The U.S. Cannabis Spot Index increased 0.3% to $1,023 per pound.
In grams, the Spot price was $2.26.
The U.S. Spot wholesale flower price has been holding in a tight range for the last three weeks, fluctuating by just a few dollars and settling this week at $1,023 per pound.
Wholesale prices for indoor and greenhouse flower have moved in opposite directions in recent weeks, with the former ascending and the latter declining, while the national price for outdoor flower has been steady. It’s likely markets in which outdoor growing takes place are waiting to gauge the size and quality of this year’s crop, which available data and anecdotal reports have indicated will be significantly smaller than those in recent years. While outdoor harvests have been occurring already, it will take several weeks for the product to be dried and make its way to market.
It’s also important to note that, while outdoor growers in more mature western markets have scaled down production this year, cultivation in younger markets such as Michigan, Illinois, and Massachusetts has been expanding. Data out of Oregon has also shown that indoor growers in the state have actually increased their output a bit compared to last year. Overall, while outdoor harvests on the West Coast and in Colorado will almost certainly come in notably smaller this year, supply continues to be robust and it’s unlikely that the outdoor production pullbacks in certain states will lead to meaningful tightness, much less shortages.
Q4 of any given year is not only characterized by the shift in supply dynamics from the Fall harvest, but by demand pressures on the consumer side as well. In recent years, inflation in the prices for household bills and necessities has been widely considered to have eaten into discretionary spending, including on cannabis products. According to the Bureau of Labor and Statistics, inflation continued to be stubbornly persistent going into Autumn, with September’s Consumer Price Index showing a 0.4% month-on-month increase and a 3.7% rise from a year prior.
The final quarter of any given year is typically one of the weaker ones in terms of sales, with only the first two months of Q1 seeing lower demand levels. With consumers having grappled with high prices for necessities for in excess of two years, cannabis retailers should not expect any major boosts in demand that has in most markets plateaued, if not declined in revenue terms. Cannabis retailers will also be competing with holiday spending and travel, as well as elevated costs for people to heat their homes as the current period progresses.
November 2023 Implied Forward unchanged at $960 per pound.
At $960 per pound, the November 2023 Implied Forward represents a discount of 6.2% relative to the current U.S. Spot Price of $1,023 per pound.
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