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.

July 8, 2021

CANADA CANNABIS SPOT INDEX — July 9, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 9, 2021
CCSI image 1 2021-07-09

*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$5.52 per gram this week, up 1.0% from last week’s C$5.47 per gram. This week’s price equates to US$2,014 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 the Ontario Cannabis Store (OCS), the organization that regulates the province’s cannabis market, released their annual Cannabis Insights report for the period from January through March 2021. The report contains a wide variety of useful data, detailing how Ontario’s market has developed.

 

In the first few years of cannabis deregulation, the legal Canadian cannabis market has faced strong competition from illicit supply chains, due in part to high product prices and few stores. That story has changed dramatically, however, especially in Ontario, Canada’s largest province by population.

 

The most recent report shows that not only did Ontario’s brick-and-mortar retail footprint grow substantially, but also that the price of dried flower as listed at the OCS online store dropped even further below the price of cannabis sold through illegal mail-order marijuana sites.

 

 

In today’s report, we focus specifically on the market share of the legal markets. The latest report shows the legal cannabis market in Ontario makes up 44% of total cannabis sales. Meanwhile the average price of legal dried flower, including sales taxes, dropped by 3% from the previous quarter to C$6.17 per gram. 

Source: OCS

While the legal market has continued to build market share over the past two years, growth slowed significantly during the past quarter. Even though the legal cannabis industry appears to be moving in the right direction, by lowering cannabis prices and providing better access with more retail stores, illicit cannabis channels have maintained a strong presence. Up until this last OCS report, the growth of the legal cannabis sector has had a very strong correlation to the number of storefronts open for business. The chart below, which combines the average number of stores in each province in the past nine quarters as tracked by Cannabis Benchmarks, versus the share of the legal cannabis market, shows the legal cannabis market share seems to have plateaued despite an increase in store counts. 

Source: OCS, Cannabis Benchmarks

The slowdown in market penetration is a cause for concern for the legal cannabis sector. For the government, this change could undermine its goal of legalizing cannabis to stamp out the illicit market altogether and to generate taxable legal sales. For the Canadian LPs and other market participants, the slowdown will impact projected revenues from domestic sales, as the export market is also facing growing competition from producers in Europe, Africa, and Colombia.
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

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

July 2, 2021

CANADA CANNABIS SPOT INDEX — July 2, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending July 2, 2021
CCSI image 1 2021-07-02

*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$5.47 per gram this week, down 1.5% from last week’s C$5.55 per gram. This week’s price equates to US$2,008 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.

As competition intensifies in the cannabis cultivation sector, and a supply surplus continues to depress wholesales prices, Licensed Producers (LPs) continue to shut down already-built indoor growing facilities and scrap future development plans. As part of the move away from indoor capacity, many Canadian cannabis cultivators are shifting to outdoor operations. Outdoor cultivation has significantly lower operating costs relative to growing indoors or in a greenhouse, including lower infrastructure and labor costs, and no energy costs for lighting or HVAC needs. 


The latest data from Statistics Canada shows outdoor cannabis cultivation capacity expanding at a consistent rate, while indoor space has been on a decline since early last year. As of March 2021, there were 772 hectares licensed to grow cannabis outdoors. This is a massive jump relative to the same period last year.  Over the past 12 months, outdoor cannabis cultivation capacity grew by 495 hectares or 179% while indoor cannabis cultivation space has dropped by 10%.

Source: Cannabis Benchmarks

As we have outlined in the past, outdoor cultivation’s lower production costs make it more competitive with illicit supply, but the resulting cannabis is frequently perceived to be of lower quality. As a result, significant portions of outdoor-grown product might not be as marketable for smoking in its raw form, relative to indoor-grown flower. However, outdoor-grown cannabis is very suitable as raw material, particularly for manufacturing cannabis 2.0 products such as edibles, beverages, and vapes. Such products are also typically less readily available from illicit sources, and could bring existing consumers seeking more novel products and experiences into the legal market. 

With more farmland dedicated to cannabis, we can expect a larger jump in unpackaged supply come the autumn harvest. In the past few years, we have seen a 66% month-over-month jump in nationwide production due to the outdoor harvest from September to October. This year, with 772 hectares dedicated to outdoor cannabis growing, we can expect even more production that will put pressure on prices.

Source: Cannabis Benchmarks

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

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

June 25, 2021

CANADA CANNABIS SPOT INDEX — June 25, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending June 25, 2021
1

*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 0.4% from last week’s C$5.53 per gram. This week’s price equates to US$2,055 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 turn our attention to supply and demand dynamics for cannabis 2.0 products in Canada’s legal cannabis market. The three main product categories that fall under the cannabis 2.0 umbrella are edibles, extracts, and topicals. See the definitions of each category in our past report covering this topic. 

 

In today’s report, we provide an update on the supply and demand associated with edibles and extracts, which are the two larger categories. To date, Health Canada has compiled and published monthly data for production, consumption, and inventory of packaged units through March 2021.

 

Below are two charts showing the monthly supply and demand for edibles and extracts from the introduction of cannabis 2.0 products in October 2019 through March 2021. 


Starting with edibles, we see the production of packaged units by licensed producers ramping up through the end of Q3 2020, and then declining slightly since. The production of packaged units increased at a greater rate than non-medical and medical sales, leading to excess production going into inventory at the federal, provincial, or retail level. The current inventory of edible packaged units sits at 16M, which is approximately 7.1 months’ worth of supply at March’s consumption rate.

Source: Cannabis Benchmarks, Statistics Canada

The story for extracts is somewhat similar. Both production, as well as medical and non-medical sales, increased at relatively steady rates throughout 2020, but eased in Q1 2021. Still, production outpaced domestic consumption, leading to growing inventories. The current inventory of packaged units of extracts has not grown as quickly as edibles, but still sits at 12.6M, which is approximately 6.6 months’ worth of supply at March’s consumption rate.

Source: Cannabis Benchmarks, Statistics Canada

Typically, inventory level is a barometer for the health of a commodity. Inventories are closely tracked for major agricultural commodities, metals, and energy. A growing level of inventory signals a continuous mismatch between supply and demand, and ultimately leads to lower wholesale prices. The lower wholesale price diminishes the economics to produce at the same strong rate, and also increases demand for the commodity by providing consumers an incentive to purchase more. Ultimately the change in price helps bring the market back into equilibrium. 

Source: Cannabis Benchmarks

The yellow lines in the charts above denote the typical timing of the autumn harvest of outdoor-grown cannabis, which provides a good deal of feedstock from which extracts and edibles are manufactured. Increased supply of raw materials for these products from expanding outdoor cultivation is likely helping to push down prices. Since 2020’s fall harvest, the total packaged inventory of edibles and extracts looks to be on a corrective path, as increased inventory and lower prices signal to producers of these derivative products to pull back on manufacturing.

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

25 June 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

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