May 13, 2022

U.S. Cannabis Spot Index — May 13, 2022

U.S. Cannabis Spot Index — Published May 13, 2022

The U.S. Cannabis Spot Index decreased 1.0% to $1,248 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,506 per pound, with 68% of transactions (one standard deviation) in the $685 to $2,326 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $2.75 and the simple average price was $3.32.

 

The relative frequency of transactions for indoor flower rose 1%, while that of greenhouse flower fell 1%. Outdoor transaction frequency was unchanged.   

   

 

The relative volume of indoor flower was unchanged, while that of greenhouse flower fell 2%.  The relative volume of outdoor flower was unchanged.

 

U.S. Spot price slid $13 this week to trade at $1,248 per pound on legacy state net change of +$4 per pound. All legacy state spot prices are trading below the $1,000 per pound handle.

 

Massachusetts, Illinois, and Michigan netted a +$14 per pound change this week with Michigan gaining $59 this week. Michigan’s recent price crash is overdone by any measure. Moves of this magnitude in any market tend to revert back to a mean level, either in a rather spectacular run or over a period of months, or even years. A rapid return to the midway point of the crash is just below $1,800, but such a move would be in opposition to Michigan market fundamentals; specifically, the uncapped licensing scheme and burgeoning outdoor production capacity.

 

Massachusetts prices fell $92 per pound this week. Losses so far in 2022 are $1,245 per pound, or 36.3%. Spot price is at an all-time low in the state, having taken out the 2018 low of $2,292 in the last week of April 2022. 

 

Illinois spot price rose $19 per pound this week, representing a 19.1% loss since fall 2021. Spot is now trading at levels not seen since July 2020 when price was ramping up with pandemic demand. In short, Spot is nearing pre-pandemic levels. 

 

 

Even with these rather spectacular price moves, the fact remains newer states are still trading at a fat premium to legacy states, due in part to new states’ lack of large amounts of outdoor production, which tends to drag legacy state prices down. That being said, there is some scope for a bifurcated nationwide market in which states without huge amounts of outdoor production maintain a premium over states with extremely voluminous outdoor cultivation. A bifurcated market supports the notion of using outdoor-grown product as the basis for a futures contract, as it would be a direct hedge for the largest volume crop type. States without a large outdoor crop that trade at a premium to legacy states would be able to ratio hedge, adding significant liquidity to the base contract. 

 

June 2022 Implied Forward assessed down $15 to $1,300 per pound.

 

The average reported forward deal size was 79 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 44%, 43%, and 14% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were nominally unchanged at 86 pounds, 76 pounds, and 60 pounds, respectively.

 

 

At $1,300 per pound, the June 2022 Implied Forward represents a premium of 4.2% relative to the current U.S. Spot Price of $1,248 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

March Sales Figures Surge

Massachusetts

Adult Use Retail Sales Gain Slows to 1.7% M-o-M

Maine

Monthly Sales Hit Record High – Again!

Connecticut

State’s First Lottery Will Award 12 Retailer Licenses

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

13 May 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

May 6, 2022

U.S. Cannabis Spot Index — May 6, 2022

U.S. Cannabis Spot Index — Published May 6, 2022

The U.S. Cannabis Spot Index decreased 1.3% to $1,261 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,518 per pound, with 68% of transactions (one standard deviation) in the $688 to $2,348 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $2.78 and the simple average price was $3.35.

 

The relative frequency of transactions for indoor flower was unchanged. Greenhouse transaction frequency rose 1% and outdoor transaction frequency fell by 1%.  

   

 

The relative volume of indoor flower fell 1%, while that of greenhouse flower rose 2%. The relative volume of outdoor flower was unchanged.

 

U.S. Spot fell nearly $17 this week, weighed down by losses in new states even as some legacy states saw gains. Washington State was up nearly $3 per pound wholesale on a narrowing 10-week average loss of just $0.97 per pound. Oregon leapt up over $39 per pound amid a narrowing 10-week average loss of just $2.41. 

 

New Mexico Spot fell nearly $17 per pound basis spot, with a 10-week average weekly gain of $25.42. Contacts in New Mexico say they are being offered indoor flower at $3,200 per pound wholesale, while some stores have delayed opening due to the high price of indoor product. 

 

Nevada prices made some gains this week amid a sharp sell-off in the wholesale market this year, adding $57.50 per pound. As noted in this week’s Premium Report, Nevada tourist numbers jumped in March, which may account for recent price gains. 

 

Maine Spot price shed over $60 and pushed the 10-week average weekly price change into negative territory at -$5.91 per pound. 

 

 

Almost all cannabis consumers can either buy in their home state or are just a state away from legal purchases. The widespread availability of cannabis is driving price compression across the country, leading to newer markets seeing prices crater despite still experiencing expanding demand. When all of New England plus New York and New Jersey have fully developed adult use markets – a point which is still at least two years in the future – prices should become competitive almost immediately and price pressures are likely to exceed those of legacy states.

 

November 2022 Implied Forward initially assessed at $1,225 per pound.

 

The average reported forward deal size was unchanged at 78 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 44%, and 14% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 86 pounds, 76 pounds, and 60 pounds, respectively.

 

 

At $1,315 per pound, the June 2022 Implied Forward represents a premium of 4.3% relative to the current U.S. Spot Price of $1,261 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:

Nevada

Sales Down Four Months Running

Illinois

April Sales Surge 14.6% Year-on-Year

Montana

Adult Use Sales Swamping Medical Sales

National

Fed Rate Hike Means More Expensive Financing for Cannabis Businesses

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

6 May 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

April 29, 2022

U.S. Cannabis Spot Index — April 29, 2022

U.S. Cannabis Spot Index — Published April 29, 2022

The U.S. Cannabis Spot Index decreased 0.4% to $1,277 per pound.

 

The simple average (non-volume weighted) price increased $9 to $1,515 per pound, with 68% of transactions (one standard deviation) in the $677 to $2,353 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $2.82 and the simple average price was $3.34.

 

The relative frequency of transactions for indoor flower fell by 1%. The relative frequency of trades for greenhouse flower rose 2% while that for deals for outdoor product fell 1%.    

 

 

The relative volume of indoor flower was unchanged, as were those of greenhouse and outdoor flower.

 

The U.S. Spot Index slipped just over $5 this week even as legacy states mostly saw prices decline by greater amounts. Oregon fell over $23 per pound basis spot, but the 10-week average of weekly losses has narrowed to -$4.45 per pound. The California Spot index fell nearly $21 per pound on a narrowing 10-week average loss of just -$6.89 per pound. Colorado Spot fell $11.82 per pound, but the 10-week average weekly losses remain low at $6.24 per pound. Narrowing average losses typically presage a steady, if not rallying market. Washington state tacked on $29 per pound on a 10-week average gain of $3.03 per pound. 

 

Large population states newer to the adult use market have undergone significant price erosion even amid unflagging demand as growers jockey for market position, including Illinois where the spot price fell more than $91 this week. New cannabis business licenses in Illinois remain mostly mired in lawsuits, while craft cultivators granted licenses earlier this year are not yet up and running, making the rapid spot market price deterioration more likely a function of competition among multi-state operators for market share. Illinois Spot is down 19.6% since October 2021 and down 13% in 2022. 

 

Massachusetts Spot fell nearly $73 per pound this week, but the 10-week average loss is just under $40 per pound. In 2021, Massachusetts saw spot cannabis prices hew closely to the $3,500 level, but price has fallen 32.6% this year amid a well-supplied market and strong demand, again suggesting competition among growers is likely responsible for lower prices.  

 

Michigan Spot rose over $12 per pound this week, amid a shrinking 10-week average loss per pound of $36. Michigan Spot is down 54% from the end of November 2021, some of which has been attributed to outdoor-grown crops entering the market and some of which is likely due to the state’s uncapped licensing scheme. That said, Michigan Spot has steadied over the past several weeks, trading in within a $27 range. 

 

New Jersey opened their adult use market last week and other states in the Northeast are likely to begin sales near year-end or just after the new year. Demand will likely push prices higher in the first months of legalization, but the rapid deterioration of spot prices in new states is signaling a much faster uptake of price trends. With cannabis available literally across the nation, the price increases seen in early adopter states may be fleeting in the Northeast. 

May 2022 Implied Forward assessed up $20 to $1,300 per pound.

 

The average reported forward deal size increased to 78 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 45%, and 14% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 86 pounds, 77 pounds, and 58 pounds, respectively.

 

 

At $1,300 per pound, the May 2022 Implied Forward represents a premium of 1.8% relative to the current U.S. Spot Price of $1,277 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

Business License Moratorium in Effect, But Current Market Conditions Likely to Persist

Michigan

4/20 Saw 3X Revenue, 6X Flower Sales Volume of Typical Day

New Jersey

$1.9 Million in Revenue Generated on First Day of Adult Use Sales

New York

Report: Regulators Expect Some Adult Use Sales to Begin by Fall 2022

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

29 April 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

April 22, 2022

U.S. Cannabis Spot Index — April 22, 2022

U.S. Cannabis Spot Index — Published April 22, 2022

The U.S. Cannabis Spot Index increased 1% to $1,283 per pound.

 

The simple average (non-volume weighted) price decreased $4 to $1,506 per pound, with 68% of transactions (one standard deviation) in the $665 to $2,346 per pound range. The average reported deal size declined to 2.2 pounds. In grams, the Spot price was $2.83 and the simple average price was $3.32.

 

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

  

 

The relative volume of indoor flower increased by 3%, while that of greenhouse flower decreased by 2%. Outdoor flower’s relative volume declined 1%.

