November 6, 2020

U.S. Cannabis Spot Index — November 6, 2020

U.S. Cannabis Spot Index — Published November 6, 2020

U.S. Cannabis Spot Index down 0.7% to $1,647 per pound.

 

The simple average (non-volume weighted) price decreased $11 to $1,859 per pound, with 68% of transactions (one standard deviation) in the $1,115 to $2,603 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.63 and the simple average price was $4.10.

 

The relative frequencies of trades for each grow type were essentially unchanged from last week.

 

The relative volume of outdoor flower expanded by almost 3% this week. The relative volumes of indoor and greenhouse product contracted by about 1% and 2%, respectively.

With the close of October, much of the country’s legal outdoor crop has been harvested, but early reports out of Oregon state that it has not yet hit the market for the most part. It will likely be several weeks before significant portions of this year’s crop are dried, trimmed, tested, packaged, and sent to retailers. While the overall state of the harvest in West Coast states and Colorado is still unclear, some initial reports from market participants in Oregon indicate that some outdoor crops that were exposed to smoke and ash from the wildfires earlier this year are finishing favorably. Some are worried more about disruptions to power and water caused by the wildfires, and how that impacted the ability to care for growing plants, more so than smoke damage. 

 

In the meantime, the upward momentum of the U.S. Spot Index accelerated in October relative to September. While the national composite price last year rose to its annual peak in mid-November 2019, this year the last two weeks have seen consecutive downturns in the U.S. Spot.

 

 

Strong sales are continuing, however, with the holidays approaching as well. Adult-use markets in Massachusetts and Illinois both saw new monthly sales records set in October. It remains to be seen how – or if – the worsening COVID-19 pandemic will impact demand during the upcoming holiday season. Prior to this year, Thanksgiving and the end-of-year holidays had become a period when retailers run promotions and specials to drive sales, including dubbing the day after Thanksgiving “Green Friday,” to accompany “Black Friday” deals run by traditional retailers.

May 2021 Forward initially assessed at $1,565 per pound.

 

The average reported forward deal size was nominally unchanged at 23 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 40%, 36%, and 25% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 29 pounds, 17 pounds, and 23 pounds, respectively.

 

At $1,590 per pound, the December Forward represents a discount of 3.5% relative to the current U.S. Spot Price of $1,647 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:

Legalization Updates

Five States Legalized Cannabis in Some Form in Tuesday’s Elections: Arizona (Rec), Mississippi (Med), Montana (Rec), New Jersey (Rec), and South Dakota (Rec & Med)

Arizona’s Large Medical Program Well-Positioned to Expand to Serve Adult-Use Consumers

New Jersey’s Nascent Adult-Use Industry, Building on Small Medical Program, Will Need Time to Grow to Meet Massive In and Out-of-State Demand

Massachusetts

Adult-Use Retailers Set New Sales Record in October, Exceeding $83M; 2020’s YTD Tally Climbs to Over $542M

Illinois

Recreational Sales Top $75M in October, Another New Record, With Average Daily Sales Increasing Almost 8% from Prior Month

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6 November 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved