June 14, 2019

CANADA CANNABIS SPOT INDEX — June 14, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 14, 2019

*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$7.24 per gram this week, up 6.2% from last week’s C$6.81 per gram. This week’s price equates to US$2,466 per pound at current exchange rates.

 

This week we look at sales, tax revenue, and market dynamics in Quebec in the province’s first fiscal year of legal cannabis.

Quebec is the only large Canadian province that has kept a tight grip over cannabis sales, with its primary goal of ensuring safe consumption while minimizing the illicit market. The Quebec government mandated the Société des alcools du Québec (SAQ) to set up the Société québécoise du cannabis (SQDC) to bring legal cannabis to the market. Similar to Oregon and Washington State in the U.S., the province’s regulatory body overseeing alcohol was expanded to provide oversight of cannabis as well. The SQDC was established on June 12, 2018, ahead of legalization. Its first fiscal year of operation ended on March 30, 2019.

 

SQDC launched an online store and 12 brick and mortar locations in Quebec starting in October. With supply challenges looming at the onset of legalization, the SQDC dramatically cut store hours and slowed expansion plans. Since then the supply issues have been overcome and stores are now open seven days a week with a 13th store opened in March. The Crown corporation signed leases for three more locations in Montreal, the Laurentians, and the Montérégie.

 

SQDC reported robust sales figures despite some issues upfront. A total of C$71M in sales were tallied in the first fiscal year that ended at the close of March, with in-store sales making up roughly 81% of the sales and volume sold. The 12 locations also processed approximately 1.3M transactions with an average spend of C$51.07. Online sales were not as robust with 257,000 transactions that generated an average spend of C$61.06.

 

For this past fiscal year, the SQDC reported a balanced year when excluding C$4.9M of non-recurring start-up costs. The Quebec government received C$29.7M in consumption and excise taxes from this new industry. For the 2019-2020 fiscal year, the SQDC is projecting significantly higher earnings of C$20M with the province taking in C$89M in consumption and excise taxes.

*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..

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

14 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

June 7, 2019

CANADA CANNABIS SPOT INDEX — June 7, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 7, 2019

*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 came in at C$6.81 per gram this week, from last week’s C$7.96 per gram. This week’s price equates to US$2,301 per pound at current exchange rates.

 

The AGLC, the Government of Alberta’s Crown agency that oversees the gaming, liquor and cannabis industries in Alberta, lifted the province’s retail cannabis license moratorium. The bulletin, which was published on May 30th, indicated that with the “steady increase” in supply the AGLC is once again in a position to issue five licences a week. AGLC currently has contracts with 26 licensed producers (LPs) and 111 licensed retail outlets.


Alberta is the fourth largest province with approximately 553,000 cannabis users according to a survey conducted by Statistics Canada. Statistics Canada also reports on retail sales for each province. With the limited supply of retail outlets, retail sales in Alberta have flatlined through Q1 2019 at approximately C$450,000 per day. The addition of new storefronts should help the development of the legal cannabis market by providing convenient access to customers that currently purchase from the illicit market.

 

Cannabis Benchmarks also analyzed the state of the AGLC-run online store. The online store shows 76% of 249 dried flower products available, 49% of 53 pre-rolled products available, and 85% of the oils available.

 

After taking this step forward to provide additional access to the cannabis industry, AGLS plans to closely monitor supply to ensure that existing and new retailers have access to consistent deliveries of product.

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

7 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

May 31, 2019

CANADA CANNABIS SPOT INDEX — May 31, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 31, 2019

The CCSI came in at C$6.96 per gram this week, from last week’s C$7.33 per gram. This week’s price equates to US$2,341 per pound at current exchange rates.

 

Health Canada released the latest Canadian sales data on May 24th through the Cannabis Tracking System program. Non-medical sales continue to grow across Canada with average daily sales reaching 191 kg/day, while medical sales slid further to 54 kg/day. Although these are preliminary estimates, the revisions in sales have been minimal for the past few months. In the recent report, February non-medical sales figures were lowered by 2.3%.

 

Our expectation is that non-medical sales will pick up significantly in next month’s report with the release of April data, as a result of the opening of Ontario retail stores on April 1st. Ten retail stores were opened on day one, with another 15 added by the end of the month, providing Ontario cannabis consumers with greater access to the legal, regulated market.

From the data we see that non-medical sales are on the rise versus medical sales. As of March, sales to non-medical consumers were 350% of medical sales.

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

31 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

May 24, 2019

CANADA CANNABIS SPOT INDEX — May 24, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 24, 2019

The CCSI moved higher to C$7.33 per gram this week, from last week’s C$6.96 per gram. This week’s price equates to US$2,346 per pound at current exchange rates.

 

This week we take a closer look at the cannabis excise duty rates charged by each province.

 

The Government of Canada’s Department of Finance lays out the Federal and Provincial excise duty rates payable by licensed cannabis producers. These duties are paid when the cannabis products they produce and package are delivered to a provincially-authorized distributor/retailer or final consumer.

 

The Cannabis Benchmarks’ CCSI monitors wholesale transactions between the provincial regulatory bodies and market distribution centers, such as the online provincial stores and private or public brick and mortar stores; hence the CCSI is inclusive of the average Canadian cannabis excise duties.

 

Based on Cannabis Benchmarks’ calculation for this week’s price assessment of C$7.33, the duties vary widely from on province to the next. Manitoba has the lowest cannabis excise duties at C$0.25 per gram, while Alberta’s inclusion of a sales tax adjustment takes the duties to a whopping C$1.75 per gram.

Source: Govt of Canada Department of Finance, Cannabis Benchmarks

This week, the average Canadian excise duty (population weighted average) is calculated to be C$1.14 per gram. Therefore, without the duty, this week’s average LP selling price is C$6.19 per gram, or US$2,086 per pound at current exchange rates.

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

24 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

May 17, 2019

CANADA CANNABIS SPOT INDEX — May 17, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 17, 2019

The CCSI declined by 7.8% to C$6.96 per gram this week, from last week’s C$7.55 per gram. After a momentary uptick last week, prices returned to levels observed throughout April and May. This week’s price equates to US$2,346 per pound at current exchange rates.

 

After a challenging start to the legalization of dry cannabis last year, major licensed producers (LPs) are better prepared for the upcoming launch of vapes and edibles. While supply shortages and the slow opening of retail cannabis stores set the new industry off to a slow start, conditions might be different for phase two of the Canadian cannabis market with strong consumer demand for vapes and edibles. The official launch date has not been released, but it has been stated that these new product categories will commence sometime before October 17, 2019.

 

 

On Tuesday, one of the largest LPs, Aurora Cannabis, stated in its earnings call that it is working towards reducing its production cost while building inventory for the launch of edibles and vaping products. It is doing so by controlling costs and taking advantage of economies of scale as it makes strides towards its goal of building out a production capacity of 625,000 kg/year of dry cannabis.

 

With the start of the Edmonton Aurora Sky and Bradford facilities, Aurora’s production has increased to 150,000 kg and they have brought their cost per gram of dried product down to $1.42 from $1.92. The company anticipates continued reduction in its production and manufacturing costs with an expectation of it trending below $1 per gram. It should be noted that their average net selling price was also down to $6.40 from $6.80 per gram.

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

17 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved