February 25, 2021

U.S. Cannabis Spot Index — February 26, 2021

U.S. Cannabis Spot Index — Published February 26, 2021

U.S. Cannabis Spot Index up 0.4% to $1,522 per pound.

 

The simple average (non-volume weighted) price increased $7 to $1,789 per pound, with 68% of transactions (one standard deviation) in the $1,009 to $2,568 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.35 and the simple average price was $3.94.

 

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

 

 

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

After declining since early November, the U.S. Spot Index has shown modest upward movement in recent weeks. With February drawing to a close, historical sales trends across most states tell us that next month will see a jump in demand, as sales typically spike in March after slowing in January and February of any given year. The further expansion of already strong demand – while sales have slowed they are still up significantly year-over-year in most markets – could continue to push the U.S. Spot higher. 

 

National wholesale price trends from recent years paint a mixed picture, however. The monthly average U.S. Spot price rose by 5.2% from February to March 2018, but declined in the same period in both 2019 and 2020, by 5.3% and 0.7%, respectively. While strong demand has reportedly strained supplies in several major markets, recently-released data and reports from market participants indicate that 2020’s outdoor harvest yielded significantly more product than the prior year, despite the historic wildfires that ravaged the West Coast. Growing conditions prior to the fires were reportedly ideal, according to statements from market participants at the time.

 

 

Ample supplies from the autumn crop may cushion the impact of March’s expected seasonal increase in demand in states where outdoor growing is prevalent. However, other markets, especially newer, developing ones such as Michigan and Illinois, could see wholesale prices on the rise again if sales trends there follow those observed in other states.

March 2021 Implied Forward closes unchanged at $1,525 per pound.

 

The average reported forward deal size was 39.2 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 37%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 53 pounds, 24 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the March Implied Forward represents a premium of 0.2% relative to the current U.S. Spot Price of $1,522 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 Would Allow Provisional Licenses to Be Extended to 2028; Over 80% of Cultivation Licenses are Provisional

Oregon

Proposed Rules Would Streamline Licensing Process, May Lead to Significant Increase in Producer Licenses

Nevada

October 2020 Sales Exceed $82 Million, a New Record for the State, As Las Vegas Tourism Saw its Highest Visitor Numbers of 2020

New Jersey

Governor Signs Enabling Legislation Into Law, Initiating Adult-Use Legalization; But No Definite Timeline for Licensing, Sales

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

26 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

February 19, 2021

U.S. Cannabis Spot Index — February 19, 2021

U.S. Cannabis Spot Index — Published February 19, 2021

U.S. Cannabis Spot Index up 0.8% to $1,515 per pound. The simple average (non-volume weighted) price increased $3 to $1,782 per pound, with 68% of transactions (one standard deviation) in the $1,007 to $2,556 per pound range. The average reported deal size decreased to 2.4 pounds. In grams, the Spot price was $3.34 and the simple average price was $3.93.

 

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

 

 

The relative volume of warehouse flower expanded by about 2% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was unchanged.

This week’s Premium Report analyzes new January sales data out of Oregon, Michigan, and Oklahoma. Although the aforementioned state markets are quite disparate (an over four-year-old licensed system serving both adult-use consumers and patients; regulated medical and adult-use markets that are mostly segregated and still developing; and a large, loosely-regulated medical-only system, respectively) they all reveal similar trends in demand in the opening month of 2021. Specifically, the elevated sales that manifested during the COVID-19 pandemic are persisting, albeit at levels lower than those observed in summer 2020. 

 

While strong demand in legal cannabis systems has continued, wholesale prices are depressed relative to 2020’s peak of $1,665 per pound, observed in late October. Data from Oregon regulators shows that outdoor growers in the state boosted production volume by over 30% from 2019 to 2020. This despite the record-breaking wildfires that burned areas of Oregon home to intensive cannabis cultivation right as the harvest period was approaching. Given this data, as well as previous anecdotal reports from other West Coast states, it is likely that outdoor growers in California and Washington were also able to bring in their fall crops for the most part and that 2020’s outdoor harvest was robust overall in terms of volume. Still, it should be noted that retail sales revenue in Oregon increased at a significantly faster rate than production volume from 2019 to 2020 – sales rose about 45% compared to the over 30% expansion in harvest volume – which may lead to rising supply side rates in the months to come as demand picks up in the spring and summer.

March 2021 Implied Forward down $15 to $1,525 per pound.

 

The average reported forward deal size was 39.8 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 36%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 53 pounds, 24 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the March Implied Forward represents a premium of 0.6% relative to the current U.S. Spot Price of $1,515 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

Recently-Introduced Bill Projected to Expand Licensed Cannabis Market by Providing Regulatory Support to Local Governments

Oregon

January 2021 Sales Rise 4% from December 2020 to Over $100 Million; Production Also Up Significantly YoY

Michigan

Both Adult-Use and Medical Sales Rose in January 2021 to Reach Combined Tally of Over $108 Million; Retail Flower Prices Drop in Both Market Sectors

Oklahoma

Steady, Strong Demand Continued Into 2021 with Almost $75 Million in Medical Cannabis Sales in January

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

19 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

February 12, 2021

U.S. Cannabis Spot Index — February 12, 2021

U.S. Cannabis Spot Index — Published February 12, 2021

U.S. Cannabis Spot Index down 0.5% to $1,503 per pound.

 

The simple average (non-volume weighted) price increased $29 to $1,779 per pound, with 68% of transactions (one standard deviation) in the $1,016 to $2,542 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.92.

 

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

 

 

The relative volume of outdoor flower expanded by about 2% this week. The relative volume of warehouse product contracted by the same proportion, while that for greenhouse flower was unchanged.

We noted last week that reports from Oregon regulators and Washington State academics both predicted that 2021 would see strong sales growth, but rates of increase would subside somewhat compared to the boom in revenues enjoyed by legal cannabis businesses in 2020. New data out of two major markets this week offers some preliminary affirmation of such projections. 

 

In Colorado, the state’s legal market racked up almost $2.2 billion in total retail sales last year. While a customary month-over-month increase in revenues was observed in December to close 2020, it was of a smaller magnitude than that seen in some recent prior years – namely 2017 and 2018, when overall annual growth rates were lower than in 2020. Medical cannabis sales data for January 2021 was also published by Arizona officials this week. Adult-use sales began on January 22 and data for that sector remains to be released. January’s medical cannabis sales show declining patient purchasing coinciding with the opening of the new adult-use market, though whether this trend will persist remains to be seen. 

 

National trends in wholesale prices have shown stability in recent weeks as sales growth has slowed compared to last summer.

Restrictions on businesses and individuals imposed due to the COVID-19 pandemic have been loosened in many states. Children are also returning to in-person school in many areas, which brings with it costs to parents for supplies, clothes, and the like. These developments may be diverting some disposable income away from being spent on legal cannabis compared to when more strict lockdowns were in place last year.

August 2021 Implied Forward initially assessed at $1,650 per pound.

 

The average reported forward deal size was 39.7 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 54 pounds, 22 pounds, and 26 pounds, respectively.

 

At $1,540 per pound, the March Implied Forward represents a premium of 1.9% relative to the current U.S. Spot Price of $1,512 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

Total Retail Sales Approached $2.2 Billion in 2020, Up 26% YoY

Arizona

Medical Cannabis Sales Slip in January; Decline in Patient Purchasing Coincided With Opening of Adult-Use Market

Maine

Adult-Use Sales Growing, But Still Modest at Under $2.5 Million in January

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

12 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

February 5, 2021

U.S. Cannabis Spot Index — February 5, 2021

U.S. Cannabis Spot Index — Published February 5, 2021

U.S. Cannabis Spot Index up 1.5% to $1,512 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,750 per pound, with 68% of transactions (one standard deviation) in the $992 to $2,508 per pound range. The average reported deal size was 2.3 pounds. In grams, the Spot price was $3.33 and the simple average price was $3.86.

