October 9, 2020

U.S. Cannabis Spot Index — October 9, 2020

U.S. Cannabis Spot Index — Published October 9, 2020

U.S. Cannabis Spot Index down 0.7% to $1,623 per pound.

 

The simple average (non-volume weighted) price increased $31 to $1,800 per pound, with 68% of transactions (one standard deviation) in the $1,045 to $2,556 per pound range. The average reported deal size was nominally unchanged at 2.0 pounds. In grams, the Spot price was $3.58 and the simple average price was $3.97.

 

The relative frequency of trades for greenhouse flower decreased by 2% this week. The relative frequency of transactions for indoor product increased by the same proportion, while that for deals involving outdoor flower was unchanged.  

 

The relative volume of warehouse product contracted by 1%. The relative volume of outdoor flower expanded by the same proportion, while that for greenhouse product was unchanged.

September sales data released this week continues to show demand elevated well above pre-COVID levels. However, similar to August, there are also some signs that it may have reached, or at least be near, a current peak. Sales volume to patients in Arizona’s medical cannabis system declined for the second straight month in September. Adult-use sales in Illinois continued to climb, but growth has slowed in recent months after a big jump in July, although that may be due in part to still-developing production capacity and tight supply. 

 

As record sales have strained supplies even in mature and previously well-supplied markets, new regulatory developments could add more costs for businesses, potentially applying further upward pressure on wholesale prices. Proposed rules in Oregon and Washington would enact new regulations around additives in vape products in the former state and implement required pesticide and heavy metals tests for products in the latter. Mandatory quality assurance and safety screenings of products will begin in Arizona’s market in November for the first time in the history of the state’s medical cannabis program.

 

With rules tightening in some states with more mature markets, the establishment and expansion of younger ones will capture demand that was likely supplied previously by illicit sellers. The sizable markets of Los Angeles and Michigan both announced new opportunities to apply for cannabis business licenses this week. Meanwhile, adult-use sales began today in Maine and a new law set the stage for a regulated commercial cannabis market in Vermont in the future.

November Forward up $30 to $1,545 per pound.

 

The average reported forward deal size was nominally unchanged at 22 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 35%, 39%, and 26% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 24 pounds, 17 pounds, and 25 pounds, respectively.

 

At $1,545 per pound, the November Forward represents a discount of 4.8% relative to the current U.S. Spot Price of $1,623 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:

California

Los Angeles to Accept License Applications for Several Business Types Later this Month

Arizona

Sales Volume Declines for Second Straight Month in September, but Remains Elevated from Pre-COVID Levels

Illinois

September Adult-Use Sales Approach $68 Million

Maine

Adult-Use Market Opens, but Only a Few Businesses Licensed to Make Sales Businesses

 

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9 October 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved