January 17, 2020

CANADA CANNABIS SPOT INDEX — January 17, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 17, 2020

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$6.46 per gram this week, down 0.7% from last week’s C$6.51 per gram. This week’s price equates to US$2,246 per pound at the current exchange rate.

This week we continue our discussion of both the current availability and prospects related to the Cannabis 2.0 market. As a quick reminder, Cannabis 2.0 refers to the legalization of edibles, extracts, and topicals. Unlike last year at the onset of legalization – when there appeared to be a massive shortage of flower and supply dynamics were opaque – the provincial governments, licensed producers, and retailers have this time been vocal in setting expectations. They have been open about both the timeline to release products and their limited initial availability. That said, demand for the new products has been roaring. Most shops sell out their stocks immediately.

As part of the roll out of Cannabis 2.0, Health Canada has put strict regulations on the level of THC contained in each product, as well as on packaging and labeling. 

  1. These products cannot contain nicotine, caffeine, or alcohol; hence no infused coffee or alcoholic beverages will be available. 
  2. Edibles (food, candy, or beverages) cannot contain more than 10 milligrams of THC per container. For example, a package of the Grape Oasis Gummies shown below comes with five pieces that contain two milligrams of THC each. 
  3. Cannabis oil extracts are limited to 1,000 milligrams of THC per container.
  4. Topicals, such as lotions, cannot contain more than 1,000 milligrams of THC in a container.

Ontario was one of the few provinces that gave private brick and mortar stores a head start on receiving and selling Cannabis 2.0 products. Starting January 6, the 25 Ontario retailers were able to procure a limited range of products to sell ahead of the government-run Ontario Cannabis Store (OCS). Yesterday, was the first day that the OCS online store sold Cannabis 2.0 products and they were sold out of edibles within hours of their initial availability. In fact, there was a digital queue of thousands of orders showing the strong demand. Currently there is only one cannabis edible product listed on the OCS, but even that is out of stock.

The coming months will be interesting in this industry as the Canadian population becomes accustomed to the new product types. We will be tracking the sales growth associated with these new products, as well as how dry flower sales might be impacted.

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17 January 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved