August 14, 2020

U.S. Cannabis Spot Index — August 14, 2020

U.S. Cannabis Spot Index — Published August 14, 2020

U.S. Cannabis Spot Index up 0.1% to $1,518 per pound.

 

The simple average (non-volume weighted) price increased $6 to $1,768 per pound, with 68% of transactions (one standard deviation) in the $972 to $2,565 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.35 and the simple average price was $3.90.

 

The relative frequency of trades for greenhouse flower increased by 4% this week. The relative frequency of transactions for outdoor product decreased by the same proportion, while that for deals involving indoor flower was unchanged.  

 

The relative volume of warehouse product expanded by over 3%. The relative volume of outdoor flower contracted by the same proportion, while that for greenhouse product was unchanged.

After sales growth in legal cannabis markets across the U.S. largely slowed in June, new data this week out of Oregon, Arizona, and Illinois shows demand bouncing back and expanding in July. The U.S. Spot Index has been responding to the strong demand experienced thus far this spring and summer. In July, the national composite price averaged $1,470 per pound, up 6.4% from $1,382 per pound in June. 

 

The one caveat so far to rising July sales is Oklahoma’s medical cannabis program, which saw a downturn last month. Medical sales in Oklahoma had outpaced combined adult-use and medical revenue in Illinois in recent months, but that changed in July. Illinois’ sales leapfrogging those of Oklahoma was due to a sharp uptick in the former state’s developing recreational sector, showcasing the larger growth potential of such markets relative to medical-only ones.

 

 

As we have pointed out in prior reports, however, August appears as if it could be the turning point in determining whether cannabis is truly a recession-proof commodity. Enhanced federal protections and benefits provided by the CARES Act expired at the end of July. This has left millions at risk of eviction, in addition to dramatically reducing unemployment payments. With Congress on vacation – again – from yesterday until after Labor Day, no new stimulus measure appears to be forthcoming until autumn, if at all. If strong demand persists this month and beyond, even in the face of such headwinds, then cannabis businesses will likely feel secure despite the economic carnage occurring in other industries due to the coronavirus.

September Forward unchanged at $1,400 per pound.

 

The average reported forward deal size was 30 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 33%, and 27% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 31 pounds, 25 pounds, and 33 pounds, respectively.

 

At $1,400 per pound, the September Forward represents a discount of 7.7% relative to the current U.S. Spot Price of $1,518 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

June Sales Reach Historic High for Second Straight Month, but Growth Slowed After May’s Spike

Oregon

Record Demand Resumed in July After Sales Slumped Momentarily in June

Arizona

Total Sales Volume to Patients Back on the Rise in July, Subsequent to Flattening in Prior Month

Illinois

Medical Cannabis Sales Rise to Record $33 Million in July; Total Monthly Revenue Exceeds $94 Million When Combined with Adult-Use Sales

Oklahoma

July Sales Dip to About $75 Million After Peaking in June

 

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

14 August 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved