U.S. Cannabis Spot Index up 1.0% to $1,430 per pound.
The simple average (non-volume weighted) price decreased $11 to $1,614 per pound, with 68% of transactions (one standard deviation) in the $941 to $2,287 per pound range. The average reported deal size increased to 2.0 pounds. In grams, the Spot price was $3.15 and the simple average price was $3.56.
The relative frequency of trades for each grow type was very stable compared to last week, with only a marginal decrease in that for deals for indoor flower discernible in the chart below. Greenhouse product’s share of the total documented weight moved nationally contracted by 2% this week. The relative volumes of warehouse and outdoor product each expanded by 1%.
The U.S. Spot Index rose by 1% this week to settle at $1,430 per pound. This week’s national composite price represents a new year-to-date high. This is the latest in the year that such a milestone has been established in the history of our reporting, a phenomenon that is especially notable as the autumn harvest has begun to be cut down and make its way to market.
New sales data out of Colorado shows that unprecedented demand in the country’s second largest legal cannabis market persisted through August. Official information and reports from market participants in the West Coast states indicate that similar conditions are occurring in those markets as well. Meanwhile, the sizeable medical-only markets of Arizona and Illinois are also seeing significant year-over-year demand growth and are contributing to upward pressure on national wholesale prices.
This week last year was the final one before the U.S. Spot began descending notably as the fall crop came in. In 2018, the national composite price declined by 3.4% from $1,084 per pound in the week ending October 19 to $1,047 per pound in the week ending November 9, the annual trough for last year. However, elevated demand this year, combined with impacts from bans on certain vaping products in Oregon and Washington, which we discuss in more detail in the Spot Index commentary for those states, represent novel sources of upward pressure to wholesale cannabis prices that could disrupt customary seasonal trends.
The national volume-weighted price for flower to be sold to general consumers ticked down slightly as declines in that sector of the market in California, as well as in Nevada, outweighed increases in Colorado and Oregon. The national price for medical flower jumped on increases in that portion of California’s market, in addition to the rises in the medical-only markets of Arizona, Illinois, Maine, New Mexico, Rhode Island, and Vermont.
November Forward up $75 to $1,325 per pound.
The average reported forward deal size was nominally unchanged at 57 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 53%, 32%, and 15% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 62 pounds, 39 pounds, and 70 pounds, respectively.
The entirety of the six-month Implied Forward Curve has been assessed upward this week. As we discuss in this week’s report, there apprehensions about poor weather impacting the harvest in the Pacific Northwest states. Additionally, in Colorado, Marijuana Business Daily reported late this week that an early-season snow storm caused the loss of roughly half the crop of the state’s largest outdoor grower, Los Sueños Farms in Pueblo. The loss could compound market conditions in which unprecedented demand has already been pushing up wholesale prices since the outset of summer. In California, even though growing conditions have reportedly been favorable, strong demand may be sufficient to absorb the production of the state’s licensed cultivators. Finally, adult-use sales in Michigan and Illinois – expected to begin as early as late this year and at the start of next year, respectively – will add new, expanded demand to markets already seeing supply pressure.
At $1,325 per pound, the November Forward represents a discount of 7.4% relative to the current U.S. Spot Price of $1,430 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:
Retail Sales Again Set New Records in August, as Wide-Ranging Product Recall and Reports of Significant Loss by State’s Largest Grower Could Crimp Supply