July 30, 2021

U.S. Cannabis Spot Index — July 30, 2021

U.S. Cannabis Spot Index — Published July 30, 2021

U.S. Cannabis Spot Index increased 0.5% to $1,598 per pound.

 

The simple average (non-volume weighted) price increased $27 to $1,881 per pound, with 68% of transactions (one standard deviation) in the $1,063 to $2,699 per pound range. The average reported deal size increased to 2.6 pounds. In grams, the Spot price was $3.52 and the simple average price was $4.15.

 

The relative frequency of transactions for greenhouse flower decreased by almost 2% this week. The relative frequency of deals for indoor product increased by the same proportion, while that for trades for outdoor flower was unchanged. 

     

 

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

 

The U.S. Spot Index has been back on the upswing in recent weeks. However, for July as a whole it averaged $1,581 per pound, down 1.7% from June’s mean national composite price. The downturn from June to July 2021 is in contrast to the 6.4% rise in the U.S. Spot observed in the same period last year, although July 2021’s monthly average price remains up 7.6% year-over-year. As we have covered in recent reports, sales growth is slowing in legal cannabis markets across the country after the dramatic and unexpected surge in demand that occurred in the late spring and summer last year. 

 


A report from New Cannabis Ventures expects Q2 2021 earnings reports from Multi-State Operators (MSOs) in the U.S. cannabis industry to be “strong,” with smaller MSOs also expected to show “robust growth.” According to the report, Curaleaf’s annual growth rate is expected at 164%, Greenthumb Industries’ and Trulieve’s annual growth rates are projected at 72%, and Cresco Labs’ is estimated at 102%. It must be noted that the robust year-over-year upticks are due in part to the fact that such companies have stronger presences in younger legal cannabis markets – including Illinois, Massachusetts, and Florida – that are experiencing more substantial overall growth rates than mature markets. Still, the analysis illustrates how much demand captured by state-licensed cannabis businesses has expanded in the past year, fueled both by new and growing legal markets, as well as the surge of sales that coincided with the COVID-19 pandemic’s arrival in the U.S.

August 2021 Implied Forward down $10 to close at $1,605 per pound.

 

The average reported forward deal size was 62.5 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 53%, 35%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 78 pounds, 50 pounds, and 30 pounds, respectively.

 

At $1,605 per pound, the August Implied Forward represents a premium of 0.4% relative to the current U.S. Spot Price of $1,598 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

State Health Department Report Shows Cannabis Usage Prevalence and Frequency Increasing Among Adults, While Consumption Methods Are Shifting

Washington

Regulators Reiterate Licensed Processors Are Not Allowed to Manufacture THC from Hemp-Derived CBD

Illinois

State Issues New Conditional Retail Licenses After Holding Lottery This Week

New Mexico

Report: Officials Expect Product Shortages Upon Commencement of Adult-Use Sales

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

30 July 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

July 23, 2021

U.S. Cannabis Spot Index — July 23, 2021

U.S. Cannabis Spot Index — Published July 23, 2021

U.S. Cannabis Spot Index increased 1.4% to $1,591 per pound.

 

The simple average (non-volume weighted) price increased $29 to $1,854 per pound, with 68% of transactions (one standard deviation) in the $1,057 to $2,651 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.51 and the simple average price was $4.09.

 

The relative frequency of transactions for greenhouse flower increased by 2% this week. The relative frequencies of deals for indoor and outdoor product decreased by 1% each.  

    

 

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

 

While the “Dog Days” of summer have brought scorching temperatures to many parts of the country, the previous upward momentum of the U.S. Spot Index has cooled. As we have discussed in recent reports, the recent downward trend in the national wholesale flower price has coincided with reports of plateauing or slightly decreasing sales in many major markets during the May-June period. Data examined in this week’s Premium report out of Arizona, Oklahoma, and Illinois’ medical cannabis sector is in line with stagnant sales trends observed in other states, which we noted in each of the past two weeks.

 

The arrival of the COVID-19 pandemic last year brought with it significant uncertainty for legal cannabis markets, with many expecting to be on firmer footing this year as vaccination rates increased and restrictions on businesses and individuals were lifted. However, supply and demand dynamics for legal cannabis remain in flux and numerous factors could impact wholesale prices in the coming months. On the supply side, extreme weather in the form of excessive heat and drought – accompanied by wildfires – appear poised to again threaten outdoor cultivation on the West Coast and in Colorado. As for demand, we pointed out last week that the Consumer Price Index has been on the rise, potentially squeezing discretionary spending. Americans also currently have more options for recreational spending than they did last year due to the lifting of virus-related restrictions. Finally, the coronavirus remains in the mix as a factor to consider as U.S. vaccination rates plateau and variants spread.

August 2021 Implied Forward assessed down $40 to $1,615 per pound.

 

The average reported forward deal size was 61.5 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 53%, 36%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 76 pounds, 50 pounds, and 31 pounds, respectively.

 

At $1,615 per pound, the August Implied Forward represents a premium of 1.5% relative to the current U.S. Spot Price of $1,591 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

Drought Prompts Humboldt County to Declare State of Emergency, Discuss Possibility of Further Water Restrictions on Cannabis Farmers

Arizona

Combined Monthly Adult-Use and Medical Sales Relatively Stagnant During March – May Period

Illinois

Medical and Adult-Use Sales Both Saw Downturns from May to June

Oklahoma

May Medical Cannabis Sales Reach Nearly $86 Million, Up Slightly from April; Wholesale Prices Stabilized in May After Declining Sharply in Prior Months

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

23 July 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

July 16, 2021

U.S. Cannabis Spot Index — July 16, 2021

U.S. Cannabis Spot Index — Published July 16, 2021

U.S. Cannabis Spot Index decreased 0.5% to $1,570 per pound.

 

The simple average (non-volume weighted) price decreased $16 to $1,825 per pound, with 68% of transactions (one standard deviation) in the $1,050 to $2,600 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.46 and the simple average price was $4.02.

 

The relative frequency of transactions for indoor flower decreased by 2% this week. The relative frequencies of deals for greenhouse and outdoor product increased by 1% each.      

 

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

 

Data released this week by officials in Colorado and Michigan tells a similar story to that examined in last week’s Premium Report: Specifically, that the late spring and early summer have seen demand in legal cannabis markets largely plateau or even decline slightly, albeit at levels elevated significantly compared to prior to the COVID-19 pandemic’s arrival in the U.S. last year. 

 

Slowing sales in Michigan are especially notable as the regulated market is still relatively young, with adult-use sales only beginning at the end of 2019. However, if litigation regarding the city of Detroit’s adult-use licensing ordinance is resolved and the city can move forward in approving legal businesses, more significant growth should eventually resume. In Colorado, total retail sales dipped from April to May for the first time since 2018. Notably, May 2021’s combined adult-use and medical cannabis sales in Colorado were essentially flat compared to those of May 2020, the first month that the state saw a big jump in demand coincident with the coronavirus pandemic. 

 

Stepping back to look at U.S. macroeconomic data, the Consumer Price Index rose 0.9% in June after rising 0.6% in May; this is the largest increase in CPI since June 2008. Year-over-year, CPI is up 5.4%, the largest increase since August 2008. While over a third of the rise in the overall index was due to an increase in that for used vehicles, the relatively elevated CPI may indicate that consumer spending on discretionary items such as cannabis products is being squeezed somewhat. 

 

Also of interest to the cannabis industry is the 1.5% increase in energy prices in June, bringing the year-over-year gain to 24.5%. Energy commodities are up 44.2% year-over-year and energy services are up 6.3%, including a 3.8% gain in electricity prices and a 15.6% gain in utility gas services. Growers have likely felt the impact of higher energy prices over the past year. Furthermore, as we noted in a prior report, extreme heat in some parts of the country early this summer is likely leading to elevated HVAC costs for indoor growers.

August 2021 Implied Forward unchanged at $1,655 per pound.

 

The average reported forward deal size was 60 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 53%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 75 pounds, 49 pounds, and 31 pounds, respectively.

 

At $1,655 per pound, the August Implied Forward represents a premium of 5.4% 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:

Colorado

May 2021 Sales Essentially Flat Year-Over-Year, Indicating Plateauing Demand After Sales Boomed by 25% 2020

Michigan

Retail Revenue Has Leveled Off in Recent Months; Prices Continued to Trend Down in June

Arizona

Contraction in Medical Cannabis Sales Persisted in June as Purchasing Shifts Increasingly to Adult-Use Market

New Mexico

Regulators More Than Double Plant Count Limit for Adult-Use Producers in New Proposed Rules

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

16 July 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

July 9, 2021

U.S. Cannabis Spot Index — July 9, 2021

U.S. Cannabis Spot Index — Published July 9, 2021

U.S. Cannabis Spot Index increased 0.6% to $1,578 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,841 per pound, with 68% of transactions (one standard deviation) in the $1,056 to $2,627 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.48 and the simple average price was $4.06.

 

The relative frequencies of transactions for each grow type were largely stable from last week.  

