CANNABIS BENCHMARKS WEEKLY REPORT -- PUBLISHED JANUARY 5, 2018
U.S. Cannabis Spot Index up 4.7% to $1,503 per pound.
The simple average (non-volume weighted) price increased $21 to $1,708 per pound, with 68% of transactions (one standard deviation) in the $919 to $2,496 per pound range. The average deal size decreased 18.8% to 11.6 pounds from 14.2 pounds last week. In grams, the Spot price was $3.31, and the simple average price was $3.76.
The relative frequency of trades for indoor product declined again this week, by 8%, with nearly all of the corresponding increase accruing to deals for greenhouse flower. Warehouse-grown product’s share of the total observed weight moved decreased from 49% last week. Again, the majority of the corresponding increase was absorbed by greenhouse flower. Outdoor-grown product experienced week-over-week increases of 1% in both the relative frequency of deals for such flower, as well as its relative volume.
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 rates for product traded in medical and adult-use systems both increased week-over-week by proportions similar to that of the U.S. Spot as a whole. Flower sold between businesses in recreational markets saw a larger increase, shrinking slightly the premium commanded by product dealt in medical systems. Despite the opening of adult-use sales in California, most of the state’s commerce remains medical. Additionally, the current “transition period,” which lasts through June, allows wholesale trading between medical and adult-use businesses without distinction, an allowance that is scheduled to cease come July 1st.
July 2018 Forward assessed at $1,660 per pound.
The average forward deal declined from 71.5 pounds to 64 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 61%, 17%, and 22% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 73 pounds, 55 pounds, and 46 pounds, respectively.
The July 2018 Forward is assessed at $1,660 per pound, representing expectations for roughly a 2% increase in the U.S. Spot Index from June to July, a pivotal transition period for the nation’s cannabis markets. At that time, California’s licensed system is set to take significant steps toward its ultimate form, with annual licenses replacing temporary ones in some cases, the end of the current “transition period” that allows businesses to sell previously existing inventory even if it does not meet new standards, and the imposition of more stringent quality assurance screenings for products as part of its phase-in of required testing.
In Michigan, businesses are expected to begin to receive licenses in the spring, though several questions as to exactly how the regulated supply chain will coalesce - particularly around required product testing - remain unanswered and will likely take some time to resolve.
At $1,525 per pound, the February Forward represents a premium of 1.4% relative to the current U.S. Spot Index of $1,503 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:
5 January 2018. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved