September 11, 2020

CANADA CANNABIS SPOT INDEX — September 11, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 11, 2020
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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$6.38 per gram this week, up 3.7% from last week’s C$6.15 per gram. This week’s price equates to US$2,201 per pound at the current exchange rate.

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This week we show our revised sales forecast for Ontario in light of the province’s Alcohol and Gaming Commission (AGCO) issuing a statement on September 1 regarding Cannabis Retail Store Authorizations. 

 

Last December, after pressure from the cannabis industry, the Ontario government altered its retail store licensing process from a lottery system to a more open format. The goal was to issue up to 20 retail store licenses each month starting in April. At Cannabis Benchmarks, we conduct a monthly store count across each province. We have seen a significant uptick in new stores in Ontario since April, with an average of 16.6 stores opening each month. This number does not meet the target AGCO set out, but the lower number was not unexpected given the COVID-19 pandemic. As of the end of August, we count 136 stores open across Ontario.

Source: Cannabis Benchmarks, Statistics Canada

In the recent update, AGCO stated that they are now moving to “double the pace of store authorizations this fall.” This suggests that we may see, on average, up to 40 new stores each month through the end of the year, increasing our forecast of the total store count in Ontario and, as a result, our sales forecast as well. We now expect there will be 298 stores open across Ontario by the end of the year, compared to only 27 stores at the end of 2019.

 

As we have noted in the past, there is a very strong relationship between the number of open stores and the monthly retail sales in each province. Each new store provides better accessibility to the legal cannabis market and helps pull consumers away from the still robust illicit market. The latest sales data for June 2020 issued by Statistics Canada shows Ontario cannabis retail sales totaling C$48.8M in the month with 116 stores open. Our latest forecast shows sales growing dramatically with the new store openings, bringing December sales to C$73.3M and total Ontario sales for 2020 to C$645M.

Source: Cannabis Benchmarks, Statistics Canada

The Ontario cannabis market is very important to the overall Canadian cannabis industry due to the province’s large population. Ontario has nearly 40% of the overall Canadian population and 38% of the total self-reported users; hence any change to product offerings, product pricing, or accessibility in the province makes a dramatic difference in overall nationwide sales levels. Our models show that the projected increase in stores in Ontario will add roughly $13M in additional sales by the end of the year. This takes our projected monthly Canadian sales to C$251M in December, with projected annual sales for 2020 totaling C$2.45B.

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

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