August 21, 2020

U.S. Cannabis Spot Index — August 21, 2020

U.S. Cannabis Spot Index — Published August 21, 2020

U.S. Cannabis Spot Index up 0.7% to $1,527 per pound.

 

The simple average (non-volume weighted) price increased $8 to $1,776 per pound, with 68% of transactions (one standard deviation) in the $963 to $2,589 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.37 and the simple average price was $3.92.

 

The relative frequency of trades for greenhouse flower increased by about 3% this week. The relative frequency of transactions for indoor product decreased by the same proportion, while that for deals involving outdoor flower was unchanged.  

 

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

As we have chronicled recently, wholesale cannabis prices have been trending upward since late May on record-setting demand in numerous state markets, including some of the largest and most mature. In recent weeks, the U.S. Spot has risen to its highest point since the first week of 2018, which was the last time prior to mid-July when it was observed to exceed $1,500 per pound. New data out of Michigan this week showed a surge of demand in that market as well, with combined adult-use and medical cannabis sales topping $100 million for the first time. The persistent, outsized demand that has marked legal cannabis systems since the outset of the COVID-19 pandemic in the U.S. is at this point resulting in rumblings about possible shortages in states such as Oregon and Colorado. 

 

We have also pointed out previously that production in such mature markets has leveled off somewhat in recent years. However, earlier this month a grower in southwestern Oregon reported to Cannabis Benchmarks that outdoor cultivation conditions had been excellent so far this year and that he expected a bumper crop. He speculated that growers up and down the West Coast were having similar experiences. Recent harvest figures out of Oregon suggest expanded mid-summer crops this year, substantiating the grower’s account.

 

 

A surge of high-quality supply this fall and winter could blunt the upward trend of the U.S. Spot, especially if a new coronavirus stimulus measure is insufficient or does not come to fruition.

September Forward up $50 to $1,450 per pound.

 

The average reported forward deal size was 29 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 30 pounds, 25 pounds, and 32 pounds, respectively.

 

At $1,450 per pound, the September Forward represents a discount of 5.1% relative to the current U.S. Spot Price of $1,527 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:

National

Sustained, Record Setting Demand Pushes U.S. Spot to Highest Point in Over 2.5 Years, But Reports Say West Coast on Track for Large Fall Harvest

Oregon

Flower Sales Revenue Rises in July, but Sales Volume Fairly Flat, Indicating Retail Prices are Following Wholesale Rates Upward

Michigan

Combined Adult-Use and Medical Cannabis Sales Rise to New Record in July after Slowing in June, Topping $100 Million for First Time

Annual Fees for Licensed Medical Cannabis Facilities Drop Significantly From FY20 – FY21

 

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