June 5, 2020

U.S. Cannabis Spot Index — June 5, 2020

U.S. Cannabis Spot Index — Published June 5, 2020

U.S. Cannabis Spot Index up 3.3% to $1,401 per pound.

 

The simple average (non-volume weighted) price increased $20 to $1,636 per pound, with 68% of transactions (one standard deviation) in the $887 to $2,385 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $3.09 and the simple average price was $3.61.

December Forward initially assessed at $1,350 per pound.

 

The average reported forward deal size was 35 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 38%, and 15% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 27 pounds, and 35 pounds, respectively.

 

At $1,430 per pound, the July Forward represents a premium of 2.1% relative to the current U.S. Spot Price of $1,401 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

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

5 June 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

May 29, 2020

U.S. Cannabis Spot Index — May 29, 2020

U.S. Cannabis Spot Index — Published May 29, 2020

U.S. Cannabis Spot Index up 2.6% to $1,356 per pound.

 

The simple average (non-volume weighted) price increased $91 to $1,616 per pound, with 68% of transactions (one standard deviation) in the $836 to $2,396 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.99 and the simple average price was $3.56.

 

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

 

Indoor flower’s share of the total reported weight moved nationally shrank by 1% this week. Greenhouse product’s relative volume increased by the same proportion, while that for outdoor flower was unchanged.

For the month of May, the U.S. Spot Index averaged $1,336 per pound. May is the third consecutive month to see a downturn in the national composite price, despite reports of strong demand and elevated sales out of several states during the COVID-19 pandemic, which began impacting day-to-day life in the U.S. dramatically in March. 

 

While strong demand has been observed across several states, including the sizeable markets of Oregon and Arizona, early signs out of Colorado – the nation’s second-largest market after California – suggest that previous sales growth rates slowed in March. We have also discussed how Nevada’s cannabis industry has been especially hard-hit by the measures taken to contain the pandemic. Meanwhile, Massachusetts adult-use retailers, who racked up the sixth-largest revenue total of any state with legal cannabis in 2019, were shuttered completely for two months, with sales only resuming this week.

 

In other words, while sales out of some larger and mid-sized markets have remained strong, demand in others has been curtailed or appears to have been suppressed somewhat. (April sales out of Colorado, which should be released in June, will provide a clearer picture of the coronavirus’ impact on the state’s cannabis market.) 

 

 

Additionally, we have not heard reports of any disruptions or slowdowns in supply. No accounts of COVID outbreaks at cannabis cultivation or processing facilities have surfaced to this point, suggesting that production has continued apace during a period of demand fluctuations. Despite reports of occasional runs on cannabis retailers and customers purchasing larger amounts per transaction, wholesale buyers have not evinced anxiety about being able to secure sufficient inventory. The continued prohibition on interstate cannabis commerce may have somewhat insulated each state market from supply chain difficulties that have impacted other industries during the last two unprecedented and unpredictable months.

June Forward down $50 to $1,375 per pound.

 

The average reported forward deal size was 36 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 28 pounds, and 35 pounds, respectively.

 

At $1,375 per pound, the June Forward represents a premium of 1.4% relative to the current U.S. Spot Price of $1,356 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 Releases Cannabis Tax Collections, but Scope of Market Activity Obscured as Taxpayers Allowed to Remit Payments Late Due to COVID-19

Washington

Officials Resume Rulemaking Activities, Including Proposed Rules for Required Pesticide and Heavy Metals Testing

Nevada

Governor Announces that Casinos May Reopen in Early June, Reintroducing Some Tourist Demand to State’s Cannabis Market  

Massachusetts

Adult-Use Retailers Allowed to Open for Curbside Pickup Sales this Week After Two Month Shutdown

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

29 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

May 22, 2020

U.S. Cannabis Spot Index — May 22, 2020

U.S. Cannabis Spot Index — Published May 22, 2020

U.S. Cannabis Spot Index nominally unchanged at $1,322 per pound.

 

The simple average (non-volume weighted) price was unchanged at $1,525 per pound, with 68% of transactions (one standard deviation) in the $784 to $2,266 per pound range. The average reported deal size decreased to 2.2 pounds. In grams, the Spot price was $2.92 and the simple average price was $3.36.

 

The relative frequency of trades for indoor flower decreased by almost 2% this week. The relative frequencies of deals for greenhouse and outdoor product each increased by about 1%. The relative volumes of each grow type were fairly stable compared to last week, with only marginal shifts observed.

This week, sales data for April was released by officials in Oregon, Arizona, and Michigan, providing a broader look at demand conditions in legal cannabis markets subjected to stay-at-home orders and other restrictions due to the COVID-19 pandemic.

 

Taken together, the official data available currently indicates that demand has remained elevated and robust despite the coronavirus. Three of the four states mentioned above – Oregon, Michigan, and Illinois – saw sales increase again in April, even after setting records in March. Arizona’s market saw a decline in sales volume from March to April – possibly due to the inability to celebrate 4/20 – but sales figures in the latter month are still the second-highest in the history of the state’s large, mature medical cannabis system. 

 

So far, the available data suggests that cannabis may indeed be a recession-proof commodity, so long as it remains available. Despite record-breaking unemployment levels, along with many Americans facing significant uncertainty about their work and income situations, sales continued to climb in the newer adult-use markets of Michigan and Illinois, while previously-strong growth in Oregon accelerated. 

 

It must be noted that many Americans received stimulus payments of up to $1,200 from the U.S. government in April, while federal legislation passed in response to the COVID-19 pandemic provided for expanded unemployment insurance and increased payments to those who qualify. This assistance may have facilitated spending by consumers in April. 

 

However, the stimulus payments are at this point not recurring and are quite paltry compared to those received by citizens of other countries. (In Canada, for example, residents are receiving C$2,000 per month.) This raises the possibility that cannabis sales could be impacted negatively going forward if the overall economic situation worsens and assistance from the federal government is inadequate or simply not forthcoming. We noted in last week’s report that an official budget forecast out of Colorado anticipates that cannabis tax revenues will decline in the coming fiscal year.

 

Another preliminary conclusion that can be gleaned from the data is that cannabis consumers – both those purchasing in adult-use markets and those registered as medical patients – appear relatively unconcerned with using smokable or inhalable products during an outbreak of a severe respiratory illness. Flower sales climbed in Oregon, Illinois’ medical system, and in both sectors of Michigan’s legal market in April, along with sales of concentrates and extracts for vaping. Edibles sales also rose sharply in Oregon, but the increase was not out of step with those of other product categories. Notably, in Arizona, recent monthly edibles sales volumes have been down compared to last year.

June Forward unchanged at $1,425 per pound.

 

The average reported forward deal size was 35.6 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 41 pounds, 28 pounds, and 36 pounds, respectively.

 

At $1,425 per pound, the June Forward represents a premium of 7.8% relative to the current U.S. Spot Price of $1,322 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

Planned Regulatory, Tax Reforms to Legal Cannabis Market Delayed Due to COVID-19

Oregon

Sales Rise to $89 Million in April, Setting a New Record for the Second Straight Month

Michigan

April Sales See Robust Growth in Both Adult-Use and Medical Markets, But Issuance of New Retailer Licenses Slows  

Arizona

Purchasing Slips in April, But Total Sales Volume is Still Second-Highest in the History of State’s Medical System

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

22 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

May 15, 2020

U.S. Cannabis Spot Index — May 15, 2020

U.S. Cannabis Spot Index — Published May 15, 2020

U.S. Cannabis Spot Index down 1.4% to $1,323 per pound.

 

The simple average (non-volume weighted) price decreased $42 to $1,525 per pound, with 68% of transactions (one standard deviation) in the $783 to $2,267 per pound range. The average reported deal size decreased to 2.3 pounds. In grams, the Spot price was $2.92 and the simple average price was $3.36.

 

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

 

 

Warehouse flower’s share of the total reported weight moved contracted by 2% this week. The relative volumes of greenhouse and outdoor product contracted by 1% each.

Additional sales data out of Colorado and Michigan this week is beginning to provide a picture of how adult-use and medical cannabis sales have been impacted by the COVID-19 pandemic and accompanying mitigation measures imposed by officials. At this point, it appears that the one solid conclusion to be drawn is that the effects of the pandemic on cannabis sales will vary state to state, depending on the maturity of the market and other factors. However, one trend that is emerging from medical cannabis sales in March out of Colorado, Oregon, Arizona, Michigan, and Illinois is that demand from registered patients appears to have spiked to greater degrees in response to the coronavirus than it did among adult-use customers. 

 

In our report for April 24, we discussed March sales data from Oregon and Arizona. By analyzing March 2020’s information in light of historical sales data going back to 2017, we concluded that the significant increases in sales in those states in March were likely due largely to organic market growth and seasonal sales trends, with a boost from coronavirus-motivated bulk buying. In other words, the early days of the pandemic in the U.S. resulted in a discernible, but not dramatic, increase in demand in those markets. 

 

The opposite appears to be the case for Colorado. Similar to Oregon and Arizona, Colorado saw a significant month-over-month increase in sales in March, an occurrence that has come to be expected by market observers and participants. However, unlike the two other aforementioned markets, the rate at which sales rose month-over-month in Colorado in March 2020 is down compared to the same period in prior years. Additionally, March’s year-over-year sales growth is lower than the annual growth figures documented in January and February this year, before COVID-19 made its way to Colorado. Overall, it appears that the pandemic put a small dent in demand for cannabis in Colorado in March, despite a brief surge of panic-buying in Denver late in the month.

 

Meanwhile, partial adult-use revenue data out of Michigan indicates that sales in the still-young sector of the state’s market continued to grow through April and into the early days of this month. According to the Detroit News, in the nine weeks from March 9 to May 10, adult-use retailers in Michigan racked up almost $55 million in sales. More than $7 million in sales was recorded in each of the latter four weeks of that period.

June Forward unchanged at $1,425 per pound.

 

The average reported forward deal size was 36 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 36%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 29 pounds, and 36 pounds, respectively.

 

At $1,425 per pound, the June Forward represents a premium of 7.7% relative to the current U.S. Spot Price of $1,323 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

Mark-Up Rate Used to Calculate Retail Excise Tax Will Remain the Same through 2020

Colorado

 

March Sales Rise 15% from February, But Magnitude of MoM Increase Smaller Than in Prior Years

 

State Budget Officials Forecast Declining Cannabis Sales in Current and Forthcoming FY Due to COVID-19

 

Nevada

Retailers May Conduct In-Store Sales With Approval from State Officials Under Phase One of Reopening Plan; Hotels & Casinos Remain Closed   

Massachusetts

Number of Registered Medical Cannabis Patients as of April 2020 Comparable to a Year Ago, But Sales Volume Up Almost 70%

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

15 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

May 8, 2020

U.S. Cannabis Spot Index — May 8, 2020

U.S. Cannabis Spot Index — Published May 8, 2020

U.S. Cannabis Spot Index up 0.6% to $1,342 per pound.

 

The simple average (non-volume weighted) price increased $21 to $1,568 per pound, with 68% of transactions (one standard deviation) in the $815 to $2,320 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.96 and the simple average price was $3.46.

 

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

 

Warehouse flower’s share of the total reported weight moved expanded by 3% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was unchanged.

In this week’s report, we discuss the first official sales figures for April issued by any state with a legal adult-use cannabis market, which come from Illinois. Both adult-use and medical cannabis sales in the Land of Lincoln increased in April, despite the state being subject to a stay-at-home order for the entirety of the month. 

 

The increase in medical cannabis sales in Illinois in April is particularly notable, as it followed a very large spike in sales in March. Typically, medical cannabis markets see sales fall off in the month following one in which a significant jump takes place. The rate of month-over-month growth in Illinois’ adult-use market was comparable to that documented for March, but average daily sales figures increased for the first time since the recreational sector opened in January.

 

Sales data out of Illinois indicates that restrictions put in place by state and local officials in response to COVID-19 may not dampen cannabis business revenue significantly, or at all, especially if retailers are designated as essential businesses and allowed to remain open, as they are in Illinois. The data also shows that adult-use consumers and patients are both purchasing larger quantities at once, on average, likely due to people trying to limit the number of trips out of their residences in light of the coronavirus. In Illinois, adult-use consumers and patients are still permitted to enter retailers, but ordering online for curbside pickup is also an option. Ultimately, even with limited hours and not being able to allow customers and patients to freely enter stores due to social distancing protocols, Illinois cannabis sellers still saw sales growth from March to April. 

 

Similar sales guidelines exist in Colorado and the West Coast states, while Nevada retailers were until May 1 limited to delivery only. (Nevada cannabis customers can now pick up orders curbside; in-store sales will also begin to be allowed on Saturday, May 9, once retailers obtain approval from state regulators.) Whether such similarities will lead to increased sales in those markets, which are all more mature than Illinois’ to varying degrees, remains to be seen. 

 

Also, due to the youth of Illinois’ adult-use market, monthly sales trends cannot be compared to those of prior years, obscuring potential COVID-related impacts. For example, a state such as Colorado may also see month-over-month sales growth in April, but whether the rate of growth will surpass or fall short of those observed in recent months before the pandemic can be used to gauge how much the virus and accompanying restrictions are affecting demand. Official April sales data out of Colorado will not be available until June.

June Forward unchanged at $1,425 per pound.

 

The average reported forward deal size was 36 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 29 pounds, and 36 pounds, respectively.

 

At $1,425 per pound, the June Forward represents a premium of 6.2% relative to the current U.S. Spot Price of $1,342 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

Proposed Rules for Comparable-to-Organic Certification Program for Cannabis Released by State Agriculture Department

Colorado

2019 Data Shows Wholesale Prices Rose Even as Flower Production Increased and Purchasing Declined

 

Illinois

Adult-Use & Medical Sales Both Rise in April With Stay-at-Home Order in Effect    

Massachusetts

State Announces Application Window for Adult-Use Delivery Services, Microbusinesses

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

8 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

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