives that might occur if the bill is passed is a bigger push against the illicit cannabis sector, which currently makes up an estimated 41% of recreational cannabis sales at the national level. We do not have any specific data on Alberta, but we believe that Alberta’s illicit market share is smaller due to its robust retail footprint.

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

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

November 12, 2021

CANADA CANNABIS SPOT INDEX — November 12, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending November 12, 2021
CCSI image 1 2021-11-12

*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$5.00 per gram this week, down 1.5% from last week’s C$5.07 per gram. This week’s price equates to US$1,817 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 whether legal cannabis sales in Canada have impacted alcohol sales. With the legalization of recreational cannabis in October 2018, alcohol companies feared they would see a reduction in sales, as consumers of legal age might opt to substitute cannabis for alcohol. (In Canada, one must be 18 or older to purchase cannabis; for alcohol, the legal age varies between 18 and 19, depending on the province.) The Canadian government releases monthly retail sales data, on a lagged basis, for both cannabis and alcohol (beer, wine, and liquor), which provides insight into whether cannabis has actually had an impact on alcohol sales.

Below is monthly data from the start of October 2018 through the end of this summer, showing sales of both categories. The chart illustrates that alcohol sales have been growing steadily despite the introduction of legal recreational cannabis sales. Since August 2020, monthly alcohol sales have grown by C$132M to C$2.27B. Meanwhile, monthly legal cannabis sales have grown by C$109M to reach C$357M.

SOURCE: Cannabis Benchmarks, StatsCan

So far it appears that legal cannabis sales have not eaten into alcohol sales, but we do believe that, at some point, they will. Because consumers have a finite amount of money to spend in this recreational category, increasing accessibility to and education around cannabis may lead to larger proportional expenditures for the newly-legal intoxicant. Cannabis sales are starting to represent a larger portion of the total dollars spent towards alcohol and cannabis. Currently, cannabis’ share stands at 13.6% of the total spend of the combined categories and we expect that trend to continue.

SOURCE: Cannabis Benchmarks, StatsCan

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

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

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.

1 2 3 31