The U.S. Cannabis Spot Index increased 1.4% to $999 per pound.
The simple average (non-volume weighted) price increased $141 to $1,348 per pound, with 68% of transactions (one standard deviation) in the $549 to $2,147 per pound range. The average reported deal size decreased to 2.4 pounds. In grams, the Spot price was $2.20 and the simple average price was $2.97. [Note: We have initiated coverage of Pennsylvania. This week’s increase in the U.S. simple average price and standard deviation reflects this addition.]
The relative transaction frequency of indoor product rose 4%, while that of greenhouse flower fell 4%. Outdoor flower transaction frequency was unchanged. The relative volume of indoor product fell 1%, as did that of greenhouse product. Outdoor flower’s relative volume rose 1% this week.
The Cannabis Benchmarks U.S. Spot Index jumped $14 this week despite a net loss across legacy states of $30 per wholesale pound. Croptober has taken legacy state outdoor flower on a downward trajectory, with Oregon and Colorado volume-weighted spot prices seemingly in a race to the bottom. The outdoor flower spread price is just $12 between these two states; the spread was $133 as recently as July 2022. California and Washington State outdoor prices are likewise entwined with chart formation suggesting lower prices are likely in the immediate future.
California and Oregon indoor product prices are moving higher on demand for what many connoisseurs will say is the best cannabis in the world. While there is some evidence of capitulation in the Oregon cultivator market as license renewals dip amid the state’s second moratorium, it would be too much to say the moratorium is responsible for higher prices of late.
The spread between California and Oregon indoor product has closed to $178 per pound from $424 since mid-September 2022 on what is more likely out-of-state rather than new in-state demand in these mature markets. Indeed, the likelihood that demand for higher-end product will increase as more states legalize cannabis is a foregone conclusion. Both states have memorialized interstate trade into law ahead of nationwide legalization because they see it as an inevitable eventuality, albeit on vague timelines.
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 51%, 35%, and 14% 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 4.9% 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.
