September 2, 2022

U.S. Cannabis Spot Index — September 2, 2022

U.S. Cannabis Spot Index — Published September 2, 2022

The U.S. Cannabis Spot Index decreased 2.4% to $1,003 per pound.

 

The simple average (non-volume weighted) price decreased $11 to $1,270 per pound, with 68% of transactions (one standard deviation) in the $543 to $1,997 per pound range. The average reported deal size was nominally unchanged at 2.5 pounds. In grams, the Spot price was $2.21 and the simple average price was $2.80.

 

The relative transaction frequency of indoor product rose 1% this week, while that of greenhouse flower fell 1%. Outdoor transaction frequency was unchanged in the week.  

 

 

The relative volume of indoor product rose 1%, while that of greenhouse flower fell 2%. Outdoor flower’s relative volume rose 1%.

 

The Cannabis Benchmarks U.S. Spot Index fell to a new all-time low this week at $1,003 per pound wholesale, taking out the previous all-time low of $1,007, made just two weeks ago. For some perspective on the market, one must cast back to 2019, pre-COVID, a period in which the market was in a strong, though restrained uptrend. The 2019 spot rally peaked in February 2020 at $1,459 per pound wholesale. 

 

The Spot Index showed little variability through the onset of COVID, trading in a $135 range bounded by the February high and the May 2020 low of $1,322, after which price took off as the pandemic economic math took over: Unemployment plus government subsidies compounded by nothing but free time equaled a cannabis price rally. The Spot Index’s pandemic price peak came in late October 2020 at $1,665 per pound. Starting in October 2020, price stayed within a $188 range through August 2021, when the market topped out at $1,610. Since August 2021 the spot market has lost 37.7% of its value. 

The Cannabis Benchmarks Outdoor Flower price peaked in June 2021 at $882 per pound and has since fallen 53.4% – over $450 – to trade at a new all-time low this week of $411 per pound. The Outdoor Flower Spot Index is heavily weighted toward legacy states with their massive sun-grown crops. As we enter the fall season, Croptober is looming and outdoor prices are likely to come in, with some states headed for a test of $300 per pound in quick order.

 

Cannabis Benchmarks Indoor Spot Index has fallen 33.9% since its post-pandemic peak in August 2021 at $2,033 per pound wholesale. The Indoor Index made a new all-time low in July 2022 at $1,283 per pound and has since tracked a bit higher, trading at $1,324 per pound wholesale this week.

 

Greenhouse spot prices have also undergone a massive sell-off in the post-pandemic market, losing 43.8% since the market peaked in May 2021 at $1,378 per pound. A new all-time low was set this week at $775 per pound.

March 2023 Implied Forward initially assessed at $1,015 per pound.

 

The average reported forward deal size was 74 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 54%, 32%, and 14% of forward arrangements, respectively.

 

The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 82 pounds, 65 pounds, and 64 pounds, respectively.

 

 

At $995 per pound, the October 2022 Implied Forward represents a discount of 0.8% relative to the current U.S. Spot Price of $1,003 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

Q2 Cannabis Taxes Down 4 Quarters Running

Massachusetts

Bay State July Adult Use Sales Jump 8.2%

Oregon

OLCC Ponders “Batch Tagging”

New York

Application Window for Adult Use Dispensary Licenses Opens

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