U.S. Cannabis Spot Index down 0.9% to $1,477 per pound.
The simple average (non-volume weighted) price was unchanged at $1,777 per pound, with 68% of transactions (one standard deviation) in the $1,032 to $2,523 per pound range. The average reported deal size decreased to 2.5 pounds. In grams, the Spot price was $3.26 and the simple average price was $3.92.
The relative frequency of trades for indoor flower decreased by 1%. The relative frequency of deals for outdoor product increased by the same proportion, while that for greenhouse flower was unchanged.
The relative volume of outdoor flower contracted by 1% this week.
The relative volume of greenhouse product expanded by the same proportion, while that for warehouse flower was unchanged.
The early weeks of 2021 have seen the U.S. Spot Index’s downward trend, which commenced in November with the fall harvest, continue. The current price erosion is being driven almost exclusively by falling rates in California, Colorado, and Oregon. Additionally, states in which prices had previously been climbing – namely Massachusetts, Michigan, and Illinois – have seen that upward momentum level off in recent weeks.
We have pointed out previously that the winter months typically see lower demand relative to the spring and summer, with the exception of a sales boost in December in many cases. One of the most notable findings in this week’s Premium Report is that total sales in Colorado in November dropped sharply, by over 12% compared to the prior month. A downturn in retail revenue from October to November is customary; however, this year’s decrease was more than twice the magnitude of that observed last year, indicating a significant pullback in purchasing that month.
On the other hand, Arizona’s Spot Index is trending upward as the beginning of adult-use sales draws closer. The state’s medical market saw almost 190,000 pounds of flower retailed to patients in 2020 – the fifth-largest flower sales volume in the country last year by our estimates – up by about 25% from the year prior. Notably, however, wholesale prices in the state trended downward for much of the year even in the face of strong demand, and only began to rise in the closing months of 2020 with the imposition of required product testing and the approval of adult-use legalization by voters, which both occurred in November.
February Implied Forward unchanged at $1,525 per pound.
The average reported forward deal size increased from 38.9 pounds to 40.1 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 34%, and 14% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 56 pounds, 21 pounds, and 26 pounds, respectively.
At $1,525 per pound, the February Implied Forward represents a premium of 3.3% relative to the current U.S. Spot Price of $1,477 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
YTD 2020 Sales Exceed $2 Billion as of November, Even as Monthly Tallies Have Declined Since August
Medical Dispensaries Sold Almost 190,000 Pounds of Flower to Patients in 2020, the Fifth-Largest Sales Volume Total of Any State Market
December Adult-Use Sales Top $1.9 Million, Up 50% from November