March 19, 2021

CANADA CANNABIS SPOT INDEX — March 19, 2021

CANADA CANNABIS SPOT INDEX (CCSI) 

Week Ending March 19, 2021
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*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$5.86 per gram this week, up 0.3% from last week’s C$5.84 per gram. This week’s price equates to US$2,132 per pound at the current exchange rate.

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This week we provide an update on the still-growing gap between supply and demand in Canada’s legal cannabis market. By combining our estimate on monthly demand with Statistics Canada’s production estimates, we can get a clearer understanding of the dynamics of the country’s regulated cannabis system.

Cannabis Benchmarks estimates that the total implied demand for legal cannabis in December 2020 was 30,318 kg, a 212% increase over the same month in 2019, as shown in the following table.

Source: Cannabis Benchmarks, Statistics Canada

Even though demand has grown at a rapid rate, December’s demand is still less than 18% of the 165,189 kg of unpackaged production reported by Statistics Canada for the month of November. The mismatch is creating a huge oversupply of both packaged (finished) and unpackaged (unfinished) products across the country. Statistics Canada’s most recent data for November 2020 shows unpackaged and packaged inventory ballooning to 1,165,725 kg. This represents 38 months worth of supply at current demand levels, and inventory is continuing to increase. The intent is that this inventory will ultimately be sold either as dried flower, converted into a cannabis derivative product, or exported, but there is a chance that the quality of the product degrades to a point where it is not sellable. 

Source: Cannabis Benchmarks, Statistics Canada

The issue of high production and growing inventory has been amplified by the seasonal supply increase coming to market from the outdoor harvest. The typical outdoor harvest for annual cash crops is in October and November, with cannabis following the same grow cycle. The Statistics Canada data confirms the noticeable influx of unpackaged cannabis during those months in 2019. The supply surge from sun-grown product was especially visible in 2020 as outdoor production capacity expanded last year. We anticipate a trend of expanding Q4 inventory increases going forward as more cultivators turn to outdoor cultivation.

Source: Cannabis Benchmarks, Statistics Canada

For more data and analytics like this, subscribe to the Cannabis Market Insights report developed in collaboration Nasdaq. This in-depth monthly report provides exclusive data and analysis on the legal cannabis industry, focusing largely on the Canadian cannabis market, as well as the cannabis equities market in the U.S.

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

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