CANNABIS BENCHMARKS WEEKLY REPORT -- PUBLISHED DECEMBER 22, 2017
U.S. Cannabis Spot Index up 2.0% to $1,431 per pound.
The simple average (non-volume weighted) price increased $89 to $1,691 per pound, with 68% of transactions (one standard deviation) in the $945 to $2,437 per pound range. The average deal size increased 7.3% to 11.8 pounds from 11 pounds last week. In grams, the Spot price was $3.15, and the simple average price was $3.73.
The relative frequency of trades for indoor product increased again this week, by 5%. Consequently, the relative frequency of transactions for greenhouse and outdoor flower declined by 3% and 2%, respectively. Warehouse product made up roughly half of all reported weight moved, down from 53% last week, as the relative volume of greenhouse flower increased by about 3% week-over-week. Outdoor-grown product’s share of the total observed volume traded was up very slightly compared to last week.
Indoor flower spanned from $800 to $5,800 per pound; the median price was $1,600/lb.
Greenhouse flower spanned from $500 to $3,150 per pound; the median price was $1,120/lb.
Outdoor flower spanned from $400 to $2,200 per pound; the median price was $1,000/lb.
The U.S. Spot Index ticked upward this week, rising by 2% to nearly recover the decline observed last week. All three grow types saw week-over-week increases in their volume-weighted averages in the week prior to the Christmas holiday. The composite average deal size was up on the back of increases in the average transaction volumes of both sun-fueled grow types.
The national volume-weighted average rate for greenhouse flower increased this week, interrupting a downward slide that had been sustained for over a month.
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.
Despite low prices in Colorado and Washington State, as well as a steep decline in Alaska’s Spot Index, the national volume-weighted average for product traded in adult-use systems rose slightly week-over-week. The national rate for flower dealt in medical cannabis markets was also on the upswing this week due to rising rates in California, Arizona, and Michigan, as well as a few other smaller medical markets.
January 2018 Forward down $50 at $1,525 per pound.
The average forward deal declined 10 pounds to 72 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 47%, 27%, and 26% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 96 pounds, 54 pounds, and 48 pounds, respectively.
Last week we noted that the U.S. Spot Index increased by more than 10% during the last two weeks of 2016. With only one week left in 2017, the national market is showing relative stability, averaging $1,412 per pound since the beginning of November. Despite the near-term uncertainty facing wholesale markets in California and Michigan, market participants are not anticipating significant price increases in the weeks ahead, resulting in a decline in our Forward assessments. At $1,525 per pound, the January Forward represents a premium of 6.6% relative to the current U.S. Spot Index of $1,431 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
Sample headlines from this week's Premium Report:
Sample content from this week's Premium Report:
As of the afternoon of Wednesday, December 20th, 57 temporary licenses had been issued by the Bureau of Cannabis Control (BCC) to 38 companies, occupying 40 distinct addresses. Though the 57 licenses include those of both “A” (adult-use) and “M” (medicinal) types, such licensees will be able to conduct business with each other through the first half of 2018, making it at this point a distinction without a difference. From July 1, 2018 onward, however, licenses may only conduct commerce with other businesses of the same type; meaning, in other words, that the adult-use and medical markets will be kept separate and impermeable from one another in California, similar to the situation in Colorado. The BCC is responsible for licensing retailers, distributors, testing labs, microbusinesses (small vertically-integrated companies conducting operations of multiple types), and standalone delivery services.
Early on, key choke points in the supply chain could occur at the distribution and testing levels. All product must pass through a distributor, where required quality assurance screenings, labeling, and remittance of cultivation taxes will take place prior to the product being able to be sold to retailers. A lack of adequate distributors and labs, in addition to regional scarcity of such entities, could prevent difficulties and extra costs for producers in offloading their products so that they can eventually reach consumers. At the time specified above, the BCC had licensed seven distributors; three of which are in northern California (two in Santa Rosa and one in Berkeley), two in the central portion of the state (in King City and Del Rey Oaks), and one in Lynwood, in the Los Angeles area. It should also be noted that some of the five microbusinesses licensed at the time of this analysis may include distribution services in their purview. Four testing labs had also gained temporary licenses to operate, three of which are located in the northern part of the state, in Berkeley, Santa Rosa, and Eureka. The final lab to gain a temporary license is located in Monrovia, northeast of Los Angeles.
22 December 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved