April 3, 2020

U.S. Cannabis Spot Index — April 3, 2020

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:

National

COVID-19 Pandemic and Resulting Stay-At-Home Orders Likely to Dampen or Eliminate 4/20 Sales Spike this Year

Colorado

Officials Allow Adult-Use Retailers to Serve Customers in Stores, After Limiting Them to “Curbside” Pickup Last Week

 

Oregon

February Sales Increase Slightly From Prior Month, Up 30% YoY

       

Nevada

Total January Retail Revenue Reaches New Record at over $64 Million

 

Massachusetts

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

March 27, 2020

U.S. Cannabis Spot Index — March 27, 2020

U.S. Cannabis Spot Index — Published March 27, 2020

U.S. Cannabis Spot Index down 1.3% to $1,357 per pound.

 

The simple average (non-volume weighted) price decreased $26 to $1,565 per pound, with 68% of transactions (one standard deviation) in the $799 to $2,330 per pound range. The average reported deal size increased to 2.2 pounds. In grams, the Spot price was $2.99 and the simple average price was $3.45.

 

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

 

Warehouse flower’s share of the total reported weight moved contracted by over 2% this week. The relative volume of greenhouse product expanded by the same proportion, while that for outdoor flower was unchanged.

The COVID-19, or coronavirus, crisis continued to reshape legal cannabis markets in the U.S. this week. For the most part, cannabis businesses up and down the supply chain have been declared “essential” by regulators and remain open even under shelter-in-place or stay-at-home orders issued by state and local officials. However, in many cases operations have been compelled to alter their practices significantly, while some state and local regulators have shown a willingness to shutter adult-use cannabis businesses for public health concerns.

 

Early indications from California suggested that stay-at-home, shelter-in-place, and similar orders result in a surge of sales ahead of their effective period, but could result in a steep drop in demand if residents comply with the directives. Requirements to carry out sales “curbside” or via delivery now in effect in numerous states may also slow down the pace of sales, due to each customer taking longer to serve, and result in lower revenues generally.

 

Notably, the only current official sales data able to be located to this point comes from Oregon. As part of its announcement of temporary rules, noted below, the OLCC stated, “During the period of March 1-18, 2020, OLCC marijuana retailers have seen a 25-30% increase in sales compared to the same period last year.” However, the year-over-year increase noted by Oregon officials for the first two-and-a-half weeks of March is largely consistent with general sales growth observed in the state since last year. For 2019, annual sales increased by 23% compared to 2018, as we detailed in our report for January 24. We also noted last week that February 2020’s sales were up by 30% relative to those recorded in February 2019.

 

Given this context, it does not appear that the COVID-19 crisis spurred consumer demand for cannabis in Oregon significantly greater than the growth that was taking place already. However, in markets where year-over-year growth has been slowing – such as Colorado and Washington State, as well as Nevada – ramifications of the pandemic and reactions of consumers to stay-at-home orders may have led to different results.

April Forward closes down $25 to $1,375 per pound.

 

The average reported forward deal size was 37.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 35%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 30 pounds, and 37 pounds, respectively.

 

 

At $1,375 per pound, the April Forward represents a premium of 1.3% relative to the current U.S. Spot Price of $1,357 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:

National

 

  • Most Stay-at-Home Orders Classify Cannabis Businesses as Essential, Some States Mandate Major Operational Changes in Light of COVID-19
  • Apprehension About Possible Closures, Unwillingness to Take in Inventory Applying Downward Pressure to Wholesale Prices Despite Strong Demand

Colorado

Adult-Use Cultivators Will See Lower Tax Rate on Internal Transfers of Flower in Q2

 

Washington

Tax Payments and Late Payment Penalties Deferred Until Late April for Cannabis Businesses

       

Nevada

Cannabis Sales Permitted Only by Delivery; Lack of Tourism in Las Vegas Likely to Depress Demand Significantly

 

Massachusetts

Adult-Use Cannabis Operations Ordered to Cease Operations, Medical Businesses Still Open

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

27 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

March 20, 2020

U.S. Cannabis Spot Index — March 20, 2020

U.S. Cannabis Spot Index — Published March 20, 2020

U.S. Cannabis Spot Index down 2.1% to $1,375 per pound.

 

The simple average (non-volume weighted) price decreased $27 to $1,591 per pound, with 68% of transactions (one standard deviation) in the $845 to $2,337 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.03 and the simple average price was $3.51.

 

The relative frequency of trades for greenhouse flower decreased by 5% this week. The relative frequencies of deals for indoor and outdoor product increased by 3% and 2%, respectively. 

 

Warehouse flower’s share of the total reported weight moved expanded by 2% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was unchanged.

Fallout from the COVID-19 – or coronavirus – pandemic continued to ripple across the U.S. this week. Reports from several states told of runs on legal cannabis retailers, as consumers and patients looked to stock up ahead of taking recommended social distancing and self-isolation measures. We noted in last week’s report that the COVID-19 pandemic could result in a short-term increase in demand due to such circumstances.

 

In other cases, such as in the San Francisco Bay Area, residents were ordered to “shelter in place,” or stay at home unless absolutely necessary, beginning Monday, March 16. However, while non-essential businesses in the Bay Area were ordered to close, licensed cannabis retailers were deemed essential and permitted to stay open. California Governor Gavin Newsom extended the shelter-in-place order to the entire state beginning Thursday, March 19. Yet, in virtually all states with legal cannabis markets, sales have continued through this week. Officials in numerous states have designated cannabis retailers – both medical and adult-use – as essential businesses for the time being.

 

A rundown from Leafly provides updates on many regulated cannabis markets in the U.S.

April Forward down $35 to $1,400 per pound.

 

The average reported forward deal size was 38 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 35%, and 17% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 31 pounds, and 36 pounds, respectively.

 

 

At $1,400 per pound, the April Forward represents a premium of 1.8% relative to the current U.S. Spot Price of $1,375 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

Northern California Grower States Wholesale Sales are Slow, Attributes to Shelter-in-Place Order for San Francisco Bay Area

Oregon

February Retail Sales Up 30% YoY

 

Michigan

February Sales and Production Data Indicates Supply is Loosening, Future Months Should See Bigger Harvests if Production is Not Disrupted by Pandemic

       

Arizona

Dispensaries Sell Almost 13,400 Pounds of Flower in February

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

20 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

March 13, 2020

U.S. Cannabis Spot Index — March 13, 2020

U.S. Cannabis Spot Index — Published March 13, 2020

U.S. Cannabis Spot Index up 1.1% to $1,404 per pound.

 

The simple average (non-volume weighted) price increased $45 to $1,617 per pound, with 68% of transactions (one standard deviation) in the $866 to $2,369 per pound range. The average reported deal size increased to 2.1 pounds. In grams, the Spot price was $3.10 and the simple average price was $3.57.

 

Transaction stats on the national level, shown in the chart below, were largely stable from last week. 

 

 

As we approach the end of the first quarter of 2020, relatively more indoor flower is being traded compared to the start of this year. In the opening week of 2020, each grow type constituted roughly a third of the total observed volume traded in the U.S. Now, however, indoor flower’s share of the total documented weight moved is almost half. Despite higher-priced warehouse product making up a significantly larger portion of the total, this week’s U.S. Spot is up only $7 from the first week of this year. 

The U.S. Spot Index rose by 1.1% this week to settle at $1,404 per pound. As the COVID-19 – or coronavirus – pandemic dominates national and international headlines, it is not yet clear how the situation will impact the U.S. cannabis industry. However, numerous states with large legal cannabis markets are being affected. At this point, information from the Centers for Disease Control (CDC) shows that Washington State and California are among the top three states in terms of reported cases of the virus (along with New York). As of March 12, Colorado officials had counted 49 presumptive cases of COVID-19 in the state. 

 

Recommended measures such as “social distancing” could lead to lower sales for a period, depending on how long the situation persists. On the other hand, consumers and patients in hard-hit areas may look to stock up on product ahead of isolating themselves, possibly providing a short-term increase in demand. On the production side, greater spread of the virus in areas with significant cultivation capacity could interrupt or constrict supply if employees are compelled to stay home or work only intermittently. 

 

In more quotidian developments, Boston saw its first licensed adult-use retailer open recently, which should result in a boost to statewide revenue figures as there are currently only about three dozen permitted recreational storefronts in Massachusetts. Meanwhile, regulatory changes in Michigan could tighten supply and result in less flexibility in transferring product from the medical to the adult-use sector in some cases.

March Forward unchanged at $1,435 per pound.

 

The average reported forward deal size was 38 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 36%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 31 pounds, and 37 pounds, respectively.

 

 

At $1,435 per pound, the April Forward represents a premium of 2.2% relative to the current U.S. Spot Price of $1,404 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

Q4 2019 Tax Collections Suggest Flattening Retail Sales, While Amount of Flower Entering Commercial Market Grew Almost 20% from Prior Quarter

Colorado

January 2020 Sales Up 12% YoY, Maintaining Annual Growth Rate Observed for 2019

 

Michigan

Officials Apply New Parameters to Transfers from Medical Dispensaries to Adult-Use Retailers, Allow Growers to Transfer Plants from Medical to Adult-Use Operations

       

Washington

Public Hearing on Proposed Rules for Enhanced Quality Control Testing Delayed, Comment Period Extended Due to Coronavirus Concerns

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

13 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

March 6, 2020

U.S. Cannabis Spot Index — March 6, 2020

U.S. Cannabis Spot Index — Published March 6, 2020

U.S. Cannabis Spot Index up 2.3% to $1,389 per pound.

 

The simple average (non-volume weighted) price decreased $6 to $1,572 per pound, with 68% of transactions (one standard deviation) in the $838 to $2,306 per pound range. The average reported deal size decreased to 2.0 pounds. In grams, the Spot price was $3.06 and the simple average price was $3.47.

 

The relative frequency of trades for indoor flower decreased by 4% this week. The relative frequency of deals for greenhouse product increased by the same proportion, while that for transactions for outdoor flower was unchanged. 

 

 

Warehouse product’s share of the total reported weight moved nationally contracted by 3% this week. The relative volume of greenhouse flower expanded by the same proportion, while that for outdoor flower was unchanged.

The U.S. Spot Index rose by 2.3% this week to settle at $1,389 per pound. National prices for outdoor flower stabilized this week after declining since mid-January. The U.S. volume-weighted average for indoor product also bounced back this week after declines in the latter portion of February. 

 

On the state level, four of the five largest markets saw upticks in the Spot rates, with Colorado the only exception. Oregon is the state with the most up-to-date, detailed market data available at this point, which shows roughly 800,000 pounds of unsold flower and trim still in the hands of growers and processors. While wholesale prices in the state rose despite similar surpluses at this time last year, we expect that sales growth – which approached 25% year-over-year in 2019 – will subside this year. 

 

Looking ahead, high wholesale flower prices in Illinois, Massachusetts, and Michigan could lift the U.S. Spot. However, adult-use sales slipped month-over-month in Illinois in February, likely due mainly to inadequate supply. Given the slower rollouts taking place in those states – relative to the preceding Western markets that generally had larger medical cannabis systems to build on – it is at this point an open question as to whether trading volumes in the newer markets will expand to rival those of the West Coast states and Colorado this year.

September Forward initially assessed at $1,400 per pound.

 

The average reported forward deal size was 39 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 50%, 33%, and 17% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 43 pounds, 33 pounds, and 37 pounds, respectively.

 

 

At $1,435 per pound, the March Forward represents a premium of 3.3% relative to the current U.S. Spot Price of $1,389 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

Cultivators Held Over 55% of Over 1 Million Pounds of Unsold Flower & Trim as of early February

Nevada

Total Legal Cannabis Sales Topped $700 Million in 2019, Up 21% YoY

 

Michigan

Licensed Businesses No Longer Able to Purchase Extracts and Other Manufactured Products from Caregivers, Now Limited to Flower and Trim Only  

       

Illinois

February Retail Sales in Adult-Use Sector Down 11% MoM, Likely Due to Limited Supply

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

6 March 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

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