May 8, 2020

U.S. Cannabis Spot Index — May 8, 2020

U.S. Cannabis Spot Index — Published May 8, 2020

U.S. Cannabis Spot Index up 0.6% to $1,342 per pound.

 

The simple average (non-volume weighted) price increased $21 to $1,568 per pound, with 68% of transactions (one standard deviation) in the $815 to $2,320 per pound range. The average reported deal size increased to 2.4 pounds. In grams, the Spot price was $2.96 and the simple average price was $3.46.

 

The relative frequency of trades for indoor flower increased by 2% this week. The relative frequencies of deals for greenhouse and outdoor product decreased by 1% each.

 

Warehouse flower’s share of the total reported weight moved expanded by 3% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was unchanged.

In this week’s report, we discuss the first official sales figures for April issued by any state with a legal adult-use cannabis market, which come from Illinois. Both adult-use and medical cannabis sales in the Land of Lincoln increased in April, despite the state being subject to a stay-at-home order for the entirety of the month. 

 

The increase in medical cannabis sales in Illinois in April is particularly notable, as it followed a very large spike in sales in March. Typically, medical cannabis markets see sales fall off in the month following one in which a significant jump takes place. The rate of month-over-month growth in Illinois’ adult-use market was comparable to that documented for March, but average daily sales figures increased for the first time since the recreational sector opened in January.

 

Sales data out of Illinois indicates that restrictions put in place by state and local officials in response to COVID-19 may not dampen cannabis business revenue significantly, or at all, especially if retailers are designated as essential businesses and allowed to remain open, as they are in Illinois. The data also shows that adult-use consumers and patients are both purchasing larger quantities at once, on average, likely due to people trying to limit the number of trips out of their residences in light of the coronavirus. In Illinois, adult-use consumers and patients are still permitted to enter retailers, but ordering online for curbside pickup is also an option. Ultimately, even with limited hours and not being able to allow customers and patients to freely enter stores due to social distancing protocols, Illinois cannabis sellers still saw sales growth from March to April. 

 

Similar sales guidelines exist in Colorado and the West Coast states, while Nevada retailers were until May 1 limited to delivery only. (Nevada cannabis customers can now pick up orders curbside; in-store sales will also begin to be allowed on Saturday, May 9, once retailers obtain approval from state regulators.) Whether such similarities will lead to increased sales in those markets, which are all more mature than Illinois’ to varying degrees, remains to be seen. 

 

Also, due to the youth of Illinois’ adult-use market, monthly sales trends cannot be compared to those of prior years, obscuring potential COVID-related impacts. For example, a state such as Colorado may also see month-over-month sales growth in April, but whether the rate of growth will surpass or fall short of those observed in recent months before the pandemic can be used to gauge how much the virus and accompanying restrictions are affecting demand. Official April sales data out of Colorado will not be available until June.

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 47%, 37%, 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 6.2% relative to the current U.S. Spot Price of $1,342 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

Proposed Rules for Comparable-to-Organic Certification Program for Cannabis Released by State Agriculture Department

Colorado

2019 Data Shows Wholesale Prices Rose Even as Flower Production Increased and Purchasing Declined

 

Illinois

Adult-Use & Medical Sales Both Rise in April With Stay-at-Home Order in Effect    

Massachusetts

State Announces Application Window for Adult-Use Delivery Services, Microbusinesses

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

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