August 14, 2020

U.S. Cannabis Spot Index — August 14, 2020

U.S. Cannabis Spot Index — Published August 14, 2020

U.S. Cannabis Spot Index up 0.1% to $1,518 per pound.

 

The simple average (non-volume weighted) price increased $6 to $1,768 per pound, with 68% of transactions (one standard deviation) in the $972 to $2,565 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.35 and the simple average price was $3.90.

 

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

 

The relative volume of warehouse product expanded by over 3%. The relative volume of outdoor flower contracted by the same proportion, while that for greenhouse product was unchanged.

After sales growth in legal cannabis markets across the U.S. largely slowed in June, new data this week out of Oregon, Arizona, and Illinois shows demand bouncing back and expanding in July. The U.S. Spot Index has been responding to the strong demand experienced thus far this spring and summer. In July, the national composite price averaged $1,470 per pound, up 6.4% from $1,382 per pound in June. 

 

The one caveat so far to rising July sales is Oklahoma’s medical cannabis program, which saw a downturn last month. Medical sales in Oklahoma had outpaced combined adult-use and medical revenue in Illinois in recent months, but that changed in July. Illinois’ sales leapfrogging those of Oklahoma was due to a sharp uptick in the former state’s developing recreational sector, showcasing the larger growth potential of such markets relative to medical-only ones.

 

 

As we have pointed out in prior reports, however, August appears as if it could be the turning point in determining whether cannabis is truly a recession-proof commodity. Enhanced federal protections and benefits provided by the CARES Act expired at the end of July. This has left millions at risk of eviction, in addition to dramatically reducing unemployment payments. With Congress on vacation – again – from yesterday until after Labor Day, no new stimulus measure appears to be forthcoming until autumn, if at all. If strong demand persists this month and beyond, even in the face of such headwinds, then cannabis businesses will likely feel secure despite the economic carnage occurring in other industries due to the coronavirus.

September Forward unchanged at $1,400 per pound.

 

The average reported forward deal size was 30 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 33%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 31 pounds, 25 pounds, and 33 pounds, respectively.

 

At $1,400 per pound, the September Forward represents a discount of 7.7% relative to the current U.S. Spot Price of $1,518 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

June Sales Reach Historic High for Second Straight Month, but Growth Slowed After May’s Spike

Oregon

Record Demand Resumed in July After Sales Slumped Momentarily in June

Arizona

Total Sales Volume to Patients Back on the Rise in July, Subsequent to Flattening in Prior Month

Illinois

Medical Cannabis Sales Rise to Record $33 Million in July; Total Monthly Revenue Exceeds $94 Million When Combined with Adult-Use Sales

Oklahoma

July Sales Dip to About $75 Million After Peaking in June

 

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

14 August 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

August 7, 2020

U.S. Cannabis Spot Index — August 7, 2020

U.S. Cannabis Spot Index — Published August 7, 2020

U.S. Cannabis Spot Index up 2.4% to $1,516 per pound.

 

The simple average (non-volume weighted) price increased $37 to $1,763 per pound, with 68% of transactions (one standard deviation) in the $944 to $2,581 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.34 and the simple average price was $3.89.

 

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

 

The relative volume of warehouse product expanded by over 5%. The relative volumes of greenhouse and outdoor flower contracted by about 3% and 2%, respectively.

In our report for July 24, we noted that sales data out of numerous markets showed that the dramatic expansions of demand documented in many state-legal cannabis systems had cooled. While sales continued to climb in numerous cases, they did so by much smaller magnitudes than the increases observed in March, April, and May. Some markets, such as Oregon, even saw small month-over-month downturns in June after several months of unprecedented growth. 

 

However, the first July sales figures reported out of Massachusetts and Illinois this week show a resurgence in retail revenue in the adult-use sectors of both. Each market saw month-over-month sales spikes of around 30% in July, leading to new record revenue totals. It should be noted that in Illinois, the dramatic increase in sales may be related to expanding production beginning to catch up to demand. Illinois producers have been working rapidly since last year to build out new production capacity as the state moved quickly to begin adult-use sales this year, on top of experiencing strong growth in the medical sector.

 

Another notable development is freshly-reported May sales figures from Nevada show retail revenue bouncing back strongly that month, even as tourism to Las Vegas remained down by 96% compared to the same month last year. Curbside sales and pickup orders began to be allowed in Nevada in May, after retailers were limited to sales via delivery only from late March. It appears that keeping such sales channels open can make a big impact on the ability of legal cannabis sellers to meet consumer demand.

February 2021 Forward assessed at $1,350 per pound.

 

The average reported forward deal size was 30 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 42%, 33%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 31 pounds, 26 pounds, and 33 pounds, respectively.

 

At $1,400 per pound, the September Forward represents a discount of 7.6% relative to the current U.S. Spot Price of $1,516 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 Bounce Back Strongly in May Even as Tourism Remains Almost Nonexistent

 

Massachusetts

July Adult-Use Sales Surge to New Record After Slow Restart in June

Previously Quarantined Vape Products May be Released for Sale Under New Order

Illinois

Adult-Use Revenues Jump 28% in July, Account for Almost 80% of June’s Combined Medical and Adult-Use Sales

 

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

7 August 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

July 31, 2020

U.S. Cannabis Spot Index — July 31, 2020

U.S. Cannabis Spot Index — Published July 31, 2020

U.S. Cannabis Spot Index down 0.8% to $1,480 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,726 per pound, with 68% of transactions (one standard deviation) in the $919 to $2,533 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.26 and the simple average price was $3.81.

 

The relative frequency of trades for greenhouse flower increased by 7% this week. The relative frequencies of transactions for indoor and outdoor product decreased by 4% and 3%, respectively.  

 

The relative volume of greenhouse product expanded by 4%. The relative volumes of warehouse flower contracted by the same proportion, while that for outdoor product was unchanged.

Despite the turbulence caused this year by the COVID-19 pandemic, the U.S. Spot Index has been relatively stable, while also broadly echoing the course it followed in 2019. Similar to last year, monthly average national composite prices were steady from January to February 2020, then fell in both March and April. In 2019, May saw the commencement of an upward trend in the U.S. Spot that would persist through November. This year, positive movement did not begin until June. However, with July’s monthly average U.S. Spot price of $1,470 per pound, the last two months have seen the national composite price make gains as increased, in many cases record-breaking demand has spiked sales in numerous state-legal cannabis markets. July’s monthly mean U.S. Spot is up by 6.4% from the month prior.  

 

Elevated demand has contributed to pushing wholesale flower prices above where they were observed a year ago. July 2020’s mean Spot rate represents an 11.4% year-over-year increase, from $1,320 per pound in July 2019. Prices for all three grow types are currently up compared to the same month last year, reflecting the general expansion of demand that has lifted sales of all product types.   

 

As noted, the U.S. Spot climbed through late spring, summer, and fall of last year. In normal times, the onset of August would be welcomed by cannabis retailers, as it is typically the strongest sales month of any given year in many markets, particularly adult-use ones and larger medical programs. However, as we covered in last week’s report, the most recent available sales data shows sales growth slowing, or even reversing a bit in June, after several months of sharp spikes. Whether the steadily rising sales that usually characterize the summer months will manifest this year remains to be seen, as does whether consumers and patients will maintain the elevated levels of purchasing reported recently.

August Forward closes up $25 to $1,500 per pound.

 

The average reported forward deal size was 30 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 32%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 31 pounds, 26 pounds, and 34 pounds, respectively.

 

At $1,500 per pound, the August Forward represents a premium of 1.3% relative to the current U.S. Spot Price of $1,480 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

Market Consolidation Will Not be as Rapid, Dramatic as Last Year’s M&A Announcements Suggested

Washington

Rulemaking for Required Pesticide and Heavy Metals Testing May be Delayed Further

 

Maine

Officials Reportedly Expect First Adult-Use Sales to Occur Late this Year

Rhode Island

FY2020 Medical Cannabis Sales Reach Almost $60 Million

 

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

31 July 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

July 24, 2020

U.S. Cannabis Spot Index — July 24, 2020

U.S. Cannabis Spot Index — Published July 24, 2020

U.S. Cannabis Spot Index down 0.5% to $1,492 per pound.

 

The simple average (non-volume weighted) price decreased $7 to $1,738 per pound, with 68% of transactions (one standard deviation) in the $938 to $2,538 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.29 and the simple average price was $3.83.

 

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

 

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

Sales data out of Oklahoma and Illinois showed that the dramatic growth experienced from March through May slowed in June. Increasing sales continued for the most part, albeit at a slower pace, with the exception being the medical sector of Illinois’ market, which saw a small decline in revenue last month. 

 

New data published since then shows similar trends in other states. As we detail below, sales continued to rise in Michigan, but revenue generated by the medical market largely plateaued and flower sales volume in that sector contracted slightly. In Oregon, which has seen perhaps the most stark increase in demand during the COVID-19 pandemic, sales dipped a bit in June after setting new records for three consecutive months. 

 

As reporting of sales data has a two-month lag in Colorado, it was recently revealed that May sales in the state boomed to unprecedented heights after March and April saw slowing growth. This could be related to the state beginning its “reopening” in late April, leading to more people venturing out of their homes. However, as alluded to above, stay-at-home orders did not dampen demand in other states.

 

National wholesale flower prices trended downward slightly from March through late May, despite the robust demand across nearly every sizable state market covered in our reporting. The U.S. Spot has been on the ascent since late May, which is not uncommon given that summer is typically a period of rising demand that usually peaks in August. Just as seasonal sales trends typically observed in Q2 of any given year have already been disrupted, though, the same could occur for the current quarter. 

 

While the early signs indicate that cannabis could be a recession-proof commodity, the current recession is unique and still in its early days. Many have pointed out in recent weeks that the CARES Act, passed into law in March, expires this week. The expiration of the legislation will bring to an end expanded unemployment benefits, as well as a moratorium on evictions for those with federally-backed mortgages or federally-subsidized rent, among other provisions that millions have depended on to weather the current crisis. 

 

This is taking place as the pandemic is undergoing a resurgence on the back of states loosening restrictions and reopening businesses, as well as other activities and services that were previously closed to stem the spread of the virus. Increased COVID case counts have prompted the rollback of some reopening measures and the imposition of new restrictions in some states, a trend that could expand if the virus continues to spread relatively unabated.

August Forward up $45 to $1,475 per pound.

 

The average reported forward deal size was 34 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 32%, and 23% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 39 pounds, 27 pounds, and 35 pounds, respectively.

 

At $1,475 per pound, the August Forward represents a discount of 1.2% relative to the current U.S. Spot Price of $1,492 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

May Sees Dramatic Spike in Sales After Slowing Growth in Previous Two Months

Oregon

June Sales Down 3% from May After Three Straight Months of Meteoric Growth  

 

Nevada

Trial Commenced Recently to Determine Fate of 61 New Retailer Licenses Held Up from Opening Since Late 2018

Michigan

Retailers Tally Over $90 Million in June as Adult-Use Sales Continue to Expand, Medical Market Demand Levels Off

 

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

24 July 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

July 17, 2020

U.S. Cannabis Spot Index — July 17, 2020

U.S. Cannabis Spot Index — Published July 17, 2020

U.S. Cannabis Spot Index up 4.2% to $1,501 per pound.

 

The simple average (non-volume weighted) price increased $91 to $1,745 per pound, with 68% of transactions (one standard deviation) in the $938 to $2,552 per pound range. The average reported deal size remained nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.85.

August Forward unchanged at $1,430 per pound.

 

The average reported forward deal size was 35 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 48%, 33%, and 19% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 39 pounds, 28 pounds, and 36 pounds, respectively.

 

At $1,430 per pound, the August Forward represents a discount of 4.7% relative to the current U.S. Spot Price of $1,501 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Are you a licensed market participant in the U.S. or Canada? 

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

17 July 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved