September 30, 2022

U.S. Cannabis Spot Index — September 30, 2022

U.S. Cannabis Spot Index — Published September 30, 2022

The U.S. Cannabis Spot Index decreased 2.2% to $966 per pound.

 

The simple average (non-volume weighted) price decreased $10 to $1,204 per pound, with 68% of transactions (one standard deviation) in the $540 to $1,869 per pound range. The average reported deal size increased to 2.8 pounds. In grams, the Spot price was $2.13 and the simple average price was $2.66.

 

The relative transaction frequency of indoor product was unchanged this week, as were those of greenhouse and outdoor product.  

 

 

The relative volume of indoor product fell 2%, while that of greenhouse product rose 1%. Outdoor flower’s relative volume rose 1% this week.

 

The Cannabis Benchmarks U.S. Spot Index fell $21 this week, making a new all-time low on net losses of $25 per pound across legacy states. In the interview this week about Colorado companies’ requests to state officials for a license moratorium and a tax holiday, the interviewee reminds us that the brutal sell-off in cannabis prices in 2017 and 2018 in his state should have caused a cannabis business shakeout. Instead, the pandemic sales surge saved untold numbers of cannabis businesses in legacy states.

Now, however, the post-pandemic fallout may prove to be the final straw in some legacy state markets. States that implement license moratoriums may save most cannabis businesses for a time, but as more states come online in the adult use space, competition will heat up across state borders and price convergence will start occurring, even at the higher end of the market. The outdoor market will move toward the price of production and new businesses will have to predicate business plans based on lower prices and profit margins.

It is worth tracking the price spread between contiguous western states and noting that convergence is already taking place at the high end of the market with Arizona indoor flower prices dipping below those of California, while Colorado indoor prices have breached the $900 per pound level. Nevada and New Mexico indoor prices are still well above those of legacy states, but Nevada indoor is already down over 17% this year. New Mexico indoor prices are down over 23% this year and production is still ramping up in the state. 

October 2022 Implied Forward assessed down $30 to close at $965 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 34%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 81 pounds, 68 pounds, and 64 pounds, respectively.

 

 

At $965 per pound, the October 2022 Implied Forward represents a discount of 0.1% relative to the current U.S. Spot Price of $966 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:

Colorado

Colorado Tax and Cultivation Moratoriums on Deck? – Interview

Arizona

Sales Remain Soft, Down 3.8% in July

New Mexico

August Sales Inch Higher

Illinois

Repeat Plaintiffs Want to Sell Licenses – IDFPR says Not so Fast

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

30 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

September 23, 2022

U.S. Cannabis Spot Index — September 23, 2022

U.S. Cannabis Spot Index — Published September 23, 2022

The U.S. Cannabis Spot Index decreased 2.3% to $987 per pound.

 

The simple average (non-volume weighted) price decreased $29 to $1,215 per pound, with 68% of transactions (one standard deviation) in the $529 to $1,901 per pound range. The average reported deal size increased to 2.7 pounds. In grams, the Spot price was $2.18 and the simple average price was $2.68.

 

The relative transaction frequency of indoor product fell 1%, while that of greenhouse product rose 1%. Outdoor transaction frequency was unchanged this week. 

 

 

The relative volume of indoor product fell 1%, while that of greenhouse product rose 1%. Outdoor flower’s relative volume was unchanged on the week.

 

U.S. Spot market prices were mostly lower this week, with the weighted average spot index down $23. The national greenhouse flower price fell $12 to $763 per pound wholesale and indoor flower fell $34 to $1,231. Only the outdoor U.S. spot ticked up this week, gaining $26 to trade at $466 per pound. Recent price improvements are likely to be transitory with an increasing number of states undergoing price adjustments to the downside. 

 

U.S. indoor spot price underwent a bit of a summer bump with price improving from the high $1,200s to the mid $1,300s per pound from early July to early August. With the end of summer, however, demand looks to have dropped with price again reaching an all-time low. Greenhouse product has similarly started back on a downward trend after trading up to the $800 per pound level in early August. 

 

The outdoor price rise this week perhaps reflects new product coming to market. Cannabis Benchmarks contacts have noted fresh outdoor supply in the market beginning in August. Given the vast oversupply in outdoor product and the upcoming harvest season, prices are likely to remain under pressure, though that pressure may be relieved somewhat during the holiday season. It seems growers are generally aware the market is oversupplied but are loath to decrease crop size in any meaningful way. 

 

Oregon, perhaps the most oversupplied market in the U.S., shows little sign of reigning in production. As we have covered recently, the state has implemented its second moratorium in the hope of reducing the number of licenses, with a knock-on effect of eventually lowering supply.

 

October 2022 Implied Forward unchanged at $995 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 34%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 83 pounds, 64 pounds, and 64 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $987 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:

Oregon

Market “Bloodbath” Prompts Some Growers to Leave for Other States – Interview

Washington

State Economists Reduce Cannabis Tax Revenue Forecasts, Expect Lower Demand

Michigan

CRA Meeting Discusses Possible License Moratorium, Other Changes

Colorado

State Releases New Average Market Rates for Q4

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

23 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

September 16, 2022

U.S. Cannabis Spot Index — September 16, 2022

U.S. Cannabis Spot Index — Published September 16, 2022

The U.S. Cannabis Spot Index increased 0.1%, nominally unchanged at $1,010 per pound.

 

The simple average (non-volume weighted) price decreased $3 to $1,243 per pound, with 68% of transactions (one standard deviation) in the $541 to $1,946 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.23 and the simple average price was $2.74.

 

The relative transaction frequency of indoor product was unchanged, as were those of greenhouse and outdoor product. 

  

 

The relative volume of indoor product was unchanged on the week, while that of greenhouse product rose 3% and that of outdoor product fell 3%.

 

Cannabis Benchmarks U.S. Spot Index was unchanged this week largely on the back of legacy states netting zero price change. The weighted average spot price is hanging on to the $1,000 per pound level at $1,010, just $7 over the all-time low of $1,003 per pound wholesale, made on September 2, 2022. 

 

The U.S. Indoor spot price made a new all-time low this week at $1,257 per pound, down $8 from last week and marking a resumption of the downtrend after the market had rallied from $1,286 in mid-July 2022 up to $1,364 in early August. 

 

U.S. Greenhouse spot is also at an all-time low down at $763, having shed $33 in the week.  Sources around the country are estimating the average greenhouse production price around $350 per pound in states with high utility costs, while states with lower utility costs appear to be around $300 per pound, perhaps slightly less. 

 

U.S. Outdoor spot, heavily weighted by legacy state spot prices, jumped $24 this week to trade at $463 per pound after making an all-time low at $411 per pound in the first week of September. Given the myriad differences in states’ climates, taxes, regulations, and production input prices, outdoor production price per pound reportedly ranges from $50 for product headed to biomass to $150 for product destined for retail. 

 

 

As states become ever more efficient at standing up cultivation, manufacturing and retail, the price of cannabis appears headed toward the price of production in legacy markets, mimicking other agriculture products that are in abundant supply in the U.S. While there is a good bit of volatility in grain and grass markets, pound prices are typically measured in cents. Cannabis is an agricultural product and, while the price is unlikely to sink to cents per pound, it is probably time to predicate business plans on hundreds, rather than thousands of dollars per pound.

 

October 2022 Implied Forward unchanged at $995 per pound.

 

The average reported forward deal size was 75 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 34%, and 13% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 84 pounds, 65 pounds, and 62 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a discount of 1.5% relative to the current U.S. Spot Price of $1,010 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:

Michigan

Medical Market Share Slips Below 10%

Alaska

Growers Thread the Needle on Tax Categories – Interview

Arizona

Cannabis Market Competition Heating Up – Interview

New Mexico

Adult Use Sales Uptick in August, Medical Sales Slip

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

16 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

September 9, 2022

U.S. Cannabis Spot Index — September 9, 2022

U.S. Cannabis Spot Index — Published September 9, 2022

The U.S. Cannabis Spot Index increased 0.7% to $1,010 per pound.

 

The simple average (non-volume weighted) price decreased $24 to $1,246 per pound, with 68% of transactions (one standard deviation) in the $541 to $1,951 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.23 and the simple average price was $2.75.

 

The relative transaction frequency of indoor product rose 2% this week, while that of greenhouse flower fell 1%. Outdoor transaction frequency fell by 1% in the week.  

 

 

The relative volume of indoor product rose 3%, while that of greenhouse flower was unchanged.  Outdoor flower’s relative volume fell 3%.

 

U.S. Medical and Recreational cannabis prices have settled into a long-term downtrend post-COVID due to fundamental economic crosswinds including very hot inflation, virtually full employment, and shrinking median incomes. In short, consumers are cutting back on discretionary spending, as well as non-discretionary items, through discount shopping and switching to less expensive products, including cannabis. 

 

In 2019 and 2020, medical cannabis prices mostly outpaced those of recreational cannabis, but the two categories have nearly merged in 2021. In addition to lower discretionary spending, this phenomenon can be attributed to the proliferation of adult use cannabis sales in the U.S. Upon adult use legalization, most states give a regulatory nod to medical cannabis consumers by not taxing such purchases. However, when medical patients gain access to less expensive, or at least price-competitive, cannabis through the adult use market, they comparison shop and the cheaper overall purchase wins. Consumers in markets with medical and adult use legalization must also weigh the expense and effort required to maintain a medical cannabis certification, versus simply walking into an adult use retailer at their convenience, into the equation. 

 

COVID was a great leveler between medical and recreational cannabis prices, as depicted in the chart below. U.S. spot medical and recreational cannabis prices converged in the post-pandemic market, with economic forces driving consumers to buy less expensive and often more convenient recreational cannabis. To take a snapshot of a market that opened adult use sales relatively recently, data out of Illinois on the number of medical cards issued shows fairly steady increases even as recreational sales grow, suggesting some consumers are adding or renewing medical cards to maintain a choice when it comes to buying cannabis. In other words, consumers are making the rational decision to maintain medical card status to tap whichever market is less expensive and / or offers better choices. 

October 2022 Implied Forward unchanged at $995 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 33%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 83 pounds, 65 pounds, and 63 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a discount of 1.5% relative to the current U.S. Spot Price of $1,010 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

Q2 Cannabis Taxes Down 4 Quarters Running

Massachusetts

Bay State July Adult Use Sales Jump 8.2%

Oregon

OLCC Ponders “Batch Tagging”

New York

Application Window for Adult Use Dispensary Licenses Opens

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

9 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

September 2, 2022

U.S. Cannabis Spot Index — September 2, 2022

U.S. Cannabis Spot Index — Published September 2, 2022

The U.S. Cannabis Spot Index decreased 2.4% to $1,003 per pound.

 

The simple average (non-volume weighted) price decreased $11 to $1,270 per pound, with 68% of transactions (one standard deviation) in the $543 to $1,997 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.21 and the simple average price was $2.80.

 

The relative transaction frequency of indoor product rose 1% this week, while that of greenhouse flower fell 1%. Outdoor transaction frequency was unchanged in the week.  

 

 

The relative volume of indoor product rose 1%, while that of greenhouse flower fell 2%. Outdoor flower’s relative volume rose 1%.

 

The Cannabis Benchmarks U.S. Spot Index fell to a new all-time low this week at $1,003 per pound wholesale, taking out the previous all-time low of $1,007, made just two weeks ago. For some perspective on the market, one must cast back to 2019, pre-COVID, a period in which the market was in a strong, though restrained uptrend. The 2019 spot rally peaked in February 2020 at $1,459 per pound wholesale. 

 

The Spot Index showed little variability through the onset of COVID, trading in a $135 range bounded by the February high and the May 2020 low of $1,322, after which price took off as the pandemic economic math took over: Unemployment plus government subsidies compounded by nothing but free time equaled a cannabis price rally. The Spot Index’s pandemic price peak came in late October 2020 at $1,665 per pound. Starting in October 2020, price stayed within a $188 range through August 2021, when the market topped out at $1,610. Since August 2021 the spot market has lost 37.7% of its value. 

The Cannabis Benchmarks Outdoor Flower price peaked in June 2021 at $882 per pound and has since fallen 53.4% – over $450 – to trade at a new all-time low this week of $411 per pound. The Outdoor Flower Spot Index is heavily weighted toward legacy states with their massive sun-grown crops. As we enter the fall season, Croptober is looming and outdoor prices are likely to come in, with some states headed for a test of $300 per pound in quick order.

 

Cannabis Benchmarks Indoor Spot Index has fallen 33.9% since its post-pandemic peak in August 2021 at $2,033 per pound wholesale. The Indoor Index made a new all-time low in July 2022 at $1,283 per pound and has since tracked a bit higher, trading at $1,324 per pound wholesale this week.

 

Greenhouse spot prices have also undergone a massive sell-off in the post-pandemic market, losing 43.8% since the market peaked in May 2021 at $1,378 per pound. A new all-time low was set this week at $775 per pound.

March 2023 Implied Forward initially assessed at $1,015 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 32%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 82 pounds, 65 pounds, and 64 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a discount of 0.8% relative to the current U.S. Spot Price of $1,003 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

Q2 Cannabis Taxes Down 4 Quarters Running

Massachusetts

Bay State July Adult Use Sales Jump 8.2%

Oregon

OLCC Ponders “Batch Tagging”

New York

Application Window for Adult Use Dispensary Licenses Opens

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

2 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

1 2 3 40