Cannabis benchmarks weekly report -- published december 8, 2017
U.S. Cannabis Spot Index up 5.1% to $1,442 per pound.
The simple average (non-volume weighted) price decreased $75 to $1,600 per pound, with 68% of transactions (one standard deviation) in the $908 to $2,291 per pound range. The average deal size decreased 11% to 10.0 pounds from 11.2 pounds last week. In grams, the Spot price was $3.18, and the simple average price was $3.53.
After making up a quarter of all observed weight moved nationally last week, the relative volume of outdoor flower declined by 6% this week. The corresponding increase was split relatively evenly between the remaining two grow types. The relative frequency of trades for indoor product contracted by about 9% compared to last week. As a result, greenhouse and outdoor-grown flower experienced week-over-week expansions in that metric of over 7% and 1%, respectively.
Indoor flower spanned from $900 to $5,400 per pound; the median price was $1,700/lb.
Greenhouse flower spanned from $800 to $3,100 per pound; the median price was $1,105/lb.
Outdoor flower spanned from $400 to $2,300 per pound; the median price was $900/lb.
The U.S. Spot Index ascended this week, experiencing its largest rise since the first week of November, as increases in the volume-weighted average rates for warehouse and field-grown flower overrode a small decline in greenhouse product pricing. Both sun-fueled grow types saw notable downturns in their average deal sizes this week, while that for indoor product expanded by nearly 7%
State Spot Indices and volume-weighted average prices for individual grow types were for the most part on the rise this week. Still, that did not prevent greenhouse flower in Colorado and warehouse-grown product in Oregon from sinking to new year-to-date low rates of $1,125 and $1,834 per pound, respectively.
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.
The national volume-weighted average price for flower traded in medical markets jumped sharply this week. The Spot Indices of nearly every state with a medical-only market included in our reporting experienced a week-over-week uptick, with the exception of Maine. Additionally, Oregon’s dwindling medical sector also saw a slide in its composite rate this week, to $1,713 per pound, from $1,838 last week. The national going rate for product dealt in adult-use systems saw a small bump this week, as such markets in Oregon, Alaska, and Nevada all experienced week-over-week increases, overwhelming small declines in Colorado and Washington State.
January 2018 Forward unchanged at $1,575 per pound.
The average forward deal declined 3 pounds to 83 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 52%, 29%, and 19% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 112 pounds, 50 pounds, and 50 pounds, respectively.
At $1,575 per pound, the January Forward represents a premium of 9.2% relative to the current U.S. Spot Index of $1,442 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:
Michigan regulators this week released emergency rules that will oversee the state’s soon-to-be regulated medical cannabis market for the next six months. Until this time, Michigan’s sizeable medical cannabis program, which boasts in excess of 225,000 registered patients, has relied on a caregiver model; commercial activities were not permitted under state law, though some local governments tolerated or regulated such endeavors.
As is the case in California, the imposition of regulation will result generally in significantly increased costs for those hoping to operate in the license system. Security requirements, the necessity of complying with building and fire codes, and waste disposal guidelines that are par for the course in regulated markets are included in Michigan’s emergency rules. Those applying for state permits will of course be subject to fees and taxes that were nonexistent previously. Additionally, Michigan regulators are instituting capitalization requirements for license applicants, which are not included in every state with a legal commercial cannabis program.
New testing requirements included in the emergency rules also raise questions. The rules describe a transition period, but in Michigan the transition period does not appear akin to California’s, where product will not be subject to the Golden State’s new testing or labeling requirements until July. Instead, Michigan’s rules appear to grant those operating on a temporary basis 30 days to enter inventory into the state’s tracking system, but all product must be tagged, packaged, and tested according to the emergency rules during that time.
In the opinion of our analysts, the pesticide testing requirements spelled out in Michigan’s early rules will be difficult, if not impossible, to comply with in their current form. The pesticide testing requirements laid out in the rules are vague, stating that, “a sample provided to a safety compliance facility [Editor’s note: This is Michigan’s term for a testing lab.] pursuant to this rule is deemed to have passed as to that chemical if the sample satisfies the most stringent acceptable standard for an approved pesticide chemical residue as set forth in Subpart C of 40 C.F.R. Part 180. 40 C.F.R., § 180, et seq. or FIFRA section 25(b), whichever is more stringent.” However, Subpart C of 40 C.F.C Part 180 includes dozens of different pesticidal chemicals; asking a lab to test for all the different residues specified in that statute would be extremely time-consuming and expensive, if it is feasible at all. Furthermore, labs in Michigan, where quality assurance and safety testing has not been required to this point, are not accredited or subject to oversight and quality control themselves. Finally, it is likely that many are not remotely equipped to meet such extensive pesticide testing requirements; a caregiver in the state told our analysts this week that he was not aware of any of the labs in the state offering screenings for pesticide residues.
8 December 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved