July 22, 2022

U.S. Cannabis Spot Index — July 22, 2022

U.S. Cannabis Spot Index — Published July 22, 2022

The U.S. Cannabis Spot Index increased 1.0% to $1,069 per pound.

 

The simple average (non-volume weighted) price increased $9 to $1,345 per pound, with 68% of transactions (one standard deviation) in the $589 to $2,101 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $2.36 and the simple average price was $2.97.

 

The relative transaction frequency of indoor product fell 2%, while that of deals for greenhouse product rose 1%. Outdoor transaction frequency was unchanged.

 

 

The relative volume of indoor product fell 2%, while that of greenhouse flower rose 1%. Outdoor flower’s relative volume rose 2%.

 

The Cannabis Benchmarks U.S. Spot Index inched up $11 this week to trade just under $1,070 per pound, even as legacy state spot prices mostly saw declines. California spot was off $10, Colorado spot was off $12, and Washington State spot shed $30 this week.

 

Among the newer states, the most expensive marijuana is still found in Illinois, where spot price was off $17 this week, trading just over the $3,500 handle. As long as the market remains an oligopoly, prices will remain near the top of the heap. Michigan prices remain under pressure, dropping just over $40 pound this week.

 

Massachusetts spot price fell through the $2,100 per pound level two weeks ago and remains in a steep downtrend. The market is massively oversold by any technical measure, but it is hard to see how the market rebounds without a base – prices trading in a tight range for several weeks in a row. The pressure on Massachusetts is only going to increase as more states in the Northeast open adult use sales over the next year or so.

 

The sand states were mostly lower, with New Mexico dropping $21 in the week, and Arizona sheddding $38 per pound. Nevada spot slid $12 while the Oklahoma spot built some decent support , but still slid $5 per pound this week. 

 

August 2022 Implied Forward assessed down $15 to $1,070 per pound.

 

The average reported forward deal size was 87 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 48%, 34%, and 18% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 90 pounds, 94 pounds, and 66 pounds, respectively.

 

 

At $1,070 per pound, the August 2022 Implied Forward represents a premium of 0.1% relative to the current U.S. Spot Price of $1,069 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

The Future is Now In Humboldt County – Interview

Colorado

May Adult Use Sales Drop 19.2% Year-on-Year

Michigan

June Cannabis Sales Surge, Up 25.8% Year-on-Year

Massachusetts

Adult Use Sales Inch up 1.4% in June Even as Prices Drop

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

22 July 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

July 8, 2022

U.S. Cannabis Spot Index — July 15, 2022

U.S. Cannabis Spot Index — Published July 15, 2022

The U.S. Cannabis Spot Index increased 1.3% to $1,058 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,336 per pound, with 68% of transactions (one standard deviation) in the $610 to $2,062 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $2.33 and the simple average price was $2.95.

 

The relative transaction frequency of indoor product rose 1%, while that of deals for greenhouse product was unchanged. Outdoor transaction frequency rose 1%.   

   

 

The relative volume of indoor product was unchanged, while that of greenhouse flower rose 2%. Outdoor flower’s relative volume fell 2%.

 

This week’s Premium Report contains analysis illustrating the effects of the opening of legal adult use cannabis markets on medical cannabis prices, patient populations, and sales volumes in selected states. The states in question – Colorado, Arizona, Michigan, and Illinois – were selected due to the availability of official data, in addition to the related fact that all hosted licensed and regulated medical cannabis markets prior to the start of legal adult use sales. (On the other hand, states such as California, Oregon, and Washington legalized medical cannabis prior to standing up adult use commerce, but the medical cannabis markets in those states were largely informal and untracked.)  

 

Due to significant differences in the maturity, size, and regulatory structures of the cannabis markets under discussion, it is not prudent to attempt to divine any single overarching effect of adult use sales on pre-existing medical cannabis commerce. Consequently, the data included in the Premium Report should be taken as individual case studies, rather than being representative of definitive trends that can be predictive for future scenarios. 

 

That said, by comparing the states under discussion with those with analogous features, the data contained in this report could be used to extrapolate potential courses that price, patient counts, and sales volumes may take in states with medical cannabis programs that have recently or will in the future open licensed adult use markets.

 

To learn more about the Cannabis Benchmarks Premium Report, click here.

 

August 2022 Implied Forward assessed down $15 to $1,085 per pound.

 

The average reported forward deal size was 89 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 47%, 35%, and 18% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 91 pounds, 95 pounds, and 70 pounds, respectively.

 

 

At $1,085 per pound, the August 2022 Implied Forward represents a premium of 2.5% relative to the current U.S. Spot Price of $1,058 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:

Special Analysis

Adult Use Legalization’s Impact on Medical Markets in Colorado, Arizona, Michigan, Illinois

Montana

June Sales Up Slightly MoM, But Remain Down from Spring

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

15 July 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — July 8, 2022

U.S. Cannabis Spot Index — Published July 8, 2022

The U.S. Cannabis Spot Index decreased 1.2% to $1,044 per pound.

 

The simple average (non-volume weighted) price decreased $21 to $1,333 per pound, with 68% of transactions (one standard deviation) in the $594 to $2,073 per pound range. The average reported deal size was 2.4 pounds. In grams, the Spot price was $2.30 and the simple average price was $2.94.

 

The relative transaction frequency of indoor product rose 1%, while that of greenhouse product fell1%. Outdoor transactions were unchanged.  

    

 

The relative volume of indoor grown rose 1%, while that of greenhouse flower was unchanged. Outdoor volume fell 1%.  

 

The most expensive wholesale adult use cannabis markets tracked by Cannabis Benchmarks are Alaska, Illinois, Maine, Massachusetts, Nevada, and New Mexico. Every state market saw a rise in cannabis prices leading into adult use legalization and a drop in price as markets became well supplied. The common factor among the most expensive markets is non-existent or limited outdoor supply, along with other state-specific factors.

 

Massachusetts regulators say they encourage outdoor cultivation through various license incentives. However, the market is certainly not flooded with outdoor flower and, given the state’s climate, it is doubtful outdoor growers will be able to produce supply sufficient to challenge the indoor market monopoly. Massachusetts prices have undergone a brutal sell-off this year, losing 39% in the spot market in what has been characterized as a money raising effort by large firms needing to pay down expansion costs. 

 

Illinois cannabis is likely to remain at the top of the most expensive cannabis markets due to limited licensing, licensing delays due to lawsuits, and the fact that the state is surrounded by states with no legal adult use cannabis market. Additionally, outdoor cultivation is not permitted in the state. Illinois spot has also tanked this year despite growing demand and a monopolized market. There is some that speculation large players in this market needed to raise money and did so by shedding inventory on a massive scale.

 

Alaska prices remain high due to the lack of significant outdoor product and the presence of a tax-induced hard floor under price. As well, contacts in the state say customers prefer very high THC potency, the demand for which is crowding out less expensive product. While local option rules have restricted retail locations, price competition remains well above the tax-determined hard floor of $800 per pound of flower. Alaska spot price did sell off this spring, dropping from over $3,600 down to near $2,800 per pound, but there has been a bit of a rebound to just over $2,900 per pound as tourists return in a post-pandemic rush. 

 

Nevada cannabis prices have remained within a $400 per pound range since February 2021, holding steady as the end of pandemic economic support met with a surge in jobs and a return to post-pandemic tourism figures. Local contacts say there is some outdoor product in the market, although it does not appear to have significantly affected spot pricing. 

 

These states are likely to remain at the top end of cannabis prices unless state-specific rules change or outdoor growers proliferate due to a combination of innovation and / or massive land and licensing investment.

 

August 2022 Implied Forward assessed down $25 to $1,100 per pound.

 

The average reported forward deal size was 90 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 35%, and 19% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 94 pounds, 95 pounds, and 69 pounds, respectively.

 

 

At $1,100 per pound, the August 2022 Implied Forward represents a premium of 5.3% relative to the current U.S. Spot Price of $1,044 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:

New Mexico

June Sales Soften; 2nd Straight Decline After Adult Use Market Opened in April

Oregon

June Harvest Drops YoY for the First Time

Nevada

April Sales Return to Trend, Down 7.6%

Illinois

June Sales Slip 2.3%

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

8 July 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

July 1, 2022

U.S. Cannabis Spot Index — July 1, 2022

U.S. Cannabis Spot Index — Published July 1, 2022

The U.S. Cannabis Spot Index decreased 0.9% to $1,057 per pound.

 

The simple average (non-volume weighted) price decreased $17 to $1,354 per pound, with 68% of transactions (one standard deviation) in the $591 to $2,118 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.33 and the simple average price was $2.99.

 

The relative transaction frequency of indoor product fell 1%, while those of greenhouse and outdoor product were essentially unchanged.      

 

 

The relative volumes of each grow type were stable from last week.

 

U.S. Spot price is down $10 this week to $1,057 per pound as legacy and newer markets continue to catch a shellacking from various combinations of oversupply, abundant competition, and uncapped licensing.  

 

Prices for outdoor flower in legacy states remain in a strong downtrend. Prices for this most abundant grow type will likely form the basis for an eventual futures contract, This would greatly benefit the industry, allowing for hedging against price fluctuations and creating price – and profit – certainty.

 

January 2023 Implied Forward initially assessed at $1,075 per pound.

 

The average reported forward deal size increased to 91 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 36%, and 19% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 96 pounds, 96 pounds, and 69 pounds, respectively.

 

 

At $1,125 per pound, the August 2022 Implied Forward represents a premium of 6.4% relative to the current U.S. Spot Price of $1,057 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

Legislature Bids Farewell to Cultivation Tax

Cannabis Businesses Take on Prop 64 Opt-Out Towns

New York

New York Opens Processor Licensing Window

National

Hopes Rise for SAFE Banking Act Passage

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

1 July 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved

June 24, 2022

U.S. Cannabis Spot Index — June 24, 2022

U.S. Cannabis Spot Index — Published June 24, 2022

The U.S. Cannabis Spot Index decreased 0.1% to $1,067 per pound.

 

The simple average (non-volume weighted) price increased $9 to $1,371 per pound, with 68% of transactions (one standard deviation) in the $590 to $2,152 per pound range. The average reported deal size decreased to 2.5 pounds. In grams, the Spot price was $2.35 and the simple average price was $3.02.

 

The relative transaction frequency of indoor product was up 1%, while that of greenhouse product fell 1%. Outdoor transaction frequency was unchanged on the week. 

    

 

The relative volume of indoor flower rose 1%, that of greenhouse flower fell 1%, and that of outdoor flower was unchanged.

 

The Cannabis Benchmarks U.S. Spot Index barely moved this week. The national wholesale flower price lost $1 to end the week at $1,067 due to a mixed performance among legacy and high population states with younger markets. 

 

Narrowing spot price losses in legacy states is a sign that volatility is draining from the market as seasonal demand starts to pick up. Lower volatility typically means the downside is losing steam and subsequent small moves higher can form the basis of a rebound in price. 

 

Fundamental factors are keeping legacy state cannabis markets from making much headway with oversupply in the outdoor market, which is creating price contagion in the indoor and greenhouse markets. Anecdotally, there is evidence the market is also weighed down by large cannabis operators selling into falling markets, though recent price action suggests sales to raise money for business expenses are dissipating in states like Massachusetts, Illinois, and Michigan. 

 

From an economic perspective, cannabis purchases are largely discretionary – items we like, but do not have to have. With topline inflation – food and energy prices – pressing consumers, the pullback in discretionary spending is the rational response. Pandemic related wage increases were 8% according to the U.S. Department of Labor. Inflation was running at 8.6% in May. The back of the envelope calculation is a 0.6% loss in wages year-on-year. Personal consumption expenditures have been increasing due to inflation, not wage increases, and because of “base effects” – measuring against pandemic-induced loss of wages – subsequent measures may be lower in the coming months.

 

 

As the U.S. economy starts to shrink in response to higher interest rates, falling wages, and lower consumer spending, some businesses will not weather the triple whammy of these effects. The aftermath of such economic stressors has typically included the shuttering of businesses and shrinking of inventories as inefficient businesses fall in the wake of economic stressors. After the cannabis industry weathers the vicissitudes of the larger economy, it is likely the industry will emerge more efficient, thus stronger and better able to navigate subsequent economic headwinds.

 

July 2022 Implied Forward assessed down $70 to close at $1,075 per pound.

 

The average reported forward deal size decreased to 84 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 37%, and 18% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 88 pounds, 88 pounds, and 67 pounds, respectively.

 

 

At $1,075 per pound, the July 2022 Implied Forward represents a premium of 0.8% relative to the current U.S. Spot Price of $1,067 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

Large Cultivation Licenses to Become Available in 2023

Michigan

May Sales Down Slightly, Retain Most of April Surge

Arizona

Sales Soften in April as Indoor Flower Price Dives

Washington

State Economists Project Cannabis Demand to Steady at Below Pandemic Levels

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

24 June 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved