June 24, 2022

U.S. Cannabis Spot Index — June 24, 2022

U.S. Cannabis Spot Index — Published June 24, 2022

The U.S. Cannabis Spot Index decreased 0.1% to $1,067 per pound.

 

The simple average (non-volume weighted) price increased $9 to $1,371 per pound, with 68% of transactions (one standard deviation) in the $590 to $2,152 per pound range. The average reported deal size decreased to 2.5 pounds. In grams, the Spot price was $2.35 and the simple average price was $3.02.

 

The relative transaction frequency of indoor product was up 1%, while that of greenhouse product fell 1%. Outdoor transaction frequency was unchanged on the week. 

    

 

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

 

The Cannabis Benchmarks U.S. Spot Index barely moved this week. The national wholesale flower price lost $1 to end the week at $1,067 due to a mixed performance among legacy and high population states with younger markets. 

 

Narrowing spot price losses in legacy states is a sign that volatility is draining from the market as seasonal demand starts to pick up. Lower volatility typically means the downside is losing steam and subsequent small moves higher can form the basis of a rebound in price. 

 

Fundamental factors are keeping legacy state cannabis markets from making much headway with oversupply in the outdoor market, which is creating price contagion in the indoor and greenhouse markets. Anecdotally, there is evidence the market is also weighed down by large cannabis operators selling into falling markets, though recent price action suggests sales to raise money for business expenses are dissipating in states like Massachusetts, Illinois, and Michigan. 

 

From an economic perspective, cannabis purchases are largely discretionary – items we like, but do not have to have. With topline inflation – food and energy prices – pressing consumers, the pullback in discretionary spending is the rational response. Pandemic related wage increases were 8% according to the U.S. Department of Labor. Inflation was running at 8.6% in May. The back of the envelope calculation is a 0.6% loss in wages year-on-year. Personal consumption expenditures have been increasing due to inflation, not wage increases, and because of “base effects” – measuring against pandemic-induced loss of wages – subsequent measures may be lower in the coming months.

 

 

As the U.S. economy starts to shrink in response to higher interest rates, falling wages, and lower consumer spending, some businesses will not weather the triple whammy of these effects. The aftermath of such economic stressors has typically included the shuttering of businesses and shrinking of inventories as inefficient businesses fall in the wake of economic stressors. After the cannabis industry weathers the vicissitudes of the larger economy, it is likely the industry will emerge more efficient, thus stronger and better able to navigate subsequent economic headwinds.

 

July 2022 Implied Forward assessed down $70 to close at $1,075 per pound.

 

The average reported forward deal size decreased to 84 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 37%, and 18% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 88 pounds, 88 pounds, and 67 pounds, respectively.

 

 

At $1,075 per pound, the July 2022 Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $1,067 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

Large Cultivation Licenses to Become Available in 2023

Michigan

May Sales Down Slightly, Retain Most of April Surge

Arizona

Sales Soften in April as Indoor Flower Price Dives

Washington

State Economists Project Cannabis Demand to Steady at Below Pandemic Levels

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

24 June 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

June 17, 2022

U.S. Cannabis Spot Index — June 17, 2022

U.S. Cannabis Spot Index — Published June 17, 2022

The U.S. Cannabis Spot Index decreased 4.1% to $1,068 per pound.

 

The simple average (non-volume weighted) price decreased $32 to $1,362 per pound, with 68% of transactions (one standard deviation) in the $593 to $2,131 per pound range. The average reported deal size increased to 2.6 pounds. In grams, the Spot price was $2.35 and the simple average price was $3.00.

 

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

 

 

The relative volume of indoor flower rose 2%, that of greenhouse flower fell 3%, and that of outdoor flower rose 1%.

 

U.S. Spot price fell $46 this week to $1,068 per pound on the back of net losses of $24 per pound in legacy states. Oregon fell $26 and Washington State was off $11, against gains of $5 in California and $7 in Colorado. 

 

Adding to the pressure on Cannabis Benchmarks U.S. Spot Index are losses in Illinois of $67 per pound, a $45 loss in Michigan, a $41 decline in Arizona, a $25 decrease in Oklahoma, and a $46 slide in New Mexico. 

 

It remains to be seen if Illinois spot retraces the entire gain from Spring 2020, when spot traded from $3,250 up to $3,900 per pound as the pandemic took hold. Given the state is dominated by a small number of very large growers, there may be an attempt to hold the line near current price, but the technical and statistical outlook suggests a retest of the $3,200 level is in the cards.

 

Michigan spot is trading up nearly $300 from an all-time low in early May 2022, even as the odds of ever seeing the high $2,700s again shrink against an uncapped licensing scheme and the likelihood of an ever-larger outdoor crop. 

 

Oklahoma prices are also weighed down by the state’s massive number of cultivation licenses – a situation the state is addressing with a license moratorium beginning in August 2022.

 

New Mexico prices remain in a broad uptrend; price has softened within the trend. New Mexico greenhouse-grown product has been bid up as indoor-grown prices remained out of reach for many small retailers. The indoor / greenhouse spread is at $52 this week, versus $511 in April 2022 when the adult use market opened. 

 

Alaska spot has put together five weeks of gains and is trading at nearly $2,300 per pound. 

 

 

Massachusetts spot ticked up $48 per pound this week. A turnaround from current levels can only be achieved if the market can put together weeks or even months of incremental gains and avoid breaking below the all-time low set last week.

 

July 2022 Implied Forward assessed down $70 to $1,145 per pound.

 

The average reported forward deal size was 87 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 37%, and 18% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 90 pounds, 88 pounds, and 67 pounds, respectively.

 

 

At $1,145 per pound, the July 2022 Implied Forward represents a premium of 7.2% relative to the current U.S. Spot Price of $1,068 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

Sales Slump Extends in April

Massachusetts

Sales Slip Amid Price Crash

New Jersey

First Month Sales Top $24 Million, Average Daily Sales $4.8 Million

Montana

Yellowstone Flood Imperils Cannabis Business

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

17 June 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

June 10, 2022

U.S. Cannabis Spot Index — June 10, 2022

U.S. Cannabis Spot Index — Published June 10, 2022

The U.S. Cannabis Spot Index decreased 4.1% to $1,114 per pound.

 

The simple average (non-volume weighted) price decreased $25 to $1,394 per pound, with 68% of transactions (one standard deviation) in the $612 to $2,176 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.46 and the simple average price was $3.07.

 

The relative frequencies of transactions for indoor, greenhouse, and outdoor flower were unchanged this week. 

  

 

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

 

The Cannabis Benchmarks U.S. Spot Index fell $47 this week, the third week in a row of losses that amount to $106 since late May. While some states are seeing small upticks in price or smaller losses, double-digit losses in high population states continue to drag the U.S. Spot lower. 

 

California spot lost $22 this week with outdoor-grown cannabis still under pressure in the mid-to-low $400s, a new record low for the most abundant outdoor stock in the nation. 

 

Massachusetts spot was off $66 this week. The last uptick in Massachusetts spot price was in the week of April 22, 2022 amid the 4/20 holiday, which capped a three-week run of higher weekly prices. 

 

Michigan spot shed $21 this week, also capping a three-week run of higher prices in which spot gained $175. Of note, the spread between indoor and greenhouse prices has blown out to $372 this week from just over $100 in mid-March. Generally speaking, instability in spreads is a forerunner of higher volatility, which typically means lower prices. 

 

The most salient feature of New Mexico’s market is the massive narrowing of the spread between indoor and greenhouse prices. At the beginning of April, when the adult use market opened, the spread between the two grow types was $677; this week it is $67. Narrowing spreads are typically indicative of higher prices.

 

 

Nevada spot price has shed $260 per pound since mid-March, but managed to tack on $24 this week. The spread between indoor and greenhouse-grown product has widened to $770 from just over $200 last November. To find out more about Nevada price volatility Cannabis Benchmarks spoke to Brandon Wiegand, President of the Nevada Cannabis Association. The interview is available in this week’s Premium Report.

 

July 2022 Implied Forward assessed down $20 to $1,215 per pound.

 

The average reported forward deal size was nominally unchanged at 86 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 38%, and 18% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 92 pounds, 88 pounds, and 68 pounds, respectively.

 

 

At $1,215 per pound, the July 2022 Implied Forward represents a premium of 9.1% relative to the current U.S. Spot Price of $1,114 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

“Fill My Bowl or Fill My Gas Tank,” Nevadans Decide – Interview

Illinois

May Sales Slip 2.3% Month-on-Month

Maine

Maine Adult Use Sales on a 4 Month Tear

New Mexico

Second Month Not the Charm; Cannabis Sales Slip in May

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10 June 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

June 3, 2022

U.S. Cannabis Spot Index — June 3, 2022

U.S. Cannabis Spot Index — Published June 3, 2022

The U.S. Cannabis Spot Index decreased 4.9% to $1,161 per pound.

 

The simple average (non-volume weighted) price decreased $56 to $1,419 per pound, with 68% of transactions (one standard deviation) in the $618 to $2,220 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $2.56 and the simple average price was $3.13.

 

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

 

 

The relative volume of indoor flower fell 1%, while those of greenhouse and outdoor flower were unchanged.  

 

“Green shoots” refer to the environmental signs that winter is fading and spring is on the way. In economics, signs of recovery in a weak economy are often referred to as “green shoots.” Typically, signs of recovery are taken from GDP inputs – pieces of data about consumption, investment, government spending, and the net of imports and exports. 

 

The California cannabis market is starting to show “green shoots,” and, while not a perfect replication of GDP calculation, there are signs of economic recovery in the cannabis sector in government spending, consumption, and investment.

 

Bills currently under consideration in the California legislature that affect government receipts – lowering the cannabis excise tax from 15% to 5%, eliminating the cannabis cultivation tax, and the cannabis equity tax credit – fit in the government spending category. 

 

A Los Angeles County Health study shows steady year-on-year increases in the number of people using cannabis – a broadening consumer base.  The California Department of Taxation and Fee Administration show broad increases in per capita expenditures year-on-year, despite significant price erosion. Both demonstrate increasing consumption.

 

The number of local governments that allow legal cannabis operations continues to expand – with San Bernardino County supply coming on line over the past few years and dozens of cities pushing to open doors to businesses in the next few years – representing opportunities for investment. 

 

While Cannabis Benchmarks does not collect data on the illicit market, there is anecdotal evidence suggesting the California cannabis market has a robust “export” business. Exports surely exceed imports, representing an increase in overall GDP.  

 

So, while California cannabis prices are causing some degree of pain in local markets, from a broad perspective the cannabis industry is showing “green shoots” in each GDP input. Viewed through a long lens, the California cannabis market is continuing to grow, with government spending, consumption, investment, and yes, exports, suggesting the industry has all the inputs in place to begin a broad-based recovery in the world’s largest legal cannabis market. 

 

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

 

The average reported forward deal size increased from 80 to 86 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 36%, and 19% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 92 pounds, 89 pounds, and 68 pounds, respectively.

 

 

At $1,235 per pound, the July 2022 Implied Forward represents a premium of 6.4% relative to the current U.S. Spot Price of $1,161 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

Sales Off 10% from Q4 2021 to Q1 2022; Amount of Wholesale Flower Entering Market Down Over 40,000 Pounds

Tax Department Adjusts Excise Tax Markup Rate Down as Cannabis Tax Reform Bills Advance

New York

144 Conditional Cultivator Licenses Awarded So Far

Oregon

May 2022 Sales Down 15% YoY; Harvest Volume Up from a Year Ago

New Jersey

Report: Additional Adult Use Retailers Open, One Near Philadelphia

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

3 June 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

May 27, 2022

U.S. Cannabis Spot Index — May 27, 2022

U.S. Cannabis Spot Index — Published May 27, 2022

The U.S. Cannabis Spot Index increased 0.4% to $1,220 per pound.

 

The simple average (non-volume weighted) price increased $14 to $1,475 per pound, with 68% of transactions (one standard deviation) in the $659 to $2,292 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.69 and the simple average price was $3.25.

 

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

 

 

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

 

U.S. Spot price ticked up by $5 this week to $1,220 per pound, reflecting stabilizing prices in some of the more expensive markets in the country. The top five most expensive cannabis markets in the U.S. are Illinois, Alaska, Maine, New Mexico, and Massachusetts. Michigan fell out of the top price running in November 2021 as the state brought in its first sizable outdoor harvest. New Mexico is now the fourth most expensive market tracked by Cannabis Benchmarks with its adult use market open, consumer demand ramping up, and the absence, for now, of significant amounts of outdoor-grown product. 

 

In April 2021, Massachusetts was the priciest cannabis market in the country. It managed to stay in the top two until December 2021 when prices started softening a bit, trading just over $3,400 per pound. The third week in January 2022 marked the beginning of cascading losses, taking price down $140 in just one week. Price fell over 28% from January to the second week in March, going from the second to the fourth most expensive market tracked by Cannabis Benchmarks in a matter of six weeks. Given the sell-off started just after the new year, one guesses it was a money raising event, a clearing out of inventory and / or a bold attempt at market position. 

 

Alaska retained the number two spot in the top five. While the Alaskan market does have some outdoor product, it is not a significant factor in the state’s Spot price. Contacts in the The Last Frontier state say out-of-state product weighs on local price, as does heavy competition between high THC brands. 

 

Michigan lost its spot as the fifth most expensive wholesale market in December 2021 when price fell below $2,100 per pound, just as New Mexico demand pushed prices up in the months leading up to the April 2022 opening of the state’s adult use market. Prices have steadied somewhat in Michigan, but recent remarks out of the state suggest there is some trepidation ahead of this year’s outdoor grown crop hitting the market in October and November 2022. 

 

Finally, U.S. Spot has remained steady, well below the top five priciest markets as legacy state volume weighs the index down. 

 

June 2022 Implied Forward assessed down $40 to $1,235 per pound.

 

The average reported forward deal size was 80 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 42%, and 15% of forward arrangements, respectively. 

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 90 pounds, 77 pounds, and 58 pounds, respectively.

 

 

At $1,235 per pound, the June 2022 Implied Forward represents a premium of 1.2% relative to the current U.S. Spot Price of $1,220 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

Entering the “Consequences” Phase – Interview

New York

144 Conditional Cultivator Licenses Awarded So Far

Michigan

Michigan’s Rapidly Evolving Cannabis Market – Interview

Oklahoma

OMMA – Get Compliant with METRC or Get Enforcement

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

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

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