U.S. Cannabis Spot Index — Published April 3, 2020
U.S. Cannabis Spot Index up 2.3% to $1,388 per pound.
The simple average (non-volume weighted) price increased $23 to $1,588 per pound, with 68% of transactions (one standard deviation) in the $815 to $2,361 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.06 and the simple average price was $3.50.
The relative frequency of trades for outdoor flower decreased by 5% this week. The relative frequencies of deals for indoor and greenhouse product increased by 2% and 3%, respectively.
Outdoor flower’s share of the total reported weight moved contracted by almost 5% this week. The relative volumes of warehouse and greenhouse product expanded by about 2% and 3%, respectively.
Accounts from several states across the country indicate that cannabis sales are down after experiencing a surge ahead of shelter-in-place and stay-at-home orders issued by numerous states and localities in response to the COVID-19 pandemic. This development is not particularly surprising; during the sales surge, reports frequently told of customers purchasing outsized amounts of product, resulting in ample personal supplies and no need to make further purchases for a longer-than-usual period. Similar situations have been observed in prior years, particularly after 4/20 and other traditional holidays when cannabis retailers run sales and promotions; consumers take advantage of lower prices to purchase larger volumes, which leads to lower sales in subsequent weeks.
Speaking of 4/20, it appears that the industry holiday will not provide its customary sales spike this year, as physical distancing recommendations and stay-at-home orders have in many cases been extended through the end of April. The free 4/20 concert held annually in Denver has already been canceled, while Nevada Governor Steve Sisolak announced this week that casinos and hotels in the state would remain closed through the end of this month. The New Mexico Cannabis Chamber of Commerce is urging patients and businesses to forego, or at least delay, 4/20 sales and celebrations this year until the pandemic subsides, according to New Mexico Political Report.
While most developments are pointing to a period of suppressed demand as consumers are largely complying with stay-at-home orders in many parts of the country, at least one positive sign for cannabis sales was reported this week. According to Bloomberg, recent survey data indicates that demand for cannabis “appears to be just as inelastic as demand for alcohol,” even in a period of economic downturn. However, this is the first time that the legal cannabis industry has experienced a recession, and the first time that virtually all consumers have endured a pandemic of this nature generally, so it is possible that the findings of the survey could be altered as the situation persists.
October Forward initially assessed at $1,400 per pound.
The average reported forward deal size was 37 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 46%, 37%, and 17% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 29 pounds, and 37 pounds, respectively.
At $1,400 per pound, the May Forward represents a premium of 0.9% relative to the current U.S. Spot Price of $1,388 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:
COVID-19 Pandemic and Resulting Stay-At-Home Orders Likely to Dampen or Eliminate 4/20 Sales Spike this Year
Officials Allow Adult-Use Retailers to Serve Customers in Stores, After Limiting Them to “Curbside” Pickup Last Week
February Sales Increase Slightly From Prior Month, Up 30% YoY
Total January Retail Revenue Reaches New Record at over $64 Million
Adult-Use Sales Swelled to New Peak in February, Topping $55 Million
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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC
3 April 2020. Copyright © 2020 New Leaf Data Services, LLC. All rights reserved