March 19, 2021

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

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

U.S. Cannabis Spot Index up 0.4% to $1,503 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,757 per pound, with 68% of transactions (one standard deviation) in the $987 to $2,527 per pound range. The average reported deal size was 2.3 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.87.

 

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

 

 

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

After a turbulent 2020, marked by the disruption of previously-established trends in sales and wholesale price movements during the COVID-19 pandemic, the U.S. Spot Index and monthly revenue figures out of numerous markets have shown stability through the early months of this year. In this week’s Premium Report, we examine adult-use sales figures out of Massachusetts in the first two months of 2021, which exhibited continued growth, albeit at subsiding rates compared to the end of 2020. Wholesale activity in Alaska’s relatively small adult-use market also saw a boost in January. We noted in last week’s report that an uptick in sales in Colorado in January broke with behavior observed in prior years, suggesting the possibility of the persistence of strong demand growth documented in 2020. 

 

Meanwhile, revenue figures from the first 10 days of adult-use sales in Arizona, released by state officials this week, are significantly lower than those seen in the early days of Illinois’ recreational system, which launched a bit over a year ago. This despite Arizona’s more robust retail and production footprint relative to those in Illinois at the outset of 2020. 

 

Looking ahead, how supply and demand trends will play out with the end of the coronavirus crisis seemingly within sight has yet to be determined. Federal stimulus payments were distributed to millions of individuals this week, providing an increase in disposable income to some. Such disbursements last year did not coincide noticeably with changes in monthly sales figures, however, and March is typically a month that sees a surge in purchasing in both adult-use and medical markets regardless. 

 

Increased employment as COVID-related restrictions are eased and eventually eliminated should provide a more regular source of expanded income to those whose jobs have been impacted negatively by or lost to the virus. On the other hand, though, there will also be more outlets for disposable income apart from cannabis, as businesses such as movie theaters, theme parks, and sports and entertainment venues are permitted to reopen and operate at full capacity. Additionally, a shrinking number of individuals will presumably be working from home as this year wears on, curtailing opportunities for increased cannabis consumption that presented themselves in 2020.

  

 

Finally, the cessation of the stress and anxiety generated by COVID-19 and its attendant effects on society could conceivably have divergent impacts on the robust demand for cannabis observed last year. Many have attributed 2020’s record-breaking cannabis sales in part to consumers attempting to self-medicate with cannabis products to mitigate the negative psychological impacts caused by the coronavirus. Without that impetus, consumption may stabilize or even decline, although there is also the possibility that use habits developed in 2020 could persist even as day-to-day life returns to “normal.”

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

 

The average reported forward deal size was unchanged at 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 58%, 32%, and 10% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 59 pounds, 32 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the April Implied Forward represents a premium of 1.5% relative to the current U.S. Spot Price of $1,503 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

Vertically Integrated Adult-Use Cultivators Will See 24% Decrease in Tax on Internal Transfers of Flower in Q2

Arizona

Recreational Sales Reached $2.9 Million in Final 10 Days of January, a Slower Start Than Some Other States

Massachusetts

State Data Shows Adult-Use Demand Continued to Expand in January and February, But Rate of Growth Slowed

Oklahoma

Bill Approved by State House of Representatives Would Set Cap on Licenses

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

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

March 12, 2021

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

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

U.S. Cannabis Spot Index down 0.3% to $1,497 per pound.

 

The simple average (non-volume weighted) price decreased $23 to $1,769 per pound, with 68% of transactions (one standard deviation) in the $981 to $2,557 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.30 and the simple average price was $3.90.

 

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

  

 

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

As we have noted in previous reports, officials and economic analysts in many states have stated that they expect sales growth to slow in 2021, relative to the boom in demand seen last year during the COVID-19 pandemic. Sales in numerous markets did see a downturn from December 2020 to January 2021, which at this point has come to be expected in any given year. 

 

However, sales figures published by Colorado officials this week – discussed in more detail below – show an uncharacteristic increase in demand from December 2020 to January 2021, a phenomenon not observed in the state since January 2015. The figures out of Colorado raise the possibility that demand could continue to expand in some markets at rates comparable to, or even greater than those observed in 2020. Time will tell whether this trend is borne out. 

 

Also in this week’s Premium Report, we analyze February’s medical cannabis sales out of Arizona. February is the first full month in which adult-use and medical cannabis sales have taken place simultaneously in the state and the data shows that the commencement of the former is having a major impact on the latter. February’s medical cannabis sales volumes represent significant declines from the month prior, as well as the same month a year ago, the first time that an annual contraction in monthly sales has occurred since the opening of Arizona’s medical cannabis system in 2011. 

 

While not completely unsurprising, previous examples of established medical cannabis programs that added adult-use markets have not shown such a dramatic and immediate impact on purchasing by patients. In Colorado for example, medical cannabis patient counts and sales continued to grow through 2014 and 2015, the first two years of adult-use sales in the state, before beginning to decline in subsequent years. When adult-use sales began in Illinois in 2020, monthly medical cannabis sales still saw significant increases compared to 2019 and only began to plateau in the latter portion of the year. 

 

 

Arizona cannabis business operators are working to bring additional production capacity online to meet the new demand created by the unexpectedly fast start to adult-use sales, but when such projects will start producing significant amounts of new supply is not yet clear.

April Implied Forward unchanged at $1,540 per pound.

 

The average reported forward deal size was unchanged at 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 59%, 31%, and 10% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 61 pounds, 29 pounds, and 25 pounds, respectively.

 

At $1,540 per pound, the April Implied Forward represents a premium of 2.9% relative to the current U.S. Spot Price of $1,497 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

January 2021 Sales See Small Increase from Prior Month, Breaking with Behavior Observed Over Previous Five Years

Washington

Bill Advancing Through State Legislature Would Exempt Registered Patients from 37% Retail Excise Tax

Arizona

February Medical Cannabis Sales See Significant Declines in First Full Month of Adult-Use Market Being Open

Maine

Adult-Use Sales and Store Openings Stagnate in February, Just a Few Months After the Market Opened

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

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

March 5, 2021

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

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

U.S. Cannabis Spot Index down 1.3% to $1,502 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,792 per pound, with 68% of transactions (one standard deviation) in the $992 to $2,591 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.95.

 

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

 

 

The relative volume of outdoor flower expanded by 4% this week. The relative volumes of warehouse and greenhouse product each contracted by 2%.

In this week’s premium report, February sales figures out of Oregon and Illinois show that demand slowed last month, by significant proportions in both cases. While a decrease in demand from January to February is not necessarily surprising given historical sales trends observed across most state markets, the downturn in Illinois is notable as the state’s adult-use system is just over a year old. 

 

In other cases – as in Massachusetts, as well as in Canada, for example – monthly sales generally increased for about two years after adult-use sales began. However, this is likely due to the fact that retailers opened more gradually in Massachusetts and Canada, whereas in Illinois a significant proportion of the roughly 75 adult-use retailers currently operational were able to begin sales almost immediately or fairly shortly after when they were permitted to at the beginning of 2020. As we have covered previously, an additional 75 adult-use retail licenses were to be issued in Illinois last year, but have been delayed by the COVID-19 pandemic and litigation over the licensing process.

 

Full 2020 sales data out of Nevada also became available this week. Total retail revenues grew by 12% year-over-year, despite a 55% decrease in the number of visitors to Las Vegas. Nevada’s experience is one of the most dramatic examples observed anywhere in the country of how consumers significantly increased spending in legal cannabis markets last year in response to COVID-19.

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

 

The average reported forward deal size increased to 47 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 59%, 32%, and 10% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 61 pounds, 29 pounds, and 25 pounds, respectively.

 

At $1,540 per pound, the April Implied Forward represents a premium of 2.5% relative to the current U.S. Spot Price of $1,502 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 Officials Introduce Bills that Include Measures to Allow Cannabis Delivery, License Additional Businesses Under Social Equity Program

Oregon

February Sales Down Almost 12% Compared to January; Annual Growth Rate Slowing as State Budget Officials Predict Demand Will “Cool” this Year

Nevada

2020 Sales Data Shows Retail Revenue Grew 12% YoY Despite 55% Decline in Las Vegas Tourism Due to COVID-19

Illinois

Combined Adult-Use and Medical Cannabis Sales Declined 9% MoM in February to About $110 Million

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

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

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

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