May 21, 2021

U.S. Cannabis Spot Index — May 21, 2021

U.S. Cannabis Spot Index — Published May 21, 2021

U.S. Cannabis Spot Index down 0.1% to $1,568 per pound.

 

The simple average (non-volume weighted) price increased $4 to $1,802 per pound, with 68% of transactions (one standard deviation) in the $1,027 to $2,577 per pound range. The average reported deal size was nominally unchanged at 2.3 pounds. In grams, the Spot price was $3.46 and the simple average price was $3.97.

 

The relative frequencies of trades for each grow type were essentially unchanged from last week.    

 

 

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

Cannabis Benchmarks has followed demand trends in the major markets we cover for several years. As we have documented for in excess of the past year, retail sales in legal cannabis markets across the U.S. boomed beginning in March 2020, as consumers and medical patients accelerated their purchasing from licensed outlets during the COVID-19 pandemic. Additionally, new adult-use systems in populous states like Michigan and Illinois began ramping up after opening in late 2019 and the beginning of 2020, respectively. 

 

Collective monthly retail revenue tallies from the 10 states with the largest markets for which Cannabis Benchmarks provides price assessments – California, Colorado, Oregon, Washington, Nevada, Michigan, Illinois, Massachusetts, Arizona, and Oklahoma – illustrate the dramatic expansion of cannabis demand captured by legal markets from 2020 to 2021. The following figures are derived primarily from official state data, but also include Cannabis Benchmarks estimates, and, in the case of monthly sales figures for California and Washington, research from Hedgeye Risk Management. 

 

In March 2020, combined retail sales from the 10 markets noted above totaled $1.01 billion. A year later, March 2021 saw the legal cannabis systems in the same states generate $1.53 billion in sales, a 51.5% year-over-year increase. 

 

April 2020 saw nine of the 10 states listed above combine to generate $993.2 million in retail revenue (adult-use retailers in Massachusetts were compelled to close in April 2020 as part of the state’s COVID-19 response), a figure that we estimate will rise to about $1.56 billion in April 2021, once sales from all states under discussion are documented. This would represent a 57.1% year-over-year spike. 

 

Many of the aforementioned markets saw sales records established in the early months of the pandemic. The sales data above shows that demand continued to grow to even more elevated levels, where it has stayed. Yet, even as demand expanded dramatically and rapidly, the year-over-year increase in the national composite wholesale flower price in the same period has not matched the magnitude of the sales boom. From March 2020 to March 2021, the monthly average U.S. Spot price rose by 9.2% from $1,381 to $1,508 per pound. The national volume-weighted composite price climbed by 11.7% from April 2020 to April 2021, from $1,367 to $1,527 per pound, a rate of increase that is only about one-fifth of that observed in the retail revenue data. 

June 2021 Implied Forward unchanged at $1,585 per pound.

 

The average reported forward deal size was 51.7 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 65 pounds, 41 pounds, and 27 pounds, respectively.

 

At $1,585 per pound, the June Implied Forward represents a premium of 1.1% relative to the current U.S. Spot Price of $1,568 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

10 Largest Markets for Which Cannabis Benchmarks Assesses Prices Tally Over $1.5 Billion in Combined Sales in Both March & April 2021, Up Over 50% YoY

Colorado

New Bill Would Limit Concentrate Purchasing by Registered Patients, Impose New Packaging Requirements for Concentrates in Medical and Adult-Use Markets

Michigan

April’s Combined Adult-Use and Medical Sales Climb to New Record of Over $153 Million

Legalization Updates

Montana Governor Signs Bill to Implement Adult-Use Legalization; Sales to Begin January 2022

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

21 May 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

May 14, 2021

U.S. Cannabis Spot Index — May 14, 2021

U.S. Cannabis Spot Index — Published May 14, 2021

U.S. Cannabis Spot Index up 0.4% to $1,571 per pound.

 

The simple average (non-volume weighted) price increased $36 to $1,798 per pound, with 68% of transactions (one standard deviation) in the $1,027 to $2,568 per pound range. The average reported deal size was 2.3 pounds. In grams, the Spot price was $3.46 and the simple average price was $3.96.

 

The relative frequency of transactions for greenhouse flower increased by 2% this week. The relative frequencies of deals for indoor and outdoor product contracted by 1% each.

   

 

The relative volume of greenhouse flower expanded by 1% this week. That for outdoor product contracted correspondingly, while the relative volume of warehouse flower was unchanged.

Prior to this week, the recent upward trend of the U.S. Spot Index has been driven primarily by rising wholesale flower prices in California, which is by far the country’s largest market. Apart from Nevada, rates for flower in other large state cannabis markets in the western U.S. have been observed to be relatively stable or trending down. Additionally, Michigan’s state Spot price is on the downswing as production continues to expand. Similarly, composite prices in Illinois and Massachusetts are down compared to the end of 2020. 

 

In this week’s Premium Report, we detail tax collection data that shows the large expansion that took place in the Golden State’s licensed system in 2020. Interestingly, the data shows that less product entered the state’s wholesale market in Q4 than in Q3 2020, despite the autumn harvest taking place in the final quarter of the year. 

 

 

Whether this observation reflects a smaller outdoor crop remains to be seen; 2021 data has not yet been made available. Last year’s harvest may have been slow to be sold into the regulated market, as tax data indicates that demand in California subsided in Q4 2020 as well. In previous reports, we noted that accounts from market participants suggested that the state’s fall crop was largely spared from the record-setting wildfires that burned parts of the Emerald Triangle. In Oregon, growers collectively posted record-setting harvest numbers despite facing the same adversity and wholesale flower prices have begun to trend upward slightly in recent weeks.

June 2021 Implied Forward unchanged at $1,585 per pound.

 

The average reported forward deal size was 52.1 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 33%, and 13% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 65 pounds, 41 pounds, and 27 pounds, respectively.

 

At $1,585 per pound, the June Implied Forward represents a premium of 0.9% relative to the current U.S. Spot Price of $1,571 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

State Cannabis Tax Collections Increased 63% from 2019 to 2020

Colorado

Total Year-to-Date Sales Through March Up 28% Compared to Q1 2020, Outpacing Last Year’s Accelerated Growth During COVID

Arizona

Sales Volume of Concentrates, Extracts in Medical Market Continued to Grow in April as Other Product Categories Saw Declines

Oklahoma

March’s Medical Cannabis Sales Rise to Over $89M as Patient Count Has Plateaued and Declined Slightly in Recent Months

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

14 May 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

May 7, 2021

U.S. Cannabis Spot Index — May 7, 2021

U.S. Cannabis Spot Index — Published May 7, 2021

U.S. Cannabis Spot Index up 0.7% to $1,565 per pound.

 

The simple average (non-volume weighted) price decreased $9 to $1,762 per pound, with 68% of transactions (one standard deviation) in the $1,008 to $2,515 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.45 and the simple average price was $3.88.

 

The relative frequencies of trades for each grow type were largely stable from last week.  

 

 

The relative volumes of greenhouse and outdoor flower both expanded by less than 1% each this week, with that for warehouse product contracting correspondingly.

As we noted last week, the U.S. Spot Index last month broke with behavior observed in prior years, as April’s monthly average composite price rose from March. New data out of several states this week shows that demand continued to be robust in April and outpaced March’s monthly sales in the states under discussion. While the 4/20 holiday falls in April, historical data shows total sales for the month frequently come in lower than March’s. 

 

However, the trend of a downturn in monthly sales in April was bucked in Oregon, as well as in the younger markets of Massachusetts and Illinois, which continue to see demand expand and reach new records nearly every month. Wholesale flower prices in Oregon and Massachusetts were also on the rise in April, after they leveled off or declined late in 2020 and early this year. 

 

 

Some U.S. and state officials are postulating that daily life may return to normalcy in the coming months as rates of vaccination against COVID-19 increase. How that might impact legal cannabis demand is somewhat uncertain. More options for consumers to spend their disposable income as states across the country move to lift restrictions suggests that spending on cannabis could be squeezed. However, the persistence of robust monthly sales figures posted out of states with diverse market conditions has so far refuted that notion. Similarly, very high unemployment and income uncertainty for millions of Americans last year did not dent booming demand for legal cannabis, which appears as if it could be part of the new post-COVID “normal.”

November 2021 Implied Forward initially assessed at $1,625 per pound.

 

The average reported forward deal size was 51.6 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 33%, and 13% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 64 pounds, 40 pounds, and 27 pounds, respectively.

 

At $1,585 per pound, the June Implied Forward represents a premium of 1.3% relative to the current U.S. Spot Price of $1,565 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

Sales Reach Another Record High in April, but Annual Growth Rates Have Slowed Compared to 2020

Massachusetts

Adult-Use Sales Reach New Peak in April, Clearing $100M for the Second Straight Month

Illinois

Total Adult-Use & Medical Sales Climb to Over $150M in April

Nevada

February Demand Contracts Month-Over-Month, Even As Las Vegas Tourism Increased Notably

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

7 May 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

April 30, 2021

U.S. Cannabis Spot Index — April 30, 2021

U.S. Cannabis Spot Index — Published April 30, 2021

U.S. Cannabis Spot Index up 2.5% to $1,554 per pound.

 

The simple average (non-volume weighted) price decreased $1 to $1,770 per pound, with 68% of transactions (one standard deviation) in the $1,011 to $2,530 per pound range. The average reported deal size was 2.2 pounds. In grams, the Spot price was $3.43 and the simple average price was $3.90.

 

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

 

 

The relative volumes of greenhouse and outdoor flower both contracted marginally this week, with that for warehouse product expanding slightly.

The U.S. Spot Index rose to a year-to-date peak this week to touch its highest point since late November 2020, when a fall harvest-related decline in national wholesale flower prices commenced. Additionally, after the monthly average U.S. composite price was largely stable from February to March, April saw the U.S. Spot average $1,527 per pound, an increase of 1.3% from the previous month. 

 

The gradual upward trend in wholesale flower prices to begin Q2 2021 contrasts with behavior observed last year, when the U.S. Spot slid downward from mid-February through late May. At that time, the COVID-19 pandemic was just arriving and beginning to take hold in America, and market participants faced significant uncertainty as to how consumer demand for cannabis would respond. 

 

 

Now, however, legal cannabis businesses have experienced roughly a year of elevated demand, while historical trends indicate that sales will continue to increase in the coming months. Newer markets in higher-population states continue to expand as well. Meanwhile, the first full month of adult-use sales in Arizona saw the state’s licensed businesses post impressive total revenue figures, but also suggested significant room for growth in the new recreational sector.

May 2021 Implied Forward closes at $1,550 per pound.

 

The average reported forward deal size was 51 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 33%, and 13% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 63 pounds, 41 pounds, and 27 pounds, respectively.

 

At $1,550 per pound, the May Implied Forward represents a discount of 0.2% relative to the current U.S. Spot Price of $1,554 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:

Arizona

Combined Adult-Use and Medical Cannabis Sales Reach Over $93.5 Million in February; Medical Revenues Still Significantly Higher in First Full Month of Recreational Sales

Oklahoma

February Medical Cannabis Sales Rise to Almost $85 Million, Up 9% from January

Michigan

Licensing Adult-Use Businesses in Detroit Delayed Until at Least Late May by Litigation; City Officials May Scrap Licensing Ordinance Altogether if Social Equity Program Struck Down by Court

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

30 April 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

April 23, 2021

U.S. Cannabis Spot Index — April 23, 2021

U.S. Cannabis Spot Index — Published April 23, 2021

U.S. Cannabis Spot Index down 0.8% to $1,516 per pound.

 

The simple average (non-volume weighted) price increased $2 to $1,771 per pound, with 68% of transactions (one standard deviation) in the $1,005 to $2,538 per pound range. The average reported deal size was 2.3 pounds. In grams, the Spot price was $3.34 and the simple average price was $3.90.

 

The relative frequencies of trades for each grow type were essentially unchanged from last week.  

 

 

The relative volume of greenhouse flower contracted by about 2% this week. The relative volumes of indoor and outdoor product each expanded by about 1%.

New data this week out of Michigan shows that the state’s young adult-use market saw a sales boom in March. Combined with revenue generated by medical cannabis dispensaries, total legal cannabis sales in Michigan reached over $145 million. Notably, Michigan’s March sales outpaced by a significant measure the over $109 million in revenue racked up by licensed retailers in Oregon in the same month, despite Michigan’s adult-use market being open for fewer than 18 months, making it roughly three years younger than Oregon’s. 

 

As we have noted in our reports throughout this month, the younger markets of Massachusetts, Illinois, and Michigan are now seeing sales comparable to or in excess of those out of more mature, but less-populated Western states, such as Oregon and Nevada. Despite rapidly-climbing sales, however, the state Spot Indices of Illinois and Michigan have both trended downward so far this year, indicating that production capacity in each state continues to ramp up and is better meeting demand compared to a year ago. 

 

 

The U.S. Spot has exhibited modest gains this month on the back of rising supply side rates in California and Arizona. Producers in Arizona are still building out additional production capacity after a faster-than-expected start to adult-use sales. California’s composite price has been lifted in part by the robust premium commanded by indoor-grown flower in the state, which is unique amongst other large Western markets.

May 2021 Implied Forward unchanged at $1,550 per pound.

 

The average reported forward deal size was 51 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 33%, and 13% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 63 pounds, 41 pounds, and 27 pounds, respectively.

 

At $1,550 per pound, the May Implied Forward represents a premium of 2.2% 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:

Colorado

Denver Approves Cannabis Delivery, Lifts Business License Cap for Social Equity Applicants in New Legislation

Michigan

Monthly Adult-Use and Medical Cannabis Sales Spike 38% in March to Total Over $145 Million

Arizona

Newly Awarded Adult-Use Licenses Will Bring Storefronts to Rural Areas and Increase Statewide Production Capacity

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

23 April 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved