The U.S. Cannabis Spot Index decreased 0.6% to $961 per pound.
The simple average (non-volume weighted) price decreased $9 to $1,264 per pound, with 68% of transactions (one standard deviation) in the $531 to $1,997 per pound range. The average reported deal size decreased to 2.5 pounds. In grams, the Spot price was $2.12 and the simple average price was $2.79.
The relative frequency of transactions for indoor flower increased 3%, while that of greenhouse flower fell 2%. Outdoor flower transaction frequency was unchanged this week.
The relative volume of indoor product rose 3%, while that of greenhouse flower fell 1%. Outdoor product’s relative volume decreased by about 2%.
U.S. spot cannabis price fell $6 this week. Nationwide, markets mostly lost ground as supply continues to come on board with newer, high population states getting up and running.
Connecticut is still getting over $3,000 per pound, but it is likely as the state gets nearer to opening adult use sales, price will come in line with those seen in Massachusetts and Rhode Island. Rhode Island spot price fell nearly 40% within the first month of opening as the new market was faced with the reality of prices next door in Massachusetts. Connecticut is likely to see as much as a halving of prices within the first month or so of open adult use sales with both Massachusetts and Rhode Island exerting price pressure.
Commodity prices are ruled by supply and demand. As more states come online with cannabis supply, prices are going to continue downward until the supply side can balance with demand. Generally speaking, when producers see lower prices in the future, they increase supply until a market clearing price is hit – that is, until producers can no longer survive on market prices and begin to shut down, thus decreasing supply.
Commodity prices typically trade around production prices, while production prices move around product value – the average current replacement value cost. It is safe to say that most cannabis prices are nowhere near production cost; as in, it does not cost $3,000 or even $1,500 to produce a pound of cannabis in the United States. The cannabis industry will weather the economic realities inherent in commodity markets by adjusting to lower prices through product innovation, technology, and business turnover. In short, look out below.
July 2023 Implied Forward initially assessed at $1,025 per pound.
The average reported forward deal size was 79 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 40%, and 17% of forward arrangements, respectively.
The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 96 pounds, 66 pounds, and 66 pounds, respectively.
At $975 per pound, the February 2023 Implied Forward represents a premium of 1.4% relative to the current U.S. Spot Price of $961 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
2022 Cannabis Sales Top 2019 Pre-Pandemic Sales by 25%
Adult Use Sales Down for the 4th Consecutive Month
December Sales Jump 8.8%
December Sales Soar 11.8%
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