September 16, 2022

U.S. Cannabis Spot Index — September 16, 2022

U.S. Cannabis Spot Index — Published September 16, 2022

The U.S. Cannabis Spot Index increased 0.1%, nominally unchanged at $1,010 per pound.

 

The simple average (non-volume weighted) price decreased $3 to $1,243 per pound, with 68% of transactions (one standard deviation) in the $541 to $1,946 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.23 and the simple average price was $2.74.

 

The relative transaction frequency of indoor product was unchanged, as were those of greenhouse and outdoor product. 

  

 

The relative volume of indoor product was unchanged on the week, while that of greenhouse product rose 3% and that of outdoor product fell 3%.

 

Cannabis Benchmarks U.S. Spot Index was unchanged this week largely on the back of legacy states netting zero price change. The weighted average spot price is hanging on to the $1,000 per pound level at $1,010, just $7 over the all-time low of $1,003 per pound wholesale, made on September 2, 2022. 

 

The U.S. Indoor spot price made a new all-time low this week at $1,257 per pound, down $8 from last week and marking a resumption of the downtrend after the market had rallied from $1,286 in mid-July 2022 up to $1,364 in early August. 

 

U.S. Greenhouse spot is also at an all-time low down at $763, having shed $33 in the week.  Sources around the country are estimating the average greenhouse production price around $350 per pound in states with high utility costs, while states with lower utility costs appear to be around $300 per pound, perhaps slightly less. 

 

U.S. Outdoor spot, heavily weighted by legacy state spot prices, jumped $24 this week to trade at $463 per pound after making an all-time low at $411 per pound in the first week of September. Given the myriad differences in states’ climates, taxes, regulations, and production input prices, outdoor production price per pound reportedly ranges from $50 for product headed to biomass to $150 for product destined for retail. 

 

 

As states become ever more efficient at standing up cultivation, manufacturing and retail, the price of cannabis appears headed toward the price of production in legacy markets, mimicking other agriculture products that are in abundant supply in the U.S. While there is a good bit of volatility in grain and grass markets, pound prices are typically measured in cents. Cannabis is an agricultural product and, while the price is unlikely to sink to cents per pound, it is probably time to predicate business plans on hundreds, rather than thousands of dollars per pound.

 

October 2022 Implied Forward unchanged at $995 per pound.

 

The average reported forward deal size was 75 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 53%, 34%, and 13% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 84 pounds, 65 pounds, and 62 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a discount of 1.5% relative to the current U.S. Spot Price of $1,010 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:

Michigan

Medical Market Share Slips Below 10%

Alaska

Growers Thread the Needle on Tax Categories – Interview

Arizona

Cannabis Market Competition Heating Up – Interview

New Mexico

Adult Use Sales Uptick in August, Medical Sales Slip

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16 September 2022.  Copyright © 2022 New Leaf Data Services, LLC.  All rights reserved