December 23, 2020

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

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

U.S. Cannabis Spot Index down 1.5% to $1,506 per pound.

 

The simple average (non-volume weighted) price decreased $8 to $1,808 per pound, with 68% of transactions (one standard deviation) in the $1,076 to $2,540 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.32 and the simple average price was $3.99.

 

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

 

 

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

The U.S. Spot Index closed 2020 at $1,506 per pound, up 7.8% from the rate of $1,397 per pound observed at the outset of the year. However, the final two months of this year saw the national composite price decline after climbing steadily from late May through late October. The U.S. Spot averaged $1,524 per pound in December, off by 6% from November’s monthly mean of $1,621 per pound. National wholesale flower prices were pulled down by falling rates in some of the largest markets, such as California, Colorado, and Oregon, while upward trends in states like Nevada and Michigan subsided in the final month of the year. 

 

For 2020 overall, the U.S. Spot averaged $1,471 per pound, up 15.6%, or almost $200, from 2019’s annual mean composite price of $1,273 per pound. 2020 is the second consecutive year in which the U.S. Spot’s annual average exceeded that from the year before, after national wholesale prices declined from 2016 through 2018. 

 

 

Growth in existing markets – including California, Colorado, Oregon, and others – fueled in large part by expanded demand observed during the COVID-19 pandemic this year, pushed up wholesale prices in 2020. The establishment and growth of new and younger adult-use systems in Massachusetts, Michigan, and Illinois also injected more high-priced transactions for wholesale flower into our data than have been observed in prior years.

January 2021 Implied Forward down $40 to $1,500 per pound.

 

The average reported forward deal size was unchanged at 36.5 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 36%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 54 pounds, 21 pounds, and 23 pounds, respectively.

 

At $1,500 per pound, the January Implied Forward represents a discount of 0.4% relative to the current U.S. Spot Price of $1,506 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

Exclusive State Data Shows Volume of Flower, Trim, Fresh Plants Traded Wholesale in California from 2018 through Q3 2020

Colorado

State Spot Index Closes the Year Down Almost $200 from Late October Peak

Nevada

Wholesale Flower Prices Leveled Off in Final Two Months of the Year After Previously Climbing on Strong Summer Demand

Arizona

Monthly Average Spot Index Jumps Over 8% in December with Adult-Use Sales Expected to Begin in March or April 2021

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

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

December 18, 2020

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

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

U.S. Cannabis Spot Index up 0.4% to $1,530 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,816 per pound, with 68% of transactions (one standard deviation) in the $1,084 to $2,548 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.37 and the simple average price was $4.00.

 

This week’s national transaction stats were essentially stable from last week. Members of our Price Contributor Network in Oregon pointed out this week that wholesale purchasing has subsided recently, in part due to the slowdown in sales we have noted in recent months. Additionally, due to section 280E of the Internal Revenue Code, which prohibits cannabis operations from deducting many expenses that are available for traditional businesses, it is more favorable for tax purposes for dispensaries and retailers to have less inventory on hand at the close of the calendar year.

The U.S. Spot Index is currently trending downward for the first time since earlier this year, when it largely declined from mid-February through late May. Interestingly, the course of the national composite price this year has broadly echoed that observed in 2019, despite the disruption of the COVID-19 pandemic, as well as the opening or expansion of what have become significant new markets in 2020. In both 2019 and 2020, the U.S. Spot trended downward through Q1 and into Q2 before ascending through the late spring, summer, and early autumn. Also like last year, the national average rate for flower has turned downward after rising into the midst of the outdoor harvest season. In 2019 the U.S. Spot peaked in mid-November; this year the current year-to-date high was observed in late October. 

 

 

Looking ahead, early reports from the West Coast suggest that damage and losses suffered by this year’s autumn crop from the devastating wildfire season may not be as severe as was feared just a couple months ago. Retailers are at this point likely stocked up for what has become a customary holiday season sales boost, but the first two months of any given year typically bring with them declining demand until retail revenues pick back up again in March. While the coronavirus and accompanying restrictions led to some departures from established monthly sales trends, this autumn and early winter has seen demand subside, in line with historical observations. The commencement of adult-use sales in Arizona, which are expected to begin in March or April 2021, are providing some upward pressure on national wholesale prices already, but it has not been sufficient to stop the downward direction of the U.S. Spot.