 

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

 

 

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

After a tumultuous 2020, how legal cannabis markets will fare in 2021 is an open question. In this week’s Premium report, we note two studies out of major markets. In Oregon, state regulators raise the possibility of flattening demand post-COVID, combined with a potential increase in production. A study from researchers at Washington State University also predicts slowing demand growth compared to 2020’s over 20% year-over-year increase in retail sales. 

 

Official sales data for January has yet to be released by many states, but historical trends tell us that the first two months of any given year are typically periods of relatively low demand. Sales figures out of Illinois show that growth in the adult-use sector continued in January, but the pace of increase subsided compared to the large uptick seen in December. 

 

 

Sales are reportedly brisk in Arizona, the country’s newest functioning adult-use market. However, a member of our Price Contributor Network – a vertically integrated operation encompassing cultivation, product manufacturing, and multiple storefronts – this week told Cannabis Benchmarks that the company was keeping all of its flower in-house to supply its own retailers. Additionally, while they noted that wholesale sales of extracts and edibles had increased, they stated prices for such products remained relatively constant. As we have reported previously, production in Arizona’s long standing medical market is robust, with no capacity limits for cultivators. This should prevent, or at least ameliorate, the supply crunch seen in many new adult-use markets, at least in the near term.

August 2021 Implied Forward initially assessed at $1,650 per pound.

 

The average reported forward deal size was 39.7 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 54 pounds, 22 pounds, and 26 pounds, respectively.

 

At $1,540 per pound, the March Implied Forward represents a premium of 1.9% relative to the current U.S. Spot Price of $1,512 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

State Report Shows Surging Demand During COVID Helped Balance Market, But 2021 Outlook Suggests Continued Expansion of Supply

Washington

University Study States Sales Rose 21% from 2019-2020; 15% Growth Projected for 2021

Proposed Legislation Would Allow Small Cultivators to Gain New Licenses, Expand Production Capacity, and Sell Directly to Consumers On-Site

Illinois

Adult-Use Sales Expanded Again in January, While Medical Sales Declined

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

5 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved

January 29, 2021

U.S. Cannabis Spot Index — January 29, 2021

U.S. Cannabis Spot Index — Published January 29, 2021

U.S. Cannabis Spot Index up 0.2% to $1,489 per pound.

 

The simple average (non-volume weighted) price increased $13 to $1,762 per pound, with 68% of transactions (one standard deviation) in the $998 to $2,526 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.28 and the simple average price was $3.88.

 

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

 

 

The relative volume of outdoor flower expanded by almost 3% this week. The relative volume of greenhouse product contracted by the same proportion, while that for indoor flower was unchanged.

The U.S. Spot Index averaged $1,495 per pound in January to open 2021, down by 1.9% from December 2020’s mean composite price of $1,524 per pound. The overall decline has been driven by downturns in California, Colorado, and Oregon, with increased trading volumes of outdoor product from the fall harvest largely behind the downward trend that commenced in early November. However, national wholesale prices have stabilized in recent weeks, coinciding with reports of lower trading volumes for outdoor-grown flower. 

 

Even with the U.S. Spot trending downward over the last three months, it remains elevated compared to a year ago. January 2021’s monthly mean price represents a year-over-year increase of 5.7%, from $1,415 per pound in January 2020. As we documented over the course of last year, a surge in demand during the COVID-19 pandemic boosted sales to record levels in many states, straining supplies in both new and more mature markets.

February Implied Forward closes unchanged at $1,500 per pound.

 

The average reported forward deal size was unchanged at 39.6 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 34%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 55 pounds, 21 pounds, and 26 pounds, respectively.

 

At $1,500 per pound, the February Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $1,489 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

Adult-Use Market Opened One Week Ago, With Over 100 Medical Dispensaries Approved to Sell to General Consumers

California

San Diego County Votes to Allow Licensed Cannabis Businesses in Unincorporated Areas, Reversing Previous Ban

Oregon

Proposed Changes to Required Testing Would Lower Frequency of Mandatory Screenings for Cultivators

Illinois

Officials Reportedly Moving Forward to Issue New Adult-Use Licenses Delayed Since Last Year

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

29 January 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved