February 19, 2021

CANADA CANNABIS SPOT INDEX — February 19, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending February 19, 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$5.77 per gram this week, down 0.5% from last week’s C$5.80 per gram. This week’s price equates to US$2,066 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.

We continue to keep a close eye on the expansion of cannabis retail stores across Canada, but most importantly in Ontario, the country’s most populous province where the establishment of licensed retailers initially got off to a slow start. As of the end of January 2021, we showed 317 active stores in Ontario. Last year at this time, only 26 stores were open for business in the province. Significant progress has been made with Ontario streamlining the licensing process, even as COVID-19 lockdowns last year raised barriers to new businesses opening generally.  

 

As noted, Ontario had the slowest rollout of licensed stores among all provinces, but that has drastically changed since Q2 2020. The speed at which new stores are coming to market is helping drive strong sales growth in the province, a trend that looks as if it will persist for the foreseeable future. 

 

From data received from the Alcohol and Gaming Commission of Ontario (AGCO), we can get a glimpse of the number of stores that could be coming online over the next few years. AGCO continues to receive a high volume of applications and is now issuing 30 retail store authorizations (RSA) per week. RSA applications are processed in order of receipt.


The AGCO provides detailed reports of the status of all applications. They are laid out in one of the following categories: 


In Progress: This status indicates that the AGCO has received the application and the evaluation process is underway.

Public Notice: This indicates an application has been successful, and the provincial government is now accepting written submissions for 15 days for a specific location from residents of that municipality.


Authorized to Open
: This indicates that the store has met all regulatory requirements and has passed its pre-opening inspection from the AGCO. 

Based only on current application data (and not taking into account additional new applications that will certainly be submitted), it appears that Ontario could see as many as 1,350 new cannabis stores open in the relatively near future. 

Source: Cannabis Benchmarks, AGCO

Next we look at cannabis purchasing in comparison to that for alcohol and tobacco. Major alcohol and tobacco companies have made significant investments in cannabis operations over the last few years, in part as a hedge to ensure they do not lose out to the latent demand for cannabis that is being captured gradually by legal businesses. The data released by Statistics Canada to date shows that alcohol and tobacco sales remain much stronger than cannabis sales, and that increased cannabis sales have not impacted those categories negatively. As seen in the chart below, both alcohol and tobacco sales remained consistent between Q3 2019 and Q3 2020, with 51% and 37-38% respectively.

Source: Cannabis Benchmarks, Health Canada

The map below from the AGCO website shows the locations of shops currently authorized to open. The vast majority of stores are concentrated in the Greater Toronto area. 

Source: AGCO

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

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

February 12, 2021

CANADA CANNABIS SPOT INDEX — February 12, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending February 12, 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$5.80 per gram this week, down 1.2% from last week’s C$5.88 per gram. This week’s price equates to US$2,067 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 household expenditure data issued by Statistics Canada on a quarterly basis. The data show some very interesting and positive trends for the legal cannabis sector. To start, we look at the rise of the legal recreational cannabis market across Canada. As seen in the chart below, Q3 2020 was the first quarter in which the estimated household expenditure for recreational cannabis exceeded that spent in the illicit market.

 

With increased access through retail stores and online channels during the pandemic, more Canadians chose to purchase cannabis through regulated, legal channels. Also fueling that trend was the drop in prices as new supply from indoor and outdoor cultivation operations became available.

In Q3 2020, recreational cannabis expenditures grew 102% to C$824M and illicit cannabis expenditures dropped by 19% to C$754M as compared to the same time frame in 2019. We also note that expenditure for medical-use cannabis dropped 6% to C$146M. Medical cannabis now makes up only 8.5% of the total cannabis bought in Canada. Total expenditure on cannabis was C$1.7B for the quarter, or C$18.7M per day.

Source: Cannabis Benchmarks, Health Canada

Next we look at cannabis purchasing in comparison to that for alcohol and tobacco. Major alcohol and tobacco companies have made significant investments in cannabis operations over the last few years, in part as a hedge to ensure they do not lose out to the latent demand for cannabis that is being captured gradually by legal businesses. The data released by Statistics Canada to date shows that alcohol and tobacco sales remain much stronger than cannabis sales, and that increased cannabis sales have not impacted those categories negatively. As seen in the chart below, both alcohol and tobacco sales remained consistent between Q3 2019 and Q3 2020, with 51% and 37-38% respectively.

Source: Cannabis Benchmarks, Health Canada

We should note that sales were up across the board for all three categories – most likely due to COVID-19 lockdowns. Alcohol sales were up 10% year-on-year, tobacco sales were up 4%, and total cannabis sales (legal and illicit) were up 17%.

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

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

February 5, 2021

CANADA CANNABIS SPOT INDEX — February 5, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending February 5, 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$5.88 per gram this week, down 0.3% from last week’s C$5.89 per gram. This week’s price equates to US$2,082 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 growing number of cultivators in Canada’s market. There are two types of cultivation licenses issued by Health Canada: a standard cultivation license and a micro-cultivation license. 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 – much as craft brewers do in the beer industry. These smaller growers often focus on unique strains to differentiate their product and receive a premium price. 

Source: Cannabis Benchmarks

Regardless of type, Health Canada takes the same 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 has been working through the backlog of cultivation licenses and there are currently 513 active cultivation licenses split amongst standard and micro-cultivation grow operations. Approximately two-thirds of the licenses are standard licenses.

Source: Cannabis Benchmarks, Health Canada

As seen in the chart below, the micro-cultivation license is a relatively new phenomenon. The issuance of standard licenses accelerated quickly ahead of the legalization of cannabis on October 17, 2018, but the same phenomenon for micro-cultivation was not seen until the following year. 

Source: Cannabis Benchmarks, Health Canada

Lastly, we break down in which provinces the licenses are issued. Ontario with its sizable population and British Columbia with its favorable climate have seen the largest numbers of licensed cultivators in their jurisdictions.

Source: Cannabis Benchmarks, Health Canada

We should note that at the moment not all licensees are operational. However, if each license holder builds their cultivation facility and begins producing, we can expect Canada’s production capacity will continue to outstrip domestic demand. Furthermore, if options to export significant amounts of product remain limited, as they are currently, the growing surplus inventory would likely need to be destroyed as the cost of carry outweighs the economic value of the product. 

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

05 February 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

January 29, 2021

CANADA CANNABIS SPOT INDEX — January 29, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 29, 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$5.89 per gram this week, down 1.0% from last week’s C$5.95 per gram. This week’s price equates to US$2,097 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 November 2020. November’s sales reached C$261.4M, down by C$8.5M from October. On a monthly basis, sales have been increasing steadily across Canada up until the most recently released data. The monthly figures are a bit misleading in this case, however, due to October having 31 days to November’s 30. When looking at the same data on a daily basis, as shown in the bar chart below, we see that sales began to plateau after September. After strong growth through the first 8 months of the year, we see daily sales holding at C$8.7M per day across the country. 

Source: Cannabis Benchmarks, Statistics Canada

When drilling into each province individually, the data reveals divergent trends. In most cases, consumers gaining better accessibility to the regulated market due to an expanding retail footprint did not equate to sales growth. From September to November, we counted 198 additional stores open across Canada, an increase of 18%, yet there was no increase in average daily sales on the national level or for most provinces. The exception was Ontario, which saw daily sales increase by 6% from September to November. The rest of the provinces saw either flat sales or a decline, with daily sales dropping 6% in the Maritime provinces. 

Source: Cannabis Benchmarks, Statistics Canada

November’s data suggests that Canada’s legal cannabis market may have reached a momentary baseline in much of the country, although Ontario’s slower-to-develop provincial market is still seeing expansion. On the national level, though, instead of the relatively steady, consistent growth in monthly revenues that has been recorded through the first two years of legal sales, we may begin to see more monthly and seasonal fluctuations in consumer demand. Similar trends have been observed in the numerous state markets in the U.S. as they have developed. 

 

However, this does not mean that overall growth has ceased, nor does it mean that annual growth rates will necessarily subside in the future. In Colorado, for example, the most mature legal cannabis market in the U.S., annual sales growth slowed in 2018. After four years of significant year-over-year increases in retail revenues from 2014 through 2017, 2018 saw a less than 3% uptick in annual sales. Total retail revenues then rose by 13% in 2019. Full sales data for 2020 is not yet complete, but should represent a roughly 20% jump from 2019 once December’s figures are tallied. 

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

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

January 22, 2021

CANADA CANNABIS SPOT INDEX — January 22, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending January 22, 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$5.95 per gram this week, up 1.5% from last week’s C$5.87 per gram. This week’s price equates to US$2,128 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 touch on the changing cultivation landscape in Canada. Overbuilt cultivation capacity has forced numerous Licensed Producers (LPs) to close indoor cultivation facilities and scrap plans for future developments. As the cannabis market matures, cultivators realize that price wars are inevitable, just as in any other commodity. With that realization, an increasing number of Canadian cannabis cultivators are shifting production capacity outdoors. 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, heating, and ventilation.

 

The latest data from Statistics Canada shows outdoor cannabis cultivation capacity expanding at a rapid rate. As of October 2020, there were 576 hectares licensed to grow cannabis outdoors. This is a massive jump relative to the first data point from October 2019. Over the 12 month period, outdoor cannabis cultivation capacity grew by 344 hectares, or 148%. This increase comes as three of the largest indoor and greenhouse producers, Aurora, Canopy Growth, and Tilray, announced closures of large facilities last year along with major inventory write-downs.

 

Source: Cannabis Benchmarks

The next chart takes the same data and standardizes the units to square feet. It is important to note that this chart does not represent a direct comparison of actual cannabis production by each cultivation type, since indoor operations are able to harvest multiple times annually. Additionally, while the dramatic increase in outdoor cultivation capacity – along with plateauing indoor production – points to significant volumes of new supply in the coming years, a greater proportion of indoor production ends up being sold as smokable flower, while significant amounts of outdoor-grown cannabis are devoted to extraction and product manufacturing. The controlled environments of indoor growers enable the production of flower that has greater consistency and aesthetic appeal to consumers looking for smokable product by virtue of sheltering the cultivation process from weather and pest pressures. 

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

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

1 2 3 23