January 2021 Implied Forward down $25 to $1,540 per pound.

 

The average reported forward deal size was 36.5 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 36%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 54 pounds, 21 pounds, and 23 pounds, respectively.

 

At $1,540 per pound, the January Implied Forward represents a premium of 0.7% relative to the current U.S. Spot Price of $1,530 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

Report: Early Accounts Indicate Outdoor Harvest Largely Unscathed by Wildfires

Colorado

Taxes on Transfers of Flower by Adult-Use Cultivators to Integrated Retailers Will Increase by Over 30% in Q1 2021

Oregon

Ongoing Investigations Into Vape Products Will Result in Some Inventory Removed from Circulation

Michigan

Detroit to License Adult-Use Retailers as Soon as June 2021

Arizona

State Officials Already Issued Initial Draft Rules for New Adult-Use Market, More Iterations Expected in Coming Weeks

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

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

December 11, 2020

U.S. Cannabis Spot Index — December 11, 2020

U.S. Cannabis Spot Index — Published December 11, 2020

U.S. Cannabis Spot Index down 0.6% to $1,524 per pound.

 

The simple average (non-volume weighted) price decreased $21 to $1,813 per pound, with 68% of transactions (one standard deviation) in the $1,091 to $2,536 per pound range. The average reported deal size decreased from 2.5 pounds to 2.4 pounds. In grams, the Spot price was $3.36 and the simple average price was $4.00.

 

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

 

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

New sales data out of several states confirms our previous analysis that demand has subsided since late summer. In Colorado, total sales declined for the third straight month in October, but were still up by over 30% compared to 2019. September saw retail revenues in Nevada decrease, even despite a rise in the number of tourists visiting Las Vegas. 

 

Additionally, in states with newer adult-use markets – namely Massachusetts and Illinois – November sales saw a downturn after steady growth in both states earlier this year. However, the declines were relatively small. In the case of Illinois’ adult-use sector, average daily sales in November were up compared to October, but growth has slowed. 

 

 

While it appears that the COVID-related wave of increasing cannabis demand crested around July or August in most states, monthly retail revenue figures remain elevated. In other words, recent decreases in demand do not mean that sales have fallen to pre-coronavirus levels. Wholesale flower prices reflect continued strong demand. National prices for product of each grow type have remained relatively stable during the autumn, although a slight downward trend has developed for outdoor flower in particular. The recent downturn of the U.S. Spot, meanwhile, is due to expanded volumes of lower-priced outdoor product being traded in the West Coast states and Colorado.

January 2021 Implied Forward unchanged at $1,565 per pound.

 

The average reported forward deal size was 35 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 45%, 34%, and 22% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 50 pounds, 21 pounds, and 28 pounds, respectively.

 

At $1,565 per pound, the January Implied Forward represents a premium of 2.7% relative to the current U.S. Spot Price of $1,524 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 Sales Decline for Third Straight Month in October to Just Under $200M, Still Up 33% YoY

Nevada

September Retail Revenue Down 3.5% MoM to $76.7M, Despite Increase in Tourism that Month

Massachusetts

November Adult-Use Sales Slip 8.5% from Prior Month to $76.2M, First Significant Decrease After Steady Growth in 2020

Illinois

Adult-Use Demand Growth Slowed, Medical Sales Down in November; Total Sales Reached $106M, Off 2% from October

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

11 December 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

December 4, 2020

U.S. Cannabis Spot Index — December 4, 2020

U.S. Cannabis Spot Index — Published December 4, 2020

U.S. Cannabis Spot Index down 3.8% to $1,534 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,834 per pound, with 68% of transactions (one standard deviation) in the $1,106 to $2,562 per pound range. The average reported deal size increased from 2.3 pounds to 2.5 pounds. In grams, the Spot price was $3.38 and the simple average price was $4.04.

 

The relative frequency of trades for indoor flower decreased by almost 2%. The relative frequencies of deals for greenhouse and outdoor product increased by about 1% each. 

  

 

The relative volume of outdoor flower expanded by 6% this week. The relative volumes of warehouse and greenhouse product contracted by 3% each.

With the end of 2020 approaching, a look back on our year-to-date wholesale price assessments reveals some interesting and surprising trends. The chart below shows the course of the U.S. Spot Index since Cannabis Benchmarks first began assessing this data point in April 2015.

Perhaps most notably, the behavior of the U.S. Spot in 2020 displays strong similarities to the course charted in 2019, despite the disruption caused by the COVID-19 pandemic this year. In both 2019 and 2020, the national composite price opened the year on a downward trend due to increased supplies of outdoor flower from the prior year’s fall harvest. The U.S. Spot began to climb in the spring in both years; in 2019 this ascent started in late March, in 2020 it would not commence until late May. 

 

Additionally, a downturn in wholesale flower prices began in November with the autumn harvest both last year and this year, but 2020’s started earlier and has so far been more dramatic. This is somewhat surprising given significantly elevated demand and sales revenues in 2020, as well as questions surrounding the fall crop due to the severe wildfires that ravaged the West Coast. 

 

Another surprise in this year’s data is that the ascent of the U.S. Spot in 2020 has so far not matched the magnitude of the wholesale price recovery observed in 2019. Regardless, the 10% year-to-date increase from the assessed price at the start of the year represents a notable rise, especially following the U.S. Spot’s climb in 2019. Barring a large downturn in the coming weeks, it appears likely that 2020 will be the second straight time that the U.S. Spot will close the year higher than at its outset. In the first three full years that Cannabis Benchmarks assessed wholesale flower prices, the national average ended each year off from where it started, often by a large margin.

June 2021 Implied Forward initially assessed at $1,600 per pound.

 

The average reported forward deal size was 32 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 34%, and 23% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 45 pounds, 19 pounds, and 28 pounds, respectively.

 

At $1,565 per pound, the January Implied Forward represents a premium of 2.0% relative to the current U.S. Spot Price of $1,534 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

Newly-Released Q3 Cannabis Tax Revenues Show Continued Growth in Retail and Wholesale Sectors of Legal Market

Los Angeles Identifies 200 Retail License Applicants Eligible for Further Processing, Temporary Approval to Operate

Oregon

Retail Revenues Through November Top $1B, but Monthly Sales in Autumn Down from Summer

Massachusetts

New Adult-Use Delivery License Types and Other Rules Approved by Regulators; Industry Group Threatens Litigation

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

4 December 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

November 25, 2020

U.S. Cannabis Spot Index — November 27, 2020

U.S. Cannabis Spot Index — Published November 27, 2020

U.S. Cannabis Spot Index down 0.5% to $1,594 per pound.

 

The simple average (non-volume weighted) price increased $19 to $1,846 per pound, with 68% of transactions (one standard deviation) in the $1,131 to $2,561 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.51 and the simple average price was $4.07.

 

The relative frequency of trades for greenhouse flower decreased by 3%. The relative frequency of deals for indoor product increased by the same proportion, while that for transactions for outdoor flower was unchanged.

 

 

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

The U.S. Spot Index averaged $1,621 per pound in November, off by 1.3% from the mean price of $1,642 per pound observed last month. November is the first month to see a downturn in its average national composite price since May of this year, in the early months of the COVID-19 pandemic when record-breaking sales that extended into the summer – and autumn in some cases – were just beginning to pick up. 

 

Notably, rates for each individual grow type on the national level were up in November relative to the prior month. The overall downturn in the U.S. Spot was due to increased proportions of lower-priced outdoor flower from this year’s harvest making its way to market. 

 

 

Additionally, the Spot Indices of some of the country’s largest state markets – namely California, Colorado, Oregon, and Washington – have begun to trend downward recently. We have seen sales level off in those states – and others – after peaking in the mid-late summer. The four aforementioned markets are also the ones where outdoor cultivation is most prevalent and the largest volumes of flower are traded.

December Implied Forward closes unchanged at $1,590 per pound.

 

The average reported forward deal size was 31 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 32%, and 22% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 41 pounds, 18 pounds, and 27 pounds, respectively.

 

At $1,590 per pound, the December Forward represents a discount of 0.2% 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:

Oregon

State Working Toward Changing Product Testing Rules, Including Adding Screenings for Heavy Metals and Mycotoxins

Washington

Rulemaking to Implement New Mandatory Testing and Allow Tier 1 Producers to Expand Continues

Michigan

State Officials Release Instructions on Applying for Adult-Use Licenses; Recreational Market Will Open to Any Eligible Applicant Beginning March 2021

Arizona

Sales Volume Figures Jump to New Record in October; Wholesale Prices Rise on Strong Demand and New Required Testing

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

27 November 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved