February 25, 2021

U.S. Cannabis Spot Index — February 26, 2021

U.S. Cannabis Spot Index — Published February 26, 2021

U.S. Cannabis Spot Index up 0.4% to $1,522 per pound.

 

The simple average (non-volume weighted) price increased $7 to $1,789 per pound, with 68% of transactions (one standard deviation) in the $1,009 to $2,568 per pound range. The average reported deal size was nominally unchanged at 2.4 pounds. In grams, the Spot price was $3.35 and the simple average price was $3.94.

 

The relative frequency of trades for indoor flower decreased by 2%. The relative frequency of deals for greenhouse product increased by the same proportion, while that for outdoor flower was unchanged.  

 

 

The relative volume of warehouse flower contracted by 1% this week. The relative volume of greenhouse product expanded by the same proportion, while that for outdoor flower was unchanged.

After declining since early November, the U.S. Spot Index has shown modest upward movement in recent weeks. With February drawing to a close, historical sales trends across most states tell us that next month will see a jump in demand, as sales typically spike in March after slowing in January and February of any given year. The further expansion of already strong demand – while sales have slowed they are still up significantly year-over-year in most markets – could continue to push the U.S. Spot higher. 

 

National wholesale price trends from recent years paint a mixed picture, however. The monthly average U.S. Spot price rose by 5.2% from February to March 2018, but declined in the same period in both 2019 and 2020, by 5.3% and 0.7%, respectively. While strong demand has reportedly strained supplies in several major markets, recently-released data and reports from market participants indicate that 2020’s outdoor harvest yielded significantly more product than the prior year, despite the historic wildfires that ravaged the West Coast. Growing conditions prior to the fires were reportedly ideal, according to statements from market participants at the time.

 

 

Ample supplies from the autumn crop may cushion the impact of March’s expected seasonal increase in demand in states where outdoor growing is prevalent. However, other markets, especially newer, developing ones such as Michigan and Illinois, could see wholesale prices on the rise again if sales trends there follow those observed in other states.

March 2021 Implied Forward closes unchanged at $1,525 per pound.

 

The average reported forward deal size was 39.2 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 37%, and 11% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 53 pounds, 24 pounds, and 25 pounds, respectively.

 

At $1,525 per pound, the March Implied Forward represents a premium of 0.2% relative to the current U.S. Spot Price of $1,522 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:

California

Bill Would Allow Provisional Licenses to Be Extended to 2028; Over 80% of Cultivation Licenses are Provisional

Oregon

Proposed Rules Would Streamline Licensing Process, May Lead to Significant Increase in Producer Licenses

Nevada

October 2020 Sales Exceed $82 Million, a New Record for the State, As Las Vegas Tourism Saw its Highest Visitor Numbers of 2020

New Jersey

Governor Signs Enabling Legislation Into Law, Initiating Adult-Use Legalization; But No Definite Timeline for Licensing, Sales

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

26 February 2021.  Copyright © 2021 New Leaf Data Services, LLC.  All rights reserved