The U.S. Cannabis Spot Index increased 0.9% to $990 per pound.
The simple average (non-volume weighted) price decreased $38 to $1,195 per pound, with 68% of transactions (one standard deviation) in the $494 to $1,896 per pound range. The average reported deal size increased to 2.7 pounds. In grams, the Spot price was $2.18 and the simple average price was $2.63.
Proximity matters. New England states have the most volatile wholesale cannabis prices in the country. Legal adult use markets in the region are at various stages of development led by Massachusetts, the most mature market, in addition to featuring several newcomers.
The Bay State started adult use cannabis sales in November 2018, the first on the entire East Coast to do so. Wholesale cannabis prices climbed from the outset, jumping 5.9% in the first month of sales, then jumping 17% in 2019 and adding another 7.3% in 2020. The two-year honeymoon period of steadily rising prices and no nearby legal competition saw Massachusetts wholesale cannabis prices climb to become the most expensive in the nation. However, no one knew the party was already over.
Massachusetts saw the pandemic boost demand from in-state and out-of-state consumers for a while, but when sales fell off in the fall of 2022, prices started dropping as businesses that borrowed to expand in response to burgeoning demand saw their debts coming due. At the same time, proximate states legalized adult use sales. Plateauing growth, debt servicing obligations, and regulations on the allowed shelf-life of flower made shedding inventory, debt, and assets seem prudent to many operators in the state. And shed they did: wholesale cannabis prices dropped 61% between October 2021 and January 20, 2023.
More in-depth analysis of the New England state markets will be covered in the upcoming Wholesale Market Observer on Tuesday, January 24th. The analysis uses functionality provided by our Interactive Chart tools.
February 2023 Implied Forward unchanged at $975 per pound.
The average reported forward deal size was 84 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 41%, 40%, and 19% of forward arrangements, respectively.
The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 99 pounds, 73 pounds, and 73 pounds, respectively.
At $975 per pound, the February 2023 Implied Forward represents a discount of 1.5% relative to the current U.S. Spot Price of $990 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
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