February 5, 2021

U.S. Cannabis Spot Index — February 5, 2021

U.S. Cannabis Spot Index — Published February 5, 2021

U.S. Cannabis Spot Index up 1.5% to $1,512 per pound.

 

The simple average (non-volume weighted) price decreased $12 to $1,750 per pound, with 68% of transactions (one standard deviation) in the $992 to $2,508 per pound range. The average reported deal size was 2.3 pounds. In grams, the Spot price was $3.33 and the simple average price was $3.86.

 

The relative frequency of trades for greenhouse flower decreased by 1%. The relative frequency of deals for outdoor product increased by the same proportion, while that for indoor flower was unchanged. 

 

 

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

After a tumultuous 2020, how legal cannabis markets will fare in 2021 is an open question. In this week’s Premium report, we note two studies out of major markets. In Oregon, state regulators raise the possibility of flattening demand post-COVID, combined with a potential increase in production. A study from researchers at Washington State University also predicts slowing demand growth compared to 2020’s over 20% year-over-year increase in retail sales. 

 

Official sales data for January has yet to be released by many states, but historical trends tell us that the first two months of any given year are typically periods of relatively low demand. Sales figures out of Illinois show that growth in the adult-use sector continued in January, but the pace of increase subsided compared to the large uptick seen in December. 

 

 

Sales are reportedly brisk in Arizona, the country’s newest functioning adult-use market. However, a member of our Price Contributor Network – a vertically integrated operation encompassing cultivation, product manufacturing, and multiple storefronts – this week told Cannabis Benchmarks that the company was keeping all of its flower in-house to supply its own retailers. Additionally, while they noted that wholesale sales of extracts and edibles had increased, they stated prices for such products remained relatively constant. As we have reported previously, production in Arizona’s long standing medical market is robust, with no capacity limits for cultivators. This should prevent, or at least ameliorate, the supply crunch seen in many new adult-use markets, at least in the near term.

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.

Headlines from this week's Premium Report:

Oregon

State Report Shows Surging Demand During COVID Helped Balance Market, But 2021 Outlook Suggests Continued Expansion of Supply

Washington

University Study States Sales Rose 21% from 2019-2020; 15% Growth Projected for 2021

Proposed Legislation Would Allow Small Cultivators to Gain New Licenses, Expand Production Capacity, and Sell Directly to Consumers On-Site

Illinois

Adult-Use Sales Expanded Again in January, While Medical Sales Declined

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

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