October 16, 2020

U.S. Cannabis Spot Index — October 16, 2020

U.S. Cannabis Spot Index — Published October 16, 2020

U.S. Cannabis Spot Index up 1.5% to $1,647 per pound.

 

The simple average (non-volume weighted) price increased $63 to $1,863 per pound, with 68% of transactions (one standard deviation) in the $1,083 to $2,644 per pound range. The average reported deal size increased to 2.2 pounds. In grams, the Spot price was $3.63 and the simple average price was $4.11.

September sales data continues to show demand elevated well above pre-COVID levels. However, similar to August, there are also some signs that it may have reached, or at least be near, a current peak. Sales volume to patients in Arizona’s medical cannabis system declined for the second straight month in September. Adult-use sales in Illinois continued to climb, but growth has slowed in recent months after a big jump in July, although that may be due in part to still-developing production capacity and tight supply. 

 

As record sales have strained supplies even in mature and previously well-supplied markets, new regulatory developments could add more costs for businesses, potentially applying further upward pressure on wholesale prices. Proposed rules in Oregon and Washington would enact new regulations around additives in vape products in the former state and implement required pesticide and heavy metals tests for products in the latter. Mandatory quality assurance and safety screenings of products will begin in Arizona’s market in November for the first time in the history of the state’s medical cannabis program.

November Forward up $15 to $1,560 per pound. The average reported forward deal size was nominally unchanged at 22 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 35%, 40%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 24 pounds, 18 pounds, and 25 pounds, respectively.

 

At $1,560 per pound, the November Forward represents a discount of 5.3% relative to the current U.S. Spot Price of $1,647 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

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

16 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

October 9, 2020

U.S. Cannabis Spot Index — October 9, 2020

U.S. Cannabis Spot Index — Published October 9, 2020

U.S. Cannabis Spot Index down 0.7% to $1,623 per pound.

 

The simple average (non-volume weighted) price increased $31 to $1,800 per pound, with 68% of transactions (one standard deviation) in the $1,045 to $2,556 per pound range. The average reported deal size was nominally unchanged at 2.0 pounds. In grams, the Spot price was $3.58 and the simple average price was $3.97.

 

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

 

The relative volume of warehouse product contracted by 1%. The relative volume of outdoor flower expanded by the same proportion, while that for greenhouse product was unchanged.

September sales data released this week continues to show demand elevated well above pre-COVID levels. However, similar to August, there are also some signs that it may have reached, or at least be near, a current peak. Sales volume to patients in Arizona’s medical cannabis system declined for the second straight month in September. Adult-use sales in Illinois continued to climb, but growth has slowed in recent months after a big jump in July, although that may be due in part to still-developing production capacity and tight supply. 

 

As record sales have strained supplies even in mature and previously well-supplied markets, new regulatory developments could add more costs for businesses, potentially applying further upward pressure on wholesale prices. Proposed rules in Oregon and Washington would enact new regulations around additives in vape products in the former state and implement required pesticide and heavy metals tests for products in the latter. Mandatory quality assurance and safety screenings of products will begin in Arizona’s market in November for the first time in the history of the state’s medical cannabis program.

 

With rules tightening in some states with more mature markets, the establishment and expansion of younger ones will capture demand that was likely supplied previously by illicit sellers. The sizable markets of Los Angeles and Michigan both announced new opportunities to apply for cannabis business licenses this week. Meanwhile, adult-use sales began today in Maine and a new law set the stage for a regulated commercial cannabis market in Vermont in the future.

November Forward up $30 to $1,545 per pound.

 

The average reported forward deal size was nominally unchanged at 22 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 35%, 39%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 24 pounds, 17 pounds, and 25 pounds, respectively.

 

At $1,545 per pound, the November Forward represents a discount of 4.8% relative to the current U.S. Spot Price of $1,623 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

Los Angeles to Accept License Applications for Several Business Types Later this Month

Arizona

Sales Volume Declines for Second Straight Month in September, but Remains Elevated from Pre-COVID Levels

Illinois

September Adult-Use Sales Approach $68 Million

Maine

Adult-Use Market Opens, but Only a Few Businesses Licensed to Make Sales Businesses

 

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

9 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

October 2, 2020

U.S. Cannabis Spot Index — October 2, 2020

U.S. Cannabis Spot Index — Published October 2, 2020

U.S. Cannabis Spot Index up 2.5% to $1,634 per pound.

 

The simple average (non-volume weighted) price increased $2 to $1,770 per pound, with 68% of transactions (one standard deviation) in the $1,013 to $2,526 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.60 and the simple average price was $3.90.

 

The relative frequency of trades for greenhouse flower increased by 1% this week. The relative frequency of transactions for indoor product decreased by the same proportion, while that for deals involving outdoor flower was unchanged.  

 

The relative volumes of each individual grow type were essentially stable this week, with shifts of less than 1% observed.

The U.S. Spot Index averaged $1,564 per pound for September, up 2.4% from August. September is the fourth straight month to see an increase in the monthly mean U.S. composite price. After it trended downward from late March through late May, in the early days of the COVID-19 pandemic, the U.S. Spot has since climbed almost ceaselessly. 

 

Some market participants expect such behavior to continue. Forward prices submitted by members of our Price Contributor Network in California last week show that agreed-upon wholesale prices for deals to be executed this month were 4.6% higher than the state’s average Spot price for September. The Forward deals show an expectation that rates will dip somewhat in November and December, but remain higher than current levels, before increasing even more dramatically in the coming year. 

 

However, the combination of uncertainty regarding the fall outdoor crop – due to wildfires on the West Coast and the early snow that hit Colorado a few weeks ago – and unprecedented demand could very well push wholesale rates up through the end of the year. In 2019, when sales growth was occurring at a significantly slower pace than this year, the U.S. Spot Index continued to rise into November. Additionally, wholesale rates in states such as Michigan, Illinois, and Massachusetts are very high due to expanding adult-use markets. At this time last year, recreational sales had not yet begun in Michigan and Illinois, and demand was much lower in Massachusetts.

April 2021 Forward initially assessed at $1,465 per pound.

 

The average reported forward deal size was 22 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 35%, 39%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 24 pounds, 17 pounds, and 26 pounds, respectively.

 

At $1,515 per pound, the November Forward represents a discount of 7.3% relative to the current U.S. Spot Price of $1,634 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

Legislation Introduced to Make State-Licensed Cannabis Businesses Eligible for Federal Disaster Relief

California

Fresno to Begin Process of Licensing Cannabis Businesses

Oregon

State Economists Expect Some COVID-Related Sales Gains Could be Permanent

Michigan

Caregiver Product No Longer Allowed to be Sold Into Licensed Medical Market

Massachusetts

Rules Proposed for Two Types of Adult-Use Delivery Businesses

 

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

2 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

September 25, 2020

U.S. Cannabis Spot Index — September 25, 2020

U.S. Cannabis Spot Index — Published September 25, 2020

U.S. Cannabis Spot Index up 1.5% to $1,594 per pound.

 

The simple average (non-volume weighted) price decreased $28 to $1,768 per pound, with 68% of transactions (one standard deviation) in the $987 to $2,548 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.51 and the simple average price was $3.90.

 

The relative frequency of trades for greenhouse flower increased by almost 4% this week. The relative frequencies of transactions for indoor and outdoor product decreased by about 2% each.  

 

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

As we have covered in recent months, the major story of this year in the legal cannabis realm has been the dramatic increase in demand that has occurred under the specter of the COVID-19 pandemic. With data reported out of most major markets, it is clear that elevated sales continued through August. However, August is typically the peak month of the year for legal cannabis sales. Historical data shows that monthly revenues generally decline in each month from September through November, before picking up in December to close the year. Whether those seasonal sales trends will hold this year in light of unprecedented socio-economic circumstances is an open question. 

 

Even if sales do subside this autumn, it may not be enough to cause wholesale prices to fall to the levels seen earlier this year. New data out of Colorado covering the first half of 2020 illustrates a situation that is shared by numerous mature legal cannabis markets. Namely, production capacity and supply stabilized during the past two years, and is now being strained by the new, unanticipated demand that has manifested during the coronavirus crisis. 

 

If sales in the coming months remain at or close to the elevated levels seen this summer, new production may have to come online in order to bring down prices while satisfying a higher level of baseline demand. However, if serious shortages can be avoided and consumers will tolerate price rises at retail, cannabis businesses will likely be content to maintain current supply levels while enjoying relatively high wholesale rates not seen in several years

October Forward closes up $30 to $1,525 per pound.

 

The average reported forward deal size was 25 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 36%, 38%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 27 pounds, 19 pounds, and 31 pounds, respectively.

 

At $1,525 per pound, the October Forward represents a discount of 4.3% relative to the current U.S. Spot Price of $1,594 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

Bill Preventing Increases in Cannabis Taxes in 2021 Signed into Law by Governor

Colorado

New Data Shows Growth in Flower Sales Volume Significantly Outpaced Small Increase in Production in H1 2020

Washington

July Sales Up Over 40% YoY

Arizona

August Sales Volume Down Slightly from Record Levels Recorded in July

 

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

25 September 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

September 18, 2020

U.S. Cannabis Spot Index — September 18, 2020

U.S. Cannabis Spot Index — Published September 18, 2020

U.S. Cannabis Spot Index up 1.4% to $1,570 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,796 per pound, with 68% of transactions (one standard deviation) in the $953 to $2,638 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.46 and the simple average price was $3.96.

 

The relative frequency of trades for greenhouse flower decreased by almost 3% this week. The relative frequencies of transactions for indoor and outdoor product increased by about 2% and 1%, respectively.  

 

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

New sales data out of several states this week affirms what we noted in last week’s report: the robust demand for legal cannabis that has manifested during the pandemic persisted in August, despite the cessation of federal relief to individuals and businesses. 

 

Oregon, Michigan, and Illinois officials all reported strong revenues, with a new record for total adult-use and medical sales established in the latter market. In Oregon and Michigan, however, August revenues were down a bit from the month prior, suggesting that retail demand may be reaching a momentary peak. Looking back to July, Colorado regulators this week reported record-breaking sales for that month. 

 

While demand remains very strong, the unprecedented wildfires burning on the West Coast have put the size and quality of the autumn harvest in question. Reports out of California this week state that fires have forced evacuations in the state’s famed Emerald Triangle. 

 

 

On top of fires destroying grow sites or product becoming unmarketable due to damage from smoke and other debris, disruptions in the supply chain will almost certainly occur. In Oregon, reports of cannabis businesses of all types being destroyed have surfaced, including testing labs and processors that are necessary for product to flow from farm to retail. Consequently, even if enough marketable product to meet demand is generated ultimately, temporary “shortages” could develop as market participants work to move inventory through damaged supply chains.

October Forward assessed up $35 to $1,495 per pound.

 

The average reported forward deal size was 27 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 38%, 37%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 30 pounds, 23 pounds, and 30 pounds, respectively.

 

At $1,495 per pound, the October Forward represents a discount of 4.8% 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:

California

Wildfires Reportedly Pushing Toward Emerald Triangle, Some Farmers Forced to Evacuate

Colorado

July Sales Rise to New Record; Total Adult-Use and Medical Revenues Top $225 Million

Oregon

Sales Dip Slightly in August, Suggesting Demand Possibly Reaching a Plateau

Michigan

Total Sales Down Slightly in August to Under $109 Million on Decrease in Medical Market, Slowing Growth in Adult-Use Sector

Illinois

Combined Adult-Use and Medical Sales Exceed $95 Million in August, a New Record

 

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

18 September 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved