Weekly Report -- Published on 17 March 2017
Over 65 pages of detailed commentary and analysis including:
2016 U.S. Wholesale Cannabis Market Highlights
Monthly Price Data for the Largest Wholesale Markets
Trends That Defined 2016
What To Watch For In 2017
Price Volatility And Emerging Markets
Commodity Price Correlation
U.S. Cannabis Spot Index up 5.1% to $1,655 per pound.
The simple average (non-volume weighted) price increased $48 to $1,795 per pound, with 68% of transactions (one standard deviation) in the $1,103 to $2,487 per pound range. The average deal size increased 11.7% to 6.7 pounds this week, from 6.0 pounds last week. In grams, the Spot price was $3.65, and the simple average price was $3.96.
The relative volume of indoor product swelled by 6% week-over-week to account for more than half of the total observed weight moved, as the relative frequency of transactions for flower of that grow type held largely steady. Greenhouse product also increased its share of the total observed volume traded, by 4% compared to last week. Consequently, outdoor flower made up just over one-tenth of all documented weight sold this week, down 10% from last week. The relative frequency of deals for greenhouse and outdoor product were also fairly steady, with only very slight week-over-week changes.
Indoor flower spanned from $899 to $5,000 per pound; the median price was $1,895.
Greenhouse flower spanned from $700 to $3,300 per pound; the median price was $1,305.
Outdoor flower spanned from $800 to $2,000 per pound; the median price was $1,500.
The U.S. Spot Index experienced a jump of over 5%, vaulting it above the $1,650 per pound threshold to a new year-to-date high price. Rates for all grow types were up week-over-week, though the price rises observed for indoor and greenhouse flower were slight, at about 1% each. As such, climbing rates for field-grown product were primarily responsible for the rally in the national composite price.
The table below illustrates the U.S. Spot Index, along with the volume weighted averages for all transactions accompanied by a medical or recreational / adult-use designation.
Pricing in adult-use and medical cannabis markets was on the rise this week, with both increasing at rates similar to the U.S. Spot. Rates for wholesale product in adult-use markets ticked up a bit more, proportionally, on the back of rising state Spot Indices in Colorado, Washington, and Alaska, while composite pricing in Oregon was flat week-over-week. Wholesale flower in medical cannabis markets approached the $1,800 per pound threshold, driven by week-over-week rate increases in California, Michigan, and New Mexico.
Deal sizes for indoor flower ranged from 0.15 to 100 pounds.
Deal sizes for greenhouse flower ranged from 0.15 to 139 pounds.
Deal sizes for outdoor flower ranged from 1 to 100 pounds.
Forward Curve unchanged, Peak Prices expected in May.
Forward arrangements represented 4% of overall market activity this week. The average forward deal declined to 13 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 30%, 40%, and 30% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 17 pounds, 15 pounds, and 5 pounds, respectively.
The U.S. Spot Index has averaged $1,595 per pound through the first three weeks of March, $55 or 3.3% less than the March Forward price, which closed at $1,650 per pound the week ending February 24th. This indicates that buyers participating in the March spot market, thus far, on average, benefited versus those that locked in purchases at $1,650. At $1,700 per pound, the April Forward represents a premium of 2.7% relative to the current U.S. Spot Index of $1,655. The premium or discount for each forward price, relative to the U.S. Spot Index, is illustrated in the table below.
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NEVADA - Spot Market Analysis & Commentary
Nevada transaction specifics are shown in the accompanying chart; all prices are volume weighted averages.
After stagnating in the final months of 2016 and the initial one of 2017, Nevada’s patient count is back on the rise. From the end of 2015, when the state’s commercial medical cannabis system was only about five months old, to the end of last year, the state’s patient count increased by over 53%, from 13,561 to 25,358. The increase of nearly 12,000 patients in a year’s time averages to just under 1,000 new registrants a month in Nevada’s medical cannabis program. However, from the end of November 2016 to that of January 2017, the state saw a total increase of less than 200 patients, from 25,291 to 25,465, due in part to the state’s online registration portal being down. From the end of January to the end of last month, though, Nevada’s medical cannabis program again picked up last year’s average pace and saw a month-over-month increase of registered patients of nearly 1,000, to amount to a total of 26,519 patients enrolled in the system at the end of February.
As the above figures indicate, in-state patient demand was relatively flat in the period around the transition from 2016 to 2017. A cursory examination of Las Vegas tourism statistics also suggests that demand from out-of-state visitors with valid medical cannabis cards likely held fairly steady month-to-month. According to figures from the Las Vegas Convention and Visitors authority, over 42 million tourists visited the city last year. Monthly visitor volume ranged from a low of about 3.27 million people in December to a high of roughly 3.82 million in July; in each month between March and October, monthly visitor volume topped 3.5 million. The High Times Cannabis Cup event held in the vicinity of Las Vegas two weekends ago, and discussed in our previous two reports, was reported to have drawn about 15,000 visitors to the area, some of whom undoubtedly patronized the city’s dispensaries. Between 50-60 dispensaries are open in Nevada, with 44 of those possessing their final certificates to operate located in Clark County, which contains Las Vegas.
Still, operators in the state are optimistic that an early recreational sales program will be in place by summer, which would allow existing medical businesses to sell product to adult consumers over 21. The details of the program are still under construction, but clearly such an allowance would greatly expand the limited customer pool currently patronizing the state’s dispensaries.
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