July 19, 2019

U.S. Cannabis Spot Index — July 19, 2019

U.S. Cannabis Spot Index — Published July 19, 2019

U.S. Cannabis Spot Index up 4.3% to $1,349 per pound.

 

The simple average (non-volume weighted) price increased $85 to $1,528 per pound, with 68% of transactions (one standard deviation) in the $736 to $2,319 per pound range. The average reported deal size increased to 2.3 pounds from 2.2 pounds last week. In grams, the Spot price was $2.97 and the simple average price was $3.37.

 

The relative frequency of trades for outdoor flower decreased by more than 6% week-over-week. The relative frequencies of transactions involving indoor and greenhouse product increased by about 2% and 5% respectively. Outdoor flower’s share of the total documented weight moved nationally contracted by 9% this week. The relative volumes of warehouse and greenhouse flower expanded by 5% and 4%, respectively, relative to the week prior.

The U.S. Spot Index rose by 4.3% this week to settle at $1,349 per pound, establishing a new year-to-date high for the second straight week. Emphasizing the extent of the recent recovery in U.S wholesale cannabis rates this year, this week’s national composite price would have been the fifth-highest recorded in all of 2018. Strong year-over-year demand growth in the four major Western markets continues to apply upward pressure on prices, especially as licensing and harvest data out of California, Colorado, and Oregon indicate that legal production capacity has either decreased or stabilized relative to a year ago. A significant contraction in the relative volume of outdoor product also underpinned this week’s rise in the U.S. Spot, as wholesale buyers on the West Coast continue to spurn last year’s harvest and are turning to summer light-deprivation crops, which come with higher prices than 2018’s outdoor product.  

The national volume-weighted price for flower to be sold to general consumers jumped this week on rises in that sector of the market in California and Colorado, as well as in Oregon’s licensed system, which makes no distinction between adult-use and medical product at the point of wholesale transfer. Prices for medical flower sank this week. Despite a rise in rates in that portion of California’s market, week-over-week declines were observed in essentially every sizeable medical-only legal cannabis program – namely Arizona, Illinois, Maine, Michigan, and Rhode Island. 

August Forward assessed up $75 to $1,275 per pound.

 

The average reported forward deal size was 49 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 29%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 53 pounds, and 64 pounds, respectively.

 

The entire Six-Month Implied Forward Curve was assessed upward this week. Continued demand growth in the major Western markets this year appears as if it is straining production capacities that have stabilized or diminished relative to a year ago. Meanwhile, despite robust harvests cut down at the end of last year, buyers are reportedly dissatisfied with the remaining inventory on offer and are turning increasingly to higher-priced indoor, greenhouse, and light-deprivation product that has been cut down more recently.  

 

 

At $1,275 per pound, the August Forward represents a discount of 5.5% relative to the current U.S. Spot Price of $1,349 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:

  • California

  • Audit of BCC Indicates that Oversight and Enforcement of Licensed Businesses Has Room to Become Significantly More Stringent
  •  
  • Colorado

    Retail Revenues Rise to Reach New Record High in May, YTD Sales Up Almost 9% Compared to First Five Months of 2018

  • Oregon

  • Historical Harvest Data Shows Large Increases in July 2018 and August 2017, Suggesting New Supplies Could Reach Market in the Coming Weeks
  •  
  • Washington

  • Traceability System Issues Hamper Wholesale Trading this Week as State Spot Index Continues to Climb
  •  
  • Arizona

  • June Sales Volume to Patients Declines After Two Straight Months of Record Demand, State Spot Index Also Slips Slightly

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19 July 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved