Source: Christina Hawkins via Unsplash
Data released last week by officials in Colorado and Michigan tell a similar story to recent data out of Oregon: Specifically, that the late spring and early summer have seen demand in legal cannabis markets largely plateau or even decline slightly, albeit at levels elevated significantly compared to prior to the COVID-19 pandemic’s arrival in the U.S. last year.
The Colorado Department of Revenue (CDOR) recently released its monthly Marijuana Sales Report for May 2021. Total sales slipped for the second straight month. A decline in combined adult-use and medical cannabis sales from April to May breaks with the trend observed in that period in both 2019 and 2020, but prior years saw decreases in monthly sales in this period.
In May, combined retail sales of adult-use and medical cannabis totaled over $194 million, down by 6% compared to April’s combined revenues of over $206.3 million. May 2021’s sales are up by only 1% year-over-year, from over $192.1 million in the same month in 2020. May 2020 is the month in which retail demand truly took off in Colorado last year, after April 2020’s sales were depressed during the advent of the COVID-19 crisis in the U.S. The relatively comparable sales figures from May 2020 to 2021 could be another sign that demand is plateauing across several legal cannabis markets, albeit at levels elevated relative to before the arrival of the coronavirus.
In the wholesale realm, tax collection data for June 2021 – which corresponds generally to wholesale transfers and transactions executed in May – shows that the 15% excise tax on wholesale activity in Colorado’s adult-use system resulted in over $10 million accruing to state coffers. June’s wholesale excise tax receipts are up by 1% compared to tax collections from the previous month, which amounted to over $9.9 million.
The Michigan Marijuana Regulatory Agency issued its June 2021 Monthly Report last week. Total sales for June, including medical and adult-use markets, reached over $149 million, up slightly from over $148.8 million in combined retail sales in May. Average per-ounce retail flower prices were comparable in each sector of the market, coming in at just under $210 per ounce ($3,360 per pound) in both the medical and adult-use systems in June.
Slowing sales in Michigan are especially notable as the regulated market is still relatively young, with adult-use sales only beginning at the end of 2019. However, if litigation regarding the city of Detroit’s adult-use licensing ordinance is resolved and the city can move forward in approving legal businesses, more significant growth should eventually resume.
Overall, there has been a weakening in sales over the past three months in both price and amount sold. Markets typically seek equilibrium where quantity demand is equal to supply and prices remain stable; the Michigan market appears to be adjusting toward equilibrium – at least momentarily – as prices move lower in response to demand and supply adjustments. Of course, the legal market is actively expanding and such dynamics could change in the future as more licensed producers and retailers proliferate throughout the state.
In the adult-use market, monthly sales revenue in June returned to trend with a 2.8% gain over May. Average daily sales spiked by 6.3% to almost $3.58 million per day in June. June monthly adult-use sales represent a new record for that portion of Michigan’s market. June flower sales volume jumped by over 1,000 pounds to 16,437 pounds, with a corresponding increase in revenue to over $624.2 million, from over $551.1 million in May. The downward trend of average retail flower per-ounce prices accelerated in June, dropping 5.3% to $209.82. Adult-use cultivators harvested almost 4,000 more plants in June than in May. However, growth in vegetative and flowering plant counts leveled off. Growers may be reigning in their previous expansion activities in response to plateauing sales and falling prices in recent months.
Medical use retail flower sales came in at over $20.6 million, a 7.3% drop from the May 2021 figure. The number of pounds of flower sold fell by 13.2% to 6,155, representing a sharper fall-off than the previous month.
Oregon reported June 2021’s cannabis harvest at 477,177 pounds of wet weight, a 43.6% year-on-year increase and a 37.8% increase over May 2021’s harvest volume. Of the over 477,000 pound total, outdoor growers brought in just over 115,000 pounds of wet plant material and the indoor harvest came in at just over 267,700 pounds.
The statewide sales trend is down over the past two months, with April sales at $110.8 million, May sales at $105.8 million, and June sales falling to $99.7 million. After booming during the COVID-19 pandemic in 2020, cannabis demand in Oregon seems to be plateauing recently. The current downward trend in monthly sales breaks with historical patterns, which have seen monthly retail revenue figures generally on the rise from May through August in any given year.
The Oregon Liquor Control Commission (OLCC) also reports on median wholesale prices for “Usable Marijuana,” the agency’s term for flower and other dried plant material for smoking. According to the most recent data, median prices continue to consolidate between $1,299 and $1,351 per pound this year, with June prices coming in at $1,299, matching the January 2021 low. A broader perspective on median wholesale price suggests per pound prices are consolidating within the $1,300 – $1,350 range.
[Editor’s Note: Cannabis Benchmarks price assessments are volume-weighted averages, rather than the medians reported by OLCC. Volume-weighted average pricing is important as different grow types command varied pricing and the supply mix shifts throughout the year. As noted above, higher-priced indoor flower currently makes up the majority of the volume of plant material being harvested, but the supply mix will shift heavily to outdoor product in Q4 of any given year in conjunction with the autumn harvest.]