U.S. Cannabis Spot Index down 0.5% to $1,503 per pound.
The simple average (non-volume weighted) price increased $29 to $1,779 per pound, with 68% of transactions (one standard deviation) in the $1,016 to $2,542 per pound range. The average reported deal size increased to 2.5 pounds. In grams, the Spot price was $3.31 and the simple average price was $3.92.
The relative frequency of trades for indoor flower increased by 1%. The relative frequency of deals for outdoor product decreased by the same proportion, while that for greenhouse flower was unchanged.
The relative volume of outdoor flower expanded by about 2% this week. The relative volume of warehouse product contracted by the same proportion, while that for greenhouse flower was unchanged.
We noted last week that reports from Oregon regulators and Washington State academics both predicted that 2021 would see strong sales growth, but rates of increase would subside somewhat compared to the boom in revenues enjoyed by legal cannabis businesses in 2020. New data out of two major markets this week offers some preliminary affirmation of such projections.
In Colorado, the state’s legal market racked up almost $2.2 billion in total retail sales last year. While a customary month-over-month increase in revenues was observed in December to close 2020, it was of a smaller magnitude than that seen in some recent prior years – namely 2017 and 2018, when overall annual growth rates were lower than in 2020. Medical cannabis sales data for January 2021 was also published by Arizona officials this week. Adult-use sales began on January 22 and data for that sector remains to be released. January’s medical cannabis sales show declining patient purchasing coinciding with the opening of the new adult-use market, though whether this trend will persist remains to be seen.
National trends in wholesale prices have shown stability in recent weeks as sales growth has slowed compared to last summer.
Restrictions on businesses and individuals imposed due to the COVID-19 pandemic have been loosened in many states. Children are also returning to in-person school in many areas, which brings with it costs to parents for supplies, clothes, and the like. These developments may be diverting some disposable income away from being spent on legal cannabis compared to when more strict lockdowns were in place last year.
August 2021 Implied Forward initially assessed at $1,650 per pound.
The average reported forward deal size was 39.7 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 35%, and 12% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 54 pounds, 22 pounds, and 26 pounds, respectively.
At $1,540 per pound, the March Implied Forward represents a premium of 1.9% relative to the current U.S. Spot Price of $1,512 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
Total Retail Sales Approached $2.2 Billion in 2020, Up 26% YoY
Medical Cannabis Sales Slip in January; Decline in Patient Purchasing Coincided With Opening of Adult-Use Market
Adult-Use Sales Growing, But Still Modest at Under $2.5 Million in January