September 17, 2021

CANADA CANNABIS SPOT INDEX — September 17, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 17, 2021
CCSI image 1 2021-09-17

*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 1.4% from last week’s C$5.17 per gram. This week’s price equates to US$1,824 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 report our current estimate of the total dry cannabis sold in the legal Canadian marketplace, to give a better perspective of the growing gap between supply and demand. Statistics Canada had been reporting the total kilograms of dry cannabis sold up until September 2019, and since then they have only reported the total packaged units of cannabis sold. That being said, even the packaged units data is incomplete; with the last data point for that category being for March 2021. In today’s analysis we release the output of our in-house models, which estimate the total cannabis sold for medical and non-medical consumption. 

 

Cannabis Benchmarks estimates that the total dry cannabis consumed in August 2021 was 31,314 kg. This modeled estimate takes into consideration the average size of a packaged unit sold, consumption seasonality, and the growing accessibility through retail stores opening to recreational cannabis. Last month’s figure represents an increase of 4,700 kg,or 17.6%, from August 2020.

Source: Cannabis Benchmarks, Statistics Canada

As seen in the chart above, cannabis usage has been following a steady growth trajectory since legalization, which is positive for the industry. There are concerns, however, that current monthly supply levels are well beyond these demand levels. According to Statistics Canada, the last reported unpackaged dry cannabis production for March 2021 was 112,252 kg. Unpackaged production is defined as the amount of cannabis produced from activities conducted onsite by cultivators and/or processors. The unpackaged production is either sold as dry cannabis flower, converted to a cannabis 2.0 type product, or destroyed – with any excess then pushed into the growing Federal and Provincial inventory. We do not have a good estimate regarding how much of that unpackaged supply was produced for smokeable products, but we do know that a good portion of it ends up in inventory — with those reported levels expanding almost every month. From the Statistics Canada data, we can see that total inventory (unpackaged and packaged) grew by 445,870 kg from March 2020 to March 2021. Even though that level is likely higher today, if the total inventory was used to only supply the smokeable market there would be 35 months worth of supply available.

 

This is overall a growing concern for the Canadian cannabis industry. Cultivators are experiencing a severely oversupplied market, leading to a decline in wholesale selling prices. In addition, the inventory of products they house becomes a liability on their balance sheet that continuously drops in value, with the lower current wholesale prices and degradation of stored products.

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

17 September 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

September 10, 2021

CANADA CANNABIS SPOT INDEX — September 10, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 10, 2021
CCSI image 1 2021-09-10

*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$5.17 per gram this week, down 0.2% from last week’s C$5.18 per gram. This week’s price equates to US$1,860 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 look into the latest household expenditure data from Statistics Canada, issued quarterly. The data continues to show a positive trend for the legal cannabis sector, which is encouraging news for the three-year-old industry. The first thing to note from the data is that the total dollars spent on cannabis has been on a steady rise since legalization. Statistics Canada estimates a total of C$1.91B was spent on cannabis in Q2 2021 from both the legal medical and recreational markets, as well as the illicit market. This figure is 36% higher than the amount spent in the same quarter in 2018, which shows the increase in mainstream adoption of cannabis use since the onset of legalization.

Source: Cannabis Benchmarks, Statistics Canada

In the chart below, we take the same dataset and split out the source and use of the cannabis sale. The chart shows that the legal recreational cannabis sector has been growing substantially over the past few years. The legal recreational market is not only taking market share from the illicit market but also growing overall cannabis expenditures. Statistics Canada estimates illicit recreational sales have fallen 9.7% to C$0.74B from Q2 2020 to Q2 2021.

Source: Cannabis Benchmarks, Statistics Canada
As legal recreational sales have grown to 55% of total cannabis purchases, legal medical sales have declined. Some previously medical consumers have shifted their purchases to the legal recreational markets; this can be confirmed by the drop in active medical client registrations with federally licensed cannabis cultivators. Total registrations stood at 345,520 right before recreational cannabis legalization in October 2018 and dropped to 292,399 by March 2021.
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

10 September 2021 Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved.

September 3, 2021

CANADA CANNABIS SPOT INDEX — September 3, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending September 3, 2021
CCSI image 1 2021-09-03

*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$5.18 per gram this week, down 1.9% from last week’s C$5.28 per gram. This week’s price equates to US$1,863 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 August 31 we are tracking 2,412 licensed retailers, with an average monthly growth rate of 7% in 2021. Ontario continues to lead the national growth trend, with the province hitting its 1,000 store goal ahead of schedule. The province had originally targeted September to reach that goal, but on August 20 the Ontario Cannabis Store (OCS) tweeted that the goal had been reached.

Source: Twitter

As seen in the chart below, 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 85 stores per month, a trend we expect to continue through the end of the year, as part of an ongoing government effort to marginalize the illicit market. One example of that growth: Canopy Growth is looking to open its Tokyo Smoke cannabis stores in four malls. 

 

Ontario is still far behind Alberta in terms of number of stores per capita, but there are areas in Toronto that have been overbuilt. This recent rapid growth will likely result in increased local competition, which could result in some closures. That being said, there are still many regions that are underserved, which is keeping the illicit market very active. We anticipate another 200+ stores to open in Ontario by the end of the year.

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

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

August 27, 2021

CANADA CANNABIS SPOT INDEX — August 27, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending August 27, 2021
CCSI image 1 2021-08-27

*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$5.28 per gram this week, up 1.1% from last week’s C$5.22 per gram. This week’s price equates to US$1,886 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 June 2021, with nationwide legal cannabis sales reaching a new monthly high of C$318.7M. June was also the third month where sales have exceeded the C$300M threshold, marking a new baseline for the industry. The growing retail footprint is helping the sector’s growth by expanding the consumer base to new cannabis users, while also drawing in more consumers who would otherwise have purchased cannabis from the illicit marketplace.

 

The latest data point shows sales in the first half of 2021 totaling C$1.78B, which is 68% of  total 2020 sales. Average daily sales in June 2021 reached C$10.6M.

Source: Cannabis Benchmarks, StatsCan

Ontario’s share of total sales continues to grow, as the province gets closer to its target of 1,000 retail stores by September. In June 2021 Ontario’s sales exceeded C$120M, accounting for 38% of Canada’s total sales. The Ontario Cannabis Store (OCS) puts out a report every quarter detailing activity in the province’s cannabis market. In the last report, which covers Q2 2021, the OCS reported that the legal market accounted for 44% of total cannabis sales, while the rest came from illicit markets. If we slightly increase that figure to 45% and apply that to the June 2021 sales figure, the total Ontario cannabis sales for the month are estimated to be C$239M. From the historical data we can go back and calculate the historical figures and market trends, as seen in the chart below. The most striking statistic is that from Q2 2020 to Q2 2021, total cannabis sales increased by C$66M, or 38%. This shows that not only is more cannabis being bought in the legal market, but that cannabis is becoming more mainstream. In other words, overall growth of that magnitude suggests more people are using cannabis, and potentially using more of it.

Source: Cannabis Benchmarks
Taking this Ontario data and interpolating it to assess the full Canadian market, we estimate that total cannabis sales from legal and illicit sources would have been C$557M during June 2021. At an annual run rate that would equate to C$6.6B in cannabis sales.
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

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

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.

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