September 18, 2020

U.S. Cannabis Spot Index — September 18, 2020

U.S. Cannabis Spot Index — Published September 18, 2020

U.S. Cannabis Spot Index up 1.4% to $1,570 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,796 per pound, with 68% of transactions (one standard deviation) in the $953 to $2,638 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.46 and the simple average price was $3.96.

 

The relative frequency of trades for greenhouse flower decreased by almost 3% this week. The relative frequencies of transactions for indoor and outdoor product increased by about 2% and 1%, respectively.  

 

The relative volume of warehouse product expanded by 2%. The relative volumes of greenhouse and outdoor flower contracted by 1% each.

New sales data out of several states this week affirms what we noted in last week’s report: the robust demand for legal cannabis that has manifested during the pandemic persisted in August, despite the cessation of federal relief to individuals and businesses. 

 

Oregon, Michigan, and Illinois officials all reported strong revenues, with a new record for total adult-use and medical sales established in the latter market. In Oregon and Michigan, however, August revenues were down a bit from the month prior, suggesting that retail demand may be reaching a momentary peak. Looking back to July, Colorado regulators this week reported record-breaking sales for that month. 

 

While demand remains very strong, the unprecedented wildfires burning on the West Coast have put the size and quality of the autumn harvest in question. Reports out of California this week state that fires have forced evacuations in the state’s famed Emerald Triangle. 

 

 

On top of fires destroying grow sites or product becoming unmarketable due to damage from smoke and other debris, disruptions in the supply chain will almost certainly occur. In Oregon, reports of cannabis businesses of all types being destroyed have surfaced, including testing labs and processors that are necessary for product to flow from farm to retail. Consequently, even if enough marketable product to meet demand is generated ultimately, temporary “shortages” could develop as market participants work to move inventory through damaged supply chains.

October Forward assessed up $35 to $1,495 per pound.

 

The average reported forward deal size was 27 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 38%, 37%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 23 pounds, and 30 pounds, respectively.

 

At $1,495 per pound, the October Forward represents a discount of 4.8% relative to the current U.S. Spot Price of $1,570 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

California

Wildfires Reportedly Pushing Toward Emerald Triangle, Some Farmers Forced to Evacuate

Colorado

July Sales Rise to New Record; Total Adult-Use and Medical Revenues Top $225 Million

Oregon

Sales Dip Slightly in August, Suggesting Demand Possibly Reaching a Plateau

Michigan

Total Sales Down Slightly in August to Under $109 Million on Decrease in Medical Market, Slowing Growth in Adult-Use Sector

Illinois

Combined Adult-Use and Medical Sales Exceed $95 Million in August, a New Record

 

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

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

September 11, 2020

U.S. Cannabis Spot Index — September 11, 2020

U.S. Cannabis Spot Index — Published September 11, 2020

U.S. Cannabis Spot Index up 0.3% to $1,549 per pound.

 

The simple average (non-volume weighted) price decreased $6 to $1,792 per pound, with 68% of transactions (one standard deviation) in the $954 to $2,630 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $3.41 and the simple average price was $3.95.

 

The relative frequency of trades for indoor flower decreased by almost 4% this week. The relative frequencies of transactions for greenhouse and outdoor product increased by about 2% each.  

 

The relative volume of warehouse product contracted by 6%. The relative volumes of greenhouse and outdoor flower expanded by 5% and 1%, respectively.

Over one month after the expiration of the CARES Act, passed by the U.S. Congress in response to the COVID-19 pandemic, early signs indicate that strong legal cannabis demand has persisted despite the cessation of the expanded unemployment benefits, eviction moratorium, and small business support included in the aforementioned law. This week, new data shows medical cannabis sales in Oklahoma rebounded in August, almost approaching the record set in June. 

 

While strong sales persist, natural disasters on the West Coast could lead to significant disruption in or loss of supply.  Major wildfires sprang up in Oregon this week, a state that had previously dodged such bullets this year. Some of the fires are located in southwestern Oregon, home to most of the state’s outdoor cultivation capacity. Wildfires are also burning in central and eastern Washington, where significant outdoor growing takes place. Meanwhile, California’s record-breaking blazes persist. Early snowfall this week in Colorado has at least curtailed the expansion of the historically large conflagrations there, but it may also have damaged crops. At the moment, it appears Oregon’s industry could be the hardest-hit by the current wildfires.

 

 

In prior years, severe wildfires have not had a significant impact on wholesale flower prices. However, in the face of record-setting demand in almost every legal adult-use cannabis market this year, diminished and damaged fall harvests on the West Coast and in Colorado could exacerbate what has been described as already tightening supply in those markets, which as the largest in the country exercise the most influence on the U.S. Spot.

October Forward assessed up $25 to $1,460 per pound.

 

The average reported forward deal size was 28 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 35%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 24 pounds, and 30 pounds, respectively.

 

At $1,460 per pound, the October Forward represents a discount of 5.7% relative to the current U.S. Spot Price of $1,549 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

California

Bill to Temporarily Freeze Retail Excise and Cultivation Tax Rates Approved by Legislature, Sent to Governor

Oregon

Severe Wildfires Threaten Hundreds of Cannabis Businesses and Significant Portion of State’s Outdoor Crop

Oklahoma

August Sales Reach $78.4M, Up from July but Below Peak Established in June, Despite Influx of New Registered Patients

Maine

State Issues First Active Adult-Use Licenses in Preparation for Sales to Begin October 9

 

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

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

September 4, 2020

U.S. Cannabis Spot Index — September 4, 2020

U.S. Cannabis Spot Index — Published September 4, 2020

U.S. Cannabis Spot Index down 0.2% to $1,544 per pound.

 

The simple average (non-volume weighted) price increased $36 to $1,798 per pound, with 68% of transactions (one standard deviation) in the $985 to $2,611 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.40 and the simple average price was $3.96.

 

The relative frequency of trades for outdoor flower decreased by over 3% this week. The relative frequencies of transactions for indoor and greenhouse product increased by about 2% and 1%, respectively.  

 

The relative volume of warehouse product contracted by 2%. The relative volume of greenhouse flower expanded by the same proportion, while that for outdoor product was unchanged.

After falling to its current year-to-date low of $1,322 per pound in late May, the U.S. Spot Index rose by 17% over the roughly three months from that point to the final week of August. The first official August sales figures from a sizable legal cannabis market were released this week by Massachusetts, which showed revenue in the state’s adult-use sector reaching a new record high for the second straight month. Meanwhile, newly-published June sales from Nevada officials show total retail revenue returning to pre-COVID levels, despite tourism to Las Vegas remaining extremely depressed relative to prior to the pandemic. 

 

These early signs suggest that August sales in other state markets may have continued to set records, or at least remain elevated with only small declines. August is typically one of, if not the strongest sales month of the year, particularly in adult-use systems. However, with unprecedented sales since the spring, in addition to the expiration of expanded unemployment benefits for millions of Americans at the end of July, there were questions as to whether the outsized demand that has marked the April through July period would hold. The upcoming Labor Day weekend is also typically a strong sales occasion for legal cannabis retailers.

 

 

While the fall outdoor crop will begin to be harvested in the coming weeks and months, last year’s data indicates that immediate price declines may not be in the cards even with the production of significant new supply. In 2019, the U.S. Spot rose through most of Q3 to reach its annual peak in mid-November.

March 2021 Forward initially assessed at $1,385 per pound.

 

The average reported forward deal size was 28 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 34%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 25 pounds, and 30 pounds, respectively.

 

At $1,435 per pound, the October Forward represents a discount of 7.1% relative to the current U.S. Spot Price of $1,544 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

California

Tax Collections from Santa Barbara County Cultivators Spike as Strong Retail Demand Inflates Producer Sales and More Growers Come Online

Nevada

June Sales Rise to Pre-COVID Levels Even as Las Vegas Tourism Remains Significantly Lower than Normal

Massachusetts

August Adult-Use Sales Approach $79 Million, Setting a New Record for the Second Straight Month

Illinois

Medical Cannabis Sales Subside by 5% in August After Setting Record in July

Maine

Guidance from Regulators Details How Plants to Supply Adult-Use Market May Be Transferred from Medical System

 

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

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

August 28, 2020

U.S. Cannabis Spot Index — August 28, 2020

U.S. Cannabis Spot Index — Published August 28, 2020

U.S. Cannabis Spot Index up 1.3% to $1,547 per pound.

 

The simple average (non-volume weighted) price decreased $14 to $1,762 per pound, with 68% of transactions (one standard deviation) in the $958 to $2,566 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.41 and the simple average price was $3.88.

 

The relative frequency of trades for greenhouse flower decreased by over 4% this week. The relative frequencies of transactions for indoor and outdoor product increased by about 2% each.  

 

The relative volume of warehouse product expanded by over 4%. The relative volumes of greenhouse and outdoor flower contracted by about 3% and 1%, respectively.

Already elevated relative to pre-COVID observations, the U.S. Spot Index climbed each week this month. This even as wholesale flower prices on the West Coast stabilized somewhat. New tax figures from California’s legal cannabis market indicate that overall demand is up significantly compared to 2019, with adult-use purchasing increasing from Q1 to Q2. 

 

Meanwhile, wholesale prices have continued to trend upward in Colorado, Illinois, and Michigan. The latter two markets are quickly expanding their influence on the U.S. composite price, as their growing sales account for greater proportions of the national total each month. For example, whereas Nevada was earlier this year one of the top markets by revenue, with sales reaching over $60 million monthly, both Michigan and Illinois saw total cannabis revenues top $100 million last month, in line with sales in Oregon. Those figures should also continue to grow as production and the retail footprints of their adult-use sectors develop and expand further.

 

 

Looking ahead, higher wholesale flower prices in Michigan and Illinois, where production has largely remained indoors to this point, could help buoy the U.S. Spot in the coming months as the autumn harvest comes in, at least more so than in prior years. Early reports have indicated favorable growing conditions on the West Coast, but severe wildfires in California could complicate harvests, with the potential that product could be made unmarketable by smoke and other contaminants from the blazes.

September Forward closes up $35 to $1,485 per pound.

 

The average reported forward deal size was 29 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 40%, 33%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 25 pounds, and 31 pounds, respectively.

 

At $1,485 per pound, the September Forward represents a discount of 4.0% relative to the current U.S. Spot Price of $1,547 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

National

August 2020’s Monthly Average U.S. Spot Index Highest Since September 2017 on Unprecedented Sales in Many States

California

New Tax Figures Show Sales Elevated from 2019, Increase in Adult-Use Purchasing in Q2 2020

Proposed Bill Would Prevent Increases to Cannabis Tax Rates for One Year

Colorado

Local Cannabis Measures That Could Result in More Growth Being Considered

 

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

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

August 21, 2020

U.S. Cannabis Spot Index — August 21, 2020

U.S. Cannabis Spot Index — Published August 21, 2020

U.S. Cannabis Spot Index up 0.7% to $1,527 per pound.

 

The simple average (non-volume weighted) price increased $8 to $1,776 per pound, with 68% of transactions (one standard deviation) in the $963 to $2,589 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.37 and the simple average price was $3.92.

 

The relative frequency of trades for greenhouse flower increased by about 3% this week. The relative frequency of transactions for indoor product decreased by the same proportion, while that for deals involving outdoor flower was unchanged.  

 

The relative volume of greenhouse product expanded by roughly 3%. The relative volumes of warehouse and outdoor flower contracted by about 2% and 1%, respectively.

As we have chronicled recently, wholesale cannabis prices have been trending upward since late May on record-setting demand in numerous state markets, including some of the largest and most mature. In recent weeks, the U.S. Spot has risen to its highest point since the first week of 2018, which was the last time prior to mid-July when it was observed to exceed $1,500 per pound. New data out of Michigan this week showed a surge of demand in that market as well, with combined adult-use and medical cannabis sales topping $100 million for the first time. The persistent, outsized demand that has marked legal cannabis systems since the outset of the COVID-19 pandemic in the U.S. is at this point resulting in rumblings about possible shortages in states such as Oregon and Colorado. 

 

We have also pointed out previously that production in such mature markets has leveled off somewhat in recent years. However, earlier this month a grower in southwestern Oregon reported to Cannabis Benchmarks that outdoor cultivation conditions had been excellent so far this year and that he expected a bumper crop. He speculated that growers up and down the West Coast were having similar experiences. Recent harvest figures out of Oregon suggest expanded mid-summer crops this year, substantiating the grower’s account.

 

 

A surge of high-quality supply this fall and winter could blunt the upward trend of the U.S. Spot, especially if a new coronavirus stimulus measure is insufficient or does not come to fruition.

September Forward up $50 to $1,450 per pound.

 

The average reported forward deal size was 29 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 33%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 25 pounds, and 32 pounds, respectively.

 

At $1,450 per pound, the September Forward represents a discount of 5.1% relative to the current U.S. Spot Price of $1,527 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines from this week's Premium Report:

National

Sustained, Record Setting Demand Pushes U.S. Spot to Highest Point in Over 2.5 Years, But Reports Say West Coast on Track for Large Fall Harvest

Oregon

Flower Sales Revenue Rises in July, but Sales Volume Fairly Flat, Indicating Retail Prices are Following Wholesale Rates Upward

Michigan

Combined Adult-Use and Medical Cannabis Sales Rise to New Record in July after Slowing in June, Topping $100 Million for First Time

Annual Fees for Licensed Medical Cannabis Facilities Drop Significantly From FY20 – FY21

 

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

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

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