    

 

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

Early reports out of several states indicate that demand in legal cannabis markets is continuing to stabilize and even decrease slightly. Data issued by regulators in Oregon, Massachusetts, and Illinois, examined in this week’s Premium Report, all show declines in monthly retail sales from May to June. This is a departure from historical trends, which have seen monthly revenue figures generally climb from the late spring and through the summer months in prior years. 

 

Plateauing demand is occurring as some cultivators in more mature markets such as Oregon ramped up production compared to last year, while growers in newer adult-use markets like Illinois have expanded to serve demand from general consumers over the past 18 months or so. These dynamics may put downward pressure on, or at least moderate the U.S. Spot Index in the coming months, as opposed to the summer wholesale price rise that Cannabis Benchmarks has observed in each of the past two years. 


Still, the monthly average U.S. Spot price for June 2021 was $1,609 per pound, up 2.4% from May and up 16.4% compared to June 2020. The first two weeks of July have seen the national composite price average $1,574 per pound month-to-date. 

August 2021 Implied Forward unchanged at $1,655 per pound.

 

The average reported forward deal size was 60 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 54%, 33%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 73 pounds, 48 pounds, and 31 pounds, respectively.

 

At $1,655 per pound, the August Implied Forward represents a premium of 4.9% relative to the current U.S. Spot Price of $1,578 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

Extension of Provisional Licenses Included in Legislation Recently Sent to Governor

Oregon

Demand Declined for the Second Straight Month in June; Harvest Volume Increased

Massachusetts

Adult-Use Sales Reach $105 Million in June, Down 5% from May

Illinois

June Adult-Use Sales Slip Slightly from Prior Month; Data Indicates Retail Prices Are Declining

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9 July 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

July 2, 2021

U.S. Cannabis Spot Index — July 2, 2021

U.S. Cannabis Spot Index — Published July 2, 2021

U.S. Cannabis Spot Index decreased 2.3% to $1,569 per pound.

 

The simple average (non-volume weighted) price decreased $7 to $1,838 per pound, with 68% of transactions (one standard deviation) in the $1,053 to $2,623 per pound range. The average reported deal size increased to 2.4 pounds.  In grams, the Spot price was $3.46 and the simple average price was $4.05.

 

The relative frequencies of transactions for each grow type were largely stable from last week.  

    

 

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

The Heat Dome over the northwestern United States may affect cannabis prices throughout the growing season, with heat damaging plants planned for mid-summer light-deprivation harvests, scrambling the planting and early development of full-term crops, and sparking the early onset of wildfires. Cultivators are adapting by shading outdoor and greenhouse operations to protect plants, avoiding planting in extreme heat, and scheduling workers to avoid the hottest part of the day. The early arrival of wildfires in Northern California was also attributed in part to the Heat Dome, along with lightning strikes which sparked the still-uncontained 13,000-acre fire in Siskiyou County. 

 

As we have covered previously, the past several years have seen record-breaking wildfire activity and drought in regions of California, Oregon, and Washington that are home to significant outdoor cannabis cultivation. However, this year’s extreme heat early in the season is a unique development, while drought is more severe currently along the West Coast than it was a year ago, prompting more – and more stringent – water restrictions for some growers, among other impacts. Many also fear that those factors will result in another record-setting fire season this year. 

 

In recent years, such extreme weather and natural disasters have not significantly dented supply from outdoor production in the West Coast states. Last year, for example, growers in northern California and southern Oregon reported excellent growing season conditions up until the point wildfires threatened their crops close to harvest. However, as climate change continues to exacerbate heat, drought, and wildfires in unprecedented ways, we may see impacts to wholesale cannabis prices in the months ahead. 

 

 

Finally, unprecedented heat may impact indoor growers as well. Increased production costs – or even crop loss or disruptions in the cultivation process – could ensue if strained HVAC systems cannot keep up or power outages occur. 

January 2022 Implied Forward initially assessed at $1,610 per pound.

 

The average reported forward deal size was 60 pounds. The proportions of forward deals for outdoor, greenhouse, and  indoor-grown flower were 55%, 33%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 73 pounds, 48 pounds, and 31 pounds, respectively.

 

At $1,655 per pound, the August Implied Forward represents a premium of 5.5% relative to the current U.S. Spot Price of $1,569 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:

West Coast

Extreme Heat May Impact Outdoor Crops, Is Reportedly Disrupting Business in Oregon

Colorado

New Average Market Rates In Effect Beginning this Week; Tax on Internal Transfer of Flower by Adult-Use Cultivators Steady from Q2 to Q3

Michigan

Report: Industry-Group Funded Study Says 70% of Total Cannabis Sales in the State Take Place in Illegal Market

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

2 July 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

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