 

The U.S. Spot Index continued its bumpy April, a month that has seen the national average price alternately rise and fall each week thus far. While previous rises have been due largely to expanded observations of trading in higher-priced markets, this week saw the country’s two largest legal cannabis systems – California and Colorado – both experience increases in their overall composite prices. Massachusetts’ Spot price also bucked its recent downtrend to rise this week, which saw the industry and consumers celebrate the 4/20 “holiday.” 

 

The big sales day was not enough to push prices upward in numerous markets, however, with spot prices in Oregon, Washington, and Michigan, among others, maintaining their dramatic and ongoing declines this week. Still, the downtrends in Illinois, Michigan, and Arizona have leveled off in recent weeks, though not before the latter two markets saw their composite prices fall below the U.S. Spot. 

 

Also this week, the industry celebrated the commencement of adult use sales in New Jersey, where Reuters reports that 13 medical dispensaries were given approval to open their doors to general consumers on Thursday, April 21. The stores that have so far been permitted to sell to the adult use market are all operated by existing, vertically integrated businesses that previously served the state’s medical cannabis system and that have been building up expanded production capacity in the wake of adult use legalization. Consequently, there is likely little, if any, wholesale activity taking place in New Jersey at this time, with the approved stores likely receiving their supply almost exclusively from associated cultivation and product manufacturing operations. This situation will change once new businesses are licensed and operating, though when exactly that might occur is not entirely certain at this point.

 

May 2022 Implied Forward unchanged at $1,280 per pound.

 

The average reported forward deal size declined to 77 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 40%, 46%, and 14% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 82 pounds, 77 pounds, and 60 pounds, respectively.

 

 

At $1,280 per pound, the May 2022 Implied Forward represents a discount of 0.2% relative to the current U.S. Spot Price of $1,283 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

March Sales Decline from February as Downtrend in Wholesale Price Continues

State’s Top Regulator Sees Strong Demand, Stability in Market Despite Price Drop – Interview

Arizona

February Sales Tick Down for Second Straight Month as Adult Use Sector Increases Market Share

New Jersey

Adult Use Sales Opened this Week, But Vertically Integrated Operators Mean Little Wholesale Activity Until New Businesses Enter

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

22 April 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

April 15, 2022

U.S. Cannabis Spot Index — April 15, 2022

U.S. Cannabis Spot Index — Published April 15, 2022

The U.S. Cannabis Spot Index decreased 2.4% to $1,269 per pound.

 

The simple average (non-volume weighted) price decreased $25 to $1,510 per pound, with 68% of transactions (one standard deviation) in the $684 to $2,336 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $2.80 and the simple average price was $3.33.

 

The relative frequencies of transactions for each grow type were unchanged this week. 

 

 

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

 

Legacy state spot prices are mostly lower this week with Colorado off nearly $16 per pound, with a 10-week average weekly loss of just $2.46 per pound. California shed just over $39 per pound basis spot with an average weekly loss of nearly $11 per pound, up sharply from last week’s average weekly loss of $5.01 per pound. Oregon Spot slipped another $38 per pound with a 10-week average weekly loss of $9.35 per pound. Washington State jumped $9.00 per pound with an average weekly gain of just under $1. 

 

High population states newer to the market have been undergoing a price transformation as new growers enter and competition heats up. Massachusetts spot prices have undergone a shellacking this year, losing over 32%. That said, Massachusetts Spot losses this week were just over $4 per pound; the 10-week average weekly loss has narrowed to -$65.54 per pound versus $95.46 per pound last week. 

 

Despite Illinois massive location advantage and highly concentrated production landscape, spot prices there are down over 23% this year. However, this week Spot gained better than $26 per pound, the second uptick in price in the past 10 weeks. The 10-week average weekly loss is just -$16.93 per pound versus -$27.41 per pound last week. 

 

Michigan managed to eke out gains this week, rising just under $7 per pound. The 10-week average of weekly losses narrowed from -$71.86 to -$58.62 per pound this week. 

 

 

Outdoor-grown flower in legacy states – Washington, Oregon, California, and Colorado – averaged $474 per pound this week. Price convergence among these states points to a recently emerging trend in cannabis prices that is worth paying attention to; it suggests, again, the propensity of prices of like commodities to converge at some point and, for outdoor flower in legacy markets, that point is now. Using the law of one price, with a nod to fundamental differences, we might expect rapid convergence of prices on the East Coast among the most prevalent grow types to occur rather quickly once markets in northeastern states are fully functioning. Growers know to make hay while the sun shines, which is good advice to legal states without significant competition.

 

May 2022 Implied Forward assessed up $15 to $1,280 per pound.

 

The average reported forward deal size declined to 76 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 39%, 48%, and 13% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 80 pounds, 77 pounds, and 62 pounds, respectively.

 

 

At $1,280 per pound, the May 2022 Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $1,269 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

February Sales Slip Again

Massachusetts

March Cannabis Sales Rebound, up 9.4% 

Cannabis Control Commission Chairman – Interview

New Mexico

First Week Adult Use Sales Exceed Expectations

Oklahoma

February Cannabis Sales Rebound

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

15 April 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

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