cannabis benchmarks weekly report -- published 2 june 2017
U.S. Cannabis Spot Index down 4.3% at $1,553 per pound.
The simple average (non-volume weighted) price decreased $131 to $1,749 per pound, with 68% of transactions (one standard deviation) in the $1,072 to $2,426 per pound range. The average deal size decreased 4.5% to 8.3 pounds this week, from 8.6 pounds last week. In grams, the Spot price was $3.42, and the simple average price was $3.86.
There was no change this week in the relative volume of each grow type compared to last week. This despite observations of an increase in the relative frequency of trades for the sun-fueled grow types. Deals for outdoor flower saw a 2% week-over-week increase in relative frequency, while transactions for greenhouse product saw a 4% increase in that metric. The relative frequency of deals for warehouse flower fell to below 60%, while such product accounted for just over half of the observed volume traded for the second straight week.
Indoor flower spanned from $999 to $7,000 per pound; the median price was $2,000/lb.
Greenhouse flower spanned from $500 to $2,800 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $700 to $1,800 per pound; the median price was $1,200/lb.
The U.S. Spot Index was back on the decline this week, falling by over 4% to just above $1,550 per pound. The drop in the overall rate was a result in falling prices for both indoor and greenhouse-grown flower, which reached or came very close to establishing new annual lows. The significant declines in pricing for the aforementioned grow types was moderated somewhat by rising rates for outdoor product, which increased by nearly 4% week-over-week.
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.
Despite week-over-week declines in composite pricing for adult-use product in Colorado and Oregon, significant bumps in rates for such flower in Washington State and Alaska resulted in a small net increase in pricing when considering the nation’s recreational markets as a whole. Falling composite rates in California and Nevada were the primary contributors to the decline in pricing for medical product on the national level, with the premium of such flower over that sold in adult-use markets shrinking to less than $300 this week.
December Forward assessed at $1,465 per pound.
Forward arrangements represented 5.2% of overall market activity this week. The average forward deal decreased to 21.7 pounds, from 29.2 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 56%, 31%, and 13% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 26 pounds, 18 pounds, and 10 pounds, respectively.
For the month of May, the U.S. Spot Index averaged $1,614 per pound, a decline of $445 per pound, or 21.6%, from the month’s 2016 average of $2,059 per pound. Declining costs of production in some markets, and over supply in others, has resulted in lower average prices each month in 2017 versus the corresponding month in 2016. New supplies from light deprived greenhouse flower (to be harvested on or about June 21st, the summer solstice) are anticipated to reach the market in July, continuing downward pressure on prices; although, a potential delay or diminishment of the year’s first light-deprivation harvest in