CANNABIS BENCHMARKS WEEKLY REPORT -- PUBLISHED JANUARY 12, 2018
U.S. Cannabis Spot Index down 10.9% to $1,340 per pound.
The simple average (non-volume weighted) price decreased $162 to $1,546 per pound, with 68% of transactions (one standard deviation) in the $811 to $2,281 per pound range. The average deal size increased 11.3% to 12.9 pounds from 11.6 pounds last week. In grams, the Spot price was $2.95, and the simple average price was $3.41.
Warehouse flower’s share of the total observed weight moved increased week-over-week, as did that of outdoor product, by about 3% and 2%, respectively, resulting in a corresponding decline in the relative volume of greenhouse flower. Notably in light of the significant decrease in the U.S. Spot, the combined relative volume of the lower-priced sun-fueled grow types was down slightly week-over-week. In the past, greater proportions of greenhouse and outdoor product have frequently been the cause of large weekly price drops.
The U.S. Spot Index slipped by almost 11%, with rates for all grow types down significantly compared to last week. Indoor and outdoor-grown flower saw the largest proportional declines, emphasizing that the price slide is due to general oversupply in the country’s major markets. Seasonality factors are contributing, though, as abundant product from 2017’s fall harvest continues to apply downward price pressure in the West Coast markets.
Low prices for product designated as medical in California and Colorado pushed down the national rate for such flower, even as smaller medical-only markets did not see large declines.
February 2018 Forward down $75 at $1,450 per pound.
The average forward deal increased nominally to 65 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 58%, 21%, and 21% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 72 pounds, 64 pounds, and 46 pounds, respectively.
The broadspread oversupply in the West Coast states and Colorado was on acute display this week and is expected to continue to exert downward pressure on those market prices for months to come as surplus inventory works its way through the supply chain. With a large swath of cultivators under strain, potential scenarios include an increased proportion of harvests devoted to higher-margin extraction, as well some diversion to illicit markets. While our assessment of the Forward market has declined for the six-month horizon, the potential for upstream consolidation in some markets, attempts to recoup compliance-related costs in California and Nevada, and ongoing uncertainty regarding transition periods in California, Michigan, and Massachusetts, are some of the drivers suggesting a case for higher prices in the months ahead, particularly the latter portion of the period encompassed by our Implied Forward Curve.
At $1,450 per pound, the February Forward represents a premium of 8.2% relative to the current U.S. Spot Index of $1,340 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:
12 January 2018. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved