CANNABIS BENCHMARKS WEEKLY REPORT -- PUBLISHED FEBRUARY 9, 2018
U.S. Cannabis Spot Index down 0.7% to $1,271 per pound.
The simple average (non-volume weighted) price increased more than $5 to $1,399 per pound, with 68% of transactions (one standard deviation) in the $702 to $2,095 per pound range. The average deal size decreased 2.1% to 9.4 pounds from 9.6 pounds last week. In grams, the Spot price was $2.80, and the simple average price was $3.08.
Warehouse flower’s share of the total observed weight moved expanded this week, by 6%, with a corresponding decline in the relative volume of outdoor-grown product, while that for greenhouse flower held steady. Indoor product also saw an increase in the relative frequency of deals for such flower, which was up by 3% compared to last week. The relative frequency of transactions involving greenhouse and outdoor product were down by 2% and 1%, respectively, week-over-week.
The national volume-weighted average price for greenhouse flower fell to a historic low this week of $1,187 per pound. In Colorado, both greenhouse and outdoor-grown product descended to all-time low rates of $959 and $864 per pound, respectively. Oregon this week saw the volume-weighted average price for indoor flower in the state fall to $1,703 per pound, below 2017’s annual low, but not 2016’s.
Observations of greater proportions of higher-priced warehouse product contributed to national composite rates for flower designated as medical and adult-use increasing this week, even as the U.S. Spot dropped. For medical product, a small rise in rates for flower to be sold to patients in California also helped bump the national average. Small upticks in the Spot Indices of Colorado and Washington State, a rise in Alaska’s composite price, and high rates reported for adult-use product in California, lifted the national rate for that flower designation.
March Forward down $50 to $1,375 per pound.
The average forward deal increased 1 pound to 55 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 57%, 23%, and 20% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 63 pounds, 58 pounds, and 28 pounds, respectively.
The Forward Curve has been assessed down $50 to $25 per pound across the six month period under consideration. As routinely noted, there are a variety of competing pressures on forward prices. In its current state of evolution, our analysis continues to indicate that U.S. wholesale cannabis market prices are driven more by the vagaries of supply than demand.
Overall, 2017 showed more price stability than 2016, with the delta between the annual high and low prices declining from $710 per pound two years ago to $314 per pound last year. Feedback from the field suggests an expectation between the two for 2018, with novel upward pricing pressure stemming from new markets coming online (e.g., Pennsylvania, Ohio and Massachusetts) and existing markets imposing regulation (e.g., California and Michigan). On the other hand, downward pressure on wholesale prices is expected in developed adult-use markets that will continue to mature in 2018 (e.g., Colorado, Oregon and Washington). Overall, supply continues to increase, as do compliance and regulatory costs in some cases.
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9 February 2018. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved