cannabis benchmarks weekly report -- published 14 july 2017
U.S. Cannabis Spot Index up 0.2% to $1,625 per pound.
The simple average (non-volume weighted) price decreased $16 to $1,812 per pound, with 68% of transactions (one standard deviation) in the $1,010 to $2,614 per pound range. The average deal size decreased 17.5% to 8.2 pounds from 9.9 pounds last week. In grams, the Spot price was $3.58, and the simple average price was $3.99.
This week saw Transaction Stats hold largely steady after greenhouse flower had been observed to increase its share of the total observed volume traded in recent weeks. The relative frequency of deals for each grow type was virtually unchanged from last week. Warehouse product this week regained some of its share of the total documented weight moved that it had lost in prior weeks, but only marginally, with a less than 2% increase in its relative volume.
Indoor flower spanned from $999 to $6,100 per pound; the median price was $1,850/lb.
Greenhouse flower spanned from $850 to $2,800 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $950 to $1,600 per pound; the median price was $1,200/lb.
The U.S. Spot Index continued to avoid dramatic week-over-week shifts, ticking upward very slightly this week to $1,625 per pound. While outdoor-grown product saw a nearly 5% downturn in its nationwide volume-weighted average rate, such product accounted for only a small portion of the total observed volume traded. Both warehouse and greenhouse product continued to display very steady pricing, as can be seen in the chart on the following page.
The U.S. Spot Index ticked upward marginally this week, rising by just 0.2% to settle at $1,625 per pound. Though in isolation this week’s pricing movement is unremarkable, a year-over-year comparison reveals significant departures from our observations in 2016. Similar to last week’s discussion, last year at this time saw a sharp drop in the national average, and an even larger one for national-level greenhouse flower pricing. In the week ending July 15, 2016, the U.S. Spot experienced a nearly 10% week-over-week decline, driven primarily by an over 17% fall in volume-weighted average pricing for greenhouse-grown product. While data from California and Oregon shows that increased volumes of such flower are suppressing pricing in those states in recent weeks, rates for product grown under glass or tarp in Colorado and Washington have been steadier, preventing the overall decline observed last year. The U.S. Spot this week is actually up by almost 5% since the first week of June, whereas last year saw an over 18% drop in the national average in the same time period.
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.
Rates for product wholesaled in the country’s medical cannabis markets were entirely flat this week, holding at just over $1,700 per pound. Meanwhile, small increases in the composite rates of Colorado, Oregon, and Washington State contributed to an almost 1% bump in national-level pricing for flower traded in adult-use markets. Alaska’s state Spot Index saw an over $200 week-over-week rise, but its adult-use market is still quite small in comparison to those mentioned previously, resulting in it having a very limited impact on national-level pricing.
August Forward up 2% at $1,540 per pound.
Forward arrangements represented more than 7% of overall market activity this week. The average forward deal increased to 42 pounds, from 38 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 35%, 38%, and 27% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 35 pounds, 60 pounds, and 26 pounds, respectively.
At $1,540, the August Forward represents a discount of 5.2% relative to the current U.S. Spot Index of $1,625. The August and September Forwards increased by 1.9% and 1.7%, respectively, as expectations for a dramatic near-term price decline - similar to that observed at this time last year - have waned. Last year, the U.S. Spot Index averaged $2,014 in June before declining 10.6% to $1,801 in July. Month-to-date, the U.S. Spot Index has averaged $1,623 per pound, representing an increase of 2.8% from this year’s June average of $1,579. In our report for May 19th, we noted accounts from the Emerald Triangle that heavy rains in late winter and early spring have delayed the planting of initial crops, pushing the first light-deprivation harvests back some weeks, or even leading to some growers bringing in one less harvest this year than usual. The coming weeks will reveal whether such product will come to market and have an effect on national-level pricing comparable to last year. The premium or discount for each forward price, relative to the U.S. Spot Index, is illustrated in the table below.
Sample content from this week's Premium Report:
A law that went into effect recently facilitating the distribution of product in Colorado could result in better-stocked shelves and more choices for consumers in the state’s out-of-the-way markets. House Bill 1211 was actually signed into law last year by Governor John Hickenlooper but, according to Westword, went into effect July 1st. Previously, deliveries of product had to be completed in 24 hours, which caused some difficulties in a state sometimes subject to severe weather, as well as for those attempting to move items produced on the Front Range to mountain towns that are up to a seven hour drive away, even in good conditions. Now, licensed transporters and distributors in Colorado have up to a week to make sure that a shipment reaches the destination specified on its manifest, while also being able to store products in off-site locations other than licensed grow, production, or retail facilities.
A market participant quoted in the report stated that retailers that buy on the wholesale market should have an easier time keeping their shelves stocked with a wider variety of products, as a distributor could hypothetically spend an entire day or two picking up inventory from supply side businesses, then deliver it to its recipients in subsequent days, rather than being forced to ensure that products were picked up and delivered within 24 hours. It should be noted that, in Colorado, distributors do not buy product from cultivators and product manufacturers, nor is their use required; they simply deliver it, though of course a fee is attached for their services.
North Dakota officials hope to have their state’s medical cannabis program up and running by spring or summer of next year, according to the Associated Press. The program will be relatively small, with only two producers and eight dispensaries across the state. The AP report notes that the state Health Department hopes to begin accepting applications late this summer and issue licenses in early November.
Florida’s slog toward the expanded, functional medical cannabis program approved by voters in November’s election may have hit another snag. The Miami Herald reports that attorney John Morgan, who largely funded the successful ballot initiative, has filed a lawsuit against the state over the fact that the legislature’s bill to implement the ballot measure banned smoking, illegally so according to Morgan. The Herald report notes that, if Morgan wins his suit, the law recently passed in a special legislative session and signed by Governor Rick Scott would be invalidated, with the state Health Department taking up the job of writing regulations.
Sample headlines from this week's Premium Report:
14 July 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved.