July 10, 2020

CANADA CANNABIS SPOT INDEX — July 10, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 10, 2020
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$6.14 per gram this week, down 2.6% from last week’s C$6.31 per gram. This week’s price equates to US$2,053 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 a strategy the Northwest Territories (NWT) government is undertaking to fight the robust illicit market. Over the past couple of weeks, we have reviewed the size and price differential between the legal and illegal market in Ontario, but this phenomenon is relevant across the country. Both Ontario and British Columbia not only face issues with illicit dealers, but also unlicensed storefronts. 

 

In Q1 2020, the Ontario Cannabis Store (OCS) stated 81% of the province’s cannabis supply still originated from illicit sources. The two primary contributors to the size of the illicit market are lack of retail accessibility and higher dry flower prices in the legal system. From April 2019 to March 2020, OCS data shows that dry flower purchased legally was C$2.28/gram, 27% more expensive than that from illegal sellers. 

 

In the NWT, legal cannabis products can be purchased online through the provincial government’s sales site or from five liquor stores distributed across the territory. NWT faces some of the highest retail prices in Canada, and by a significant measure. Crowdsourced data collected by Statistics Canada shows the average price at C$10.65 per gram in 2019 and 2020, well above the national average.

Source: StatsCan

With a lack of convenient physical retail infrastructure and high prices, the NWT government made the tough decision of trading revenues for a thriving legal supply network. The NWT government has decided to cut the price of legal cannabis products by 10%. This is a bold move, but a necessary one to grow market share. We believe the NWT approach will be seen as a successful pilot project, and other major provinces will follow suit.

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 July 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

July 2, 2020

CANADA CANNABIS SPOT INDEX — July 3, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 3, 2020
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$6.31 per gram this week, up 1.8% from last week’s C$6.19 per gram. This week’s price equates to US$2,101 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 closely at the growth in licensed cannabis stores across Canada, and in Ontario in particular. Nationwide, the licensing of new stores has slowed with the onset of COVID-19 lockdowns, but we still see a steady pace of growth. At the end of June, there were 962 stores across Canada, with 59 stores added since May, and an increase of 672 stores from the same time last year.

Source: Cannabis Benchmarks, Statistics Canada

Alberta still is home to roughly half the national store count with 486 stores, but other provinces are starting to grow their physical retail presence quickly. British Columbia (BC) did not see many new shops open during June, but the BC Liquor and Cannabis Regulation Branch shows 80 new stores coming soon. This would take the total BC count from 197 to 277. There is no specified time frame for these new locations, but an address is provided for each planned new store. Ontario was the province that added the most new stores in June, with 29 coming online last month, bringing the total to 100 licensed retailers across the province.  

Source: Cannabis Benchmarks

From March to June, the average increase in the number of legal storefronts in Ontario has been 17 per month. This is a significant acceleration in licensing retailers and comes after Ontario altered its approach to permitting from a lottery system to a simpler application process in late 2019. 

 

This growth rate has occurred as Canada implemented lockdowns to stem the spread of COVID-19, and we anticipate the growth rate will accelerate as the province starts to reopen. Using a conservative growth rate of 17 stores per month would take our year-end total of operational shops in Ontario to 202. With a more aggressive average store growth rate of 35 stores per month, Ontario could have as many as 310 stores 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

03 July 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

June 26, 2020

CANADA CANNABIS SPOT INDEX — June 26, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 26, 2020
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$6.19 per gram this week, up 0.7% from last week’s C$6.15 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.

Last week, Statistics Canada released retail sales data for April 2020. Sales have been steadily growing across Canada, and the COVID-19 pandemic has led to elevated demand as consumers stockpiled cannabis along with other essential products. In the back half of March, as work-from-home and social distancing became a reality, provincial online sales and in-store retail sales grew rapidly across the country. Those strong sales continued into at least the first half of April.

 

April sales settled at C$180M for the month, which was slightly below March, but higher by C$106M year-over-year. 

Source: Cannabis Benchmarks, Statistics Canada

On a daily basis, April actually saw higher sales than March. While average daily sales nationwide expanded by 2.7%, they varied significantly at the provincial level. Daily sales in most major provinces, other than Ontario, increased from March to April. Quebec led the way with a 13% increase in average daily sales. Ontario saw a drop of 7%, despite adding three retail stores during the month of April. Ontario’s decrease can be attributed to the massive sales spike seen in March ahead of the COVID lockdowns. Prince Edward Island (PEI) saw a massive drop of 62%, due to stores being closed as part of the province’s coronavirus mitigation measures. PEI just permitted cannabis stores to return to normal operating hours this past week.  

 

Below is a breakdown by province of movement in average daily sales from March to April. We expect that overall Canadian sales have continued their upward trajectory in May and June.

Source: Cannabis Benchmarks, Statistics Canada

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

26 June 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

June 19, 2020

CANADA CANNABIS SPOT INDEX — June 19, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 19, 2020
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$6.15 per gram this week, down 2.3% from last week’s C$6.30 per gram. This week’s price equates to US$2,053 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 continue our review of data released recently by the Ontario Cannabis Store (OCS). The report, entitled “A Year in Review,” details the development of Ontario’s cannabis market from April 1, 2019 through March 31, 2020. As a reminder, this is the first report of its kind that shows a full year of history in Canada’s most populous province. You can read the full report here.

 

The following examination focuses on online sales. As we have reported in the past, online sales exploded in March as Canadians prepared for stay-at-home orders in response to COVID-19. Along with other essentials, Ontario residents stocked up on cannabis. With a limited physical retail presence in the province, Ontarians turned to the province’s online outlet, the OCS, to load up on products. Prior to March 2020, the number of OCS purchases remained steady at around 62,000 transactions per month, but in March that jumped to 114,000, an 82% spike.

Source: Cannabis Benchmarks, OCS

We contend that the shift to purchasing from the OCS is not an anomalous response to the unique conditions created by the coronavirus pandemic, but rather the beginning of a fundamental change in buying habits. We are not speaking specifically of buying online, but rather purchasing cannabis from a legal channel where the product is subject to regulation and oversight. If this is the case, then legal Canadian cultivators will be better positioned to win the war against illicitly-produced product.

 

Another factor underpinning this shift is the shrinking price discrepancy between the province’s online store and illegal sources. During the period covered by the report, online cannabis was only C$0.33/gram or 4% more expensive than product coming from illegal channels, according to the OCS. 

Source: Cannabis Benchmarks, OCS

This data validates a strategy undertaken by licensed cultivators: releasing lower-priced options to be more competitive with the illegal market. From Q1 2019 to Q4 2019, the average price of dried flower on the OCS sank by C$2.00/gram, or 21%. The price drop at physical retail outlets was not as dramatic, but that channel also saw prices decline by an average of 10%.

Source: Cannabis Benchmarks, OCS

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 June 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.

June 12, 2020

CANADA CANNABIS SPOT INDEX — June 12, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 12, 2020
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$6.30 per gram this week, down 1.7% from last week’s C$6.41 per gram. This week’s price equates to US$2,117 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 data released recently by the Ontario Cannabis Store (OCS) that provides significant detail on the province’s legal cannabis market. The report, entitled “A Year in Review,” follows the development of the Ontario cannabis market from April 1, 2019 through March 31, 2020. This is the first report to show a full year of history and development in Canada’s most populous province. You can read the full report here.

 

One of the biggest challenges facing the Canadian cannabis sector is robust illegal operations and distribution. The OCS estimates that the legal market accounted for only 19% of total cannabis commerce in the province in Q4 2019. The lack of licensed retail infrastructure and higher prices in the legal sector helped keep the illegal markets very active. OCS expects that the legal market share will increase dramatically over the next couple of years, as the restructured licensing process accelerates the build out of retail locations. The current Ontario store count stands at 87.

Source: Cannabis Benchmarks, OCS

The establishment and build out of licensed retail stores has proven to be a key element in the growth of the legal market. Ontario has lagged behind the other provinces in licensing new stores. The first set of 10 stores opened on April 1, 2019; since then the roll out of new locations has been slow. Despite only having a total of 53 stores open in the province by March 31, 2020, 81% of all legal sales over the preceding twelve months were generated by these physical retail locations. Online sales did not appear to provide a sufficient consumer experience to compensate for the limited number of stores in the province and take market share from the illicit market.

Source: Cannabis Benchmarks, OCS

Ontario online sales are higher than the national average, which we estimate to be 7% over the same time frame. This is no surprise, as provinces such as Alberta and British Columbia, which have relatively larger retail presences, have a small percentage of sales that occur through their provincial online stores.

 

Cannabis 2.0 products – such as vapes, beverages, concentrates, edibles, and topicals – have also provided a boost to sales levels. In March 2020, cannabis 2.0 products produced C$9M in sales, or 19% of the total. This number is expected to continue to grow as consumers become more familiar with these products, and as a wider variety of products becomes available.

Source: Cannabis Benchmarks, OCS

Drilling deeper into the sales mix, OCS reports cannabis 1.0 products (mainly dry flower) make up 81% of sales. Vapes are the next most popular product category at 14%, with the other cannabis 2.0 products constituting only a sliver of total sales.

Source: Cannabis Benchmarks, OCS

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 June 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved.