May 15, 2020

U.S. Cannabis Spot Index — May 15, 2020

U.S. Cannabis Spot Index — Published May 15, 2020

U.S. Cannabis Spot Index down 1.4% to $1,323 per pound.

 

The simple average (non-volume weighted) price decreased $42 to $1,525 per pound, with 68% of transactions (one standard deviation) in the $783 to $2,267 per pound range. The average reported deal size decreased to 2.3 pounds. In grams, the Spot price was $2.92 and the simple average price was $3.36.

 

The relative frequency of trades for outdoor flower increased by 2% this week. The relative frequency of deals for greenhouse product decreased by the same proportion, while that for transactions involving indoor flower was unchanged. 

 

 

Warehouse flower’s share of the total reported weight moved contracted by 2% this week. The relative volumes of greenhouse and outdoor product contracted by 1% each.

Additional sales data out of Colorado and Michigan this week is beginning to provide a picture of how adult-use and medical cannabis sales have been impacted by the COVID-19 pandemic and accompanying mitigation measures imposed by officials. At this point, it appears that the one solid conclusion to be drawn is that the effects of the pandemic on cannabis sales will vary state to state, depending on the maturity of the market and other factors. However, one trend that is emerging from medical cannabis sales in March out of Colorado, Oregon, Arizona, Michigan, and Illinois is that demand from registered patients appears to have spiked to greater degrees in response to the coronavirus than it did among adult-use customers. 

 

In our report for April 24, we discussed March sales data from Oregon and Arizona. By analyzing March 2020’s information in light of historical sales data going back to 2017, we concluded that the significant increases in sales in those states in March were likely due largely to organic market growth and seasonal sales trends, with a boost from coronavirus-motivated bulk buying. In other words, the early days of the pandemic in the U.S. resulted in a discernible, but not dramatic, increase in demand in those markets. 

 

The opposite appears to be the case for Colorado. Similar to Oregon and Arizona, Colorado saw a significant month-over-month increase in sales in March, an occurrence that has come to be expected by market observers and participants. However, unlike the two other aforementioned markets, the rate at which sales rose month-over-month in Colorado in March 2020 is down compared to the same period in prior years. Additionally, March’s year-over-year sales growth is lower than the annual growth figures documented in January and February this year, before COVID-19 made its way to Colorado. Overall, it appears that the pandemic put a small dent in demand for cannabis in Colorado in March, despite a brief surge of panic-buying in Denver late in the month.

 

Meanwhile, partial adult-use revenue data out of Michigan indicates that sales in the still-young sector of the state’s market continued to grow through April and into the early days of this month. According to the Detroit News, in the nine weeks from March 9 to May 10, adult-use retailers in Michigan racked up almost $55 million in sales. More than $7 million in sales was recorded in each of the latter four weeks of that period.

June Forward unchanged at $1,425 per pound.

 

The average reported forward deal size was 36 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 48%, 36%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 29 pounds, and 36 pounds, respectively.

 

At $1,425 per pound, the June Forward represents a premium of 7.7% relative to the current U.S. Spot Price of $1,323 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

Mark-Up Rate Used to Calculate Retail Excise Tax Will Remain the Same through 2020

Colorado

 

March Sales Rise 15% from February, But Magnitude of MoM Increase Smaller Than in Prior Years

 

State Budget Officials Forecast Declining Cannabis Sales in Current and Forthcoming FY Due to COVID-19

 

Nevada

Retailers May Conduct In-Store Sales With Approval from State Officials Under Phase One of Reopening Plan; Hotels & Casinos Remain Closed   

Massachusetts

Number of Registered Medical Cannabis Patients as of April 2020 Comparable to a Year Ago, But Sales Volume Up Almost 70%

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

15 May 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved