Cannabis Benchmarks Weekly Report -- published 14 april 2017
U.S. Cannabis Spot Index down 1.4% to $1,655 per pound.
The simple average (non-volume weighted) price decreased $8 to $1,806 per pound, with 68% of transactions (one standard deviation) in the $1,099 to $2,514 per pound range. The average deal size increased 2.9% to 7.1 pounds this week, from 6.9 pounds last week. In grams, the Spot price was $3.65, and the simple average price was $3.98.
This week saw the relative volume of both sun-fueled grow types swell to account for the majority of the total observed weight moved. The relative volume of greenhouse and outdoor flower grew week-over-week by 2% and 5%, respectively. Meanwhile, the relative frequency of transactions for each grow type was largely steady. Trades for greenhouse product saw a 2% increase in their proportion of documented deals this week, which resulted in a corresponding decrease in the relative frequency of transactions for warehouse flower.
Indoor flower spanned from $800 to $6,400 per pound; the median price was $2,000/lb.
Greenhouse flower spanned from $987 to $3,250 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $700 to $1,800 per pound; the median price was $1,400/lb.
The U.S. Spot Index decreased marginally for the second consecutive week, falling by almost one and a half percent to approach $1,650 per pound. This despite a 6% increase in volume-weighted average pricing for greenhouse product, the second straight week rates for flower of that grow type have seen an increase of that magnitude. However, prices for indoor and outdoor flower - which collectively made up about two-thirds of the observed volume traded - were both down by around 1%, driving the overall decline.
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.
Wholesale rates for medical and adult-use product again followed the U.S. Spot in declining slightly for the second consecutive week. The national volume-weighted average rate for flower in adult-use markets fell more steeply and was paced by Colorado, where the volume-weighted average price for recreational product was $1,276 per pound, almost $20 below the overall state Spot. The 1.6% decline in pricing for flower in medical markets was influenced heavily by falling rates in California, in addition to holdouts in Oregon’s medical cannabis program seeing composite prices average just over $1,650 per pound.
May Forward unchanged at $1,750 per pound.
Forward arrangements represented 3.6% of overall market activity this week. The average forward deal increased to 17 pounds, from 14 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 40%, 30%, and 30% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 15.75 pounds, 18 pounds, and 16.5 pounds, respectively.
At $1,750 per pound, the May Forward represents a premium of 5.7% 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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Market participants in Washington State could be undergoing a big change in their daily routines in the latter part of this year. A report from Marijuana Business Daily (MBD) states that the LCB is in the process of accepting bids for a new plant and inventory tracking system. According to the report, bids are due by April 26th and the LCB intends to have the new tracking system in place by the end of October. Notably, the report states that the current seed-to-sale tracking software and service provider - BioTrackTHC - will not be submitting a bid for the new contract, quoting BioTrack’s CEO Patrick Vo on the matter. As such, it appears at the moment that a significant alteration to Washington’s legal cannabis system could take place in the thick of the fall harvest season.
As we have noted in previous reports, October and November are the prime months for Washington farmers to bring in their full term crops. Plants already underway or to be started imminently for harvest at that time will of course be accounted for in BioTrack, as that company’s system remains required until a new one is in place. However, farmers forced to change over to a new tracking system in the midst of the harvest could face increased labor at what is perhaps the busiest time of year already, especially if plants and product must be tagged with RFID markers of a new company, or accounted for in some other way. The switch at such a labor-intensive period of the year could also cause issues in terms of compliant record-keeping, as it would be easy to lose track of batches when so many plants and such large volumes of product are being harvested and processed. Finally, the implementation of such a new system is often fraught with hiccups and generally takes a period of weeks for operators to become accustomed to novel requirements and approaches to accounting for their inventory.
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14 April 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved.