U.S. Cannabis Spot Index down 2.6% to $1,491 per pound.
The simple average (non-volume weighted) price decreased $22 to $1,777 per pound, with 68% of transactions (one standard deviation) in the $1,041 to $2,514 per pound range. The average reported deal size increased to 2.6 pounds. In grams, the Spot price was $3.29 and the simple average price was $3.92.
The relative frequencies of trades for each grow type were essentially stable from last week.
The relative volume of indoor flower contracted by 1% this week. The relative volume of outdoor product expanded by the same proportion, while that for greenhouse flower was unchanged.
Several states have reported full-year sales figures for 2020, which we examine in detail below. Overall, states with existing, more mature adult-use markets saw demand growth accelerate last year. Newer markets such as Illinois and Michigan posted impressive total retail revenue figures, which slightly exceeded and approached $1 billion in each state, respectively.
In the face of elevated sales, the U.S. Spot Index closed 2020 by declining by 9.5% from its annual peak on October 23 to the final week of the year. Despite apprehensions concerning the state of the fall harvest due to wildfires on the West Coast, wholesale prices are trending downward in all three of those states, as well as Colorado, mainly on the introduction of larger amounts of lower-priced outdoor flower into commerce. Anecdotal reports out of Oregon and California have so far told of crops escaping major damage or contamination from the fires. Prior to the wildfires reaching their peak in September and October, reports from market participants stated that growing conditions were excellent.
Western markets are still largely steering the direction of the U.S. Spot, as the volumes of flower being traded remain much higher than those in newer markets. For example, although Illinois’ retail revenue figures were comparable to those of Oregon’s in 2020, Cannabis Benchmarks estimates that Oregon retailers sold roughly 250,000 pounds of flowers to consumers and patients last year, while we estimate total flower sales volume in Illinois – both adult-use and medical – reached about 75,000 – 80,000 pounds.
February Implied Forward unchanged at $1,525 per pound.
The average reported forward deal size increased from 36.5 pounds to 38.9 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 35%, and 13% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 55 pounds, 21 pounds, and 26 pounds, respectively.
At $1,525 per pound, the February Implied Forward represents a premium of 2.3% relative to the current U.S. Spot Price of $1,491 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
FY 2020 Sales Up 20% from Prior FY
Combined Adult-Use and Medical Cannabis Sales Near $900 Million in First 11 Months of 2020
Adult-Use Retailers Generated Almost $700M in Revenue in 2020, Despite Being Ordered Closed for 2 Months Due to Coronavirus
Total Legal Sales in 2020 Top $1 Billion in First Year of Adult-Use Legalization