U.S. spot price rose just $19 this week to $985 per wholesale pound. Illinois remains the most expensive cannabis in the nation on factors well-covered here. However, topside gains narrowed again this week with wholesale pounds up just $1. The state has put together 10 weeks of steady gains with the exception of last week when spot price shed $3. The average weekly gain has been just $8 since the week of July 22, 2022, displaying little upside momentum in a well-supplied market.
As the cultivation oligopoly slowly breaks with new entrants, Illinois prices should become more competitive, but not as competitive as products “imported” from Oregon and California, not to mention Michigan. When the state next door is trading a one fourth the price, one wonders how Illinois prices can be sustained. Stay tuned.
Vermont jumped into the adult use retail space two weeks ago with pricing $104 over the Maine spot price and better than $200 over the Massachusetts price. The spreads between the three New Englanders are: Vermont / Massachusetts at $219, Vermont / Maine $104, and Maine / Massachusetts at $115. With Rhode Island and Connecticut on deck to begin adult use retail sales within the next six months, the spreads should tighten among New England’s contiguous states, then spread throughout the region. The pace of East Coast price convergence is going to make legacy state convergence look like an eon of time.
November 2022 Implied Forward unchanged at $950 per pound.
The average reported forward deal size was 76 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 52%, 35%, and 13% of forward arrangements, respectively.
The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 82 pounds, 70 pounds, and 65 pounds, respectively.
At $950 per pound, the November 2022 Implied Forward represents a discount of 3.6% relative to the current U.S. Spot Price of $985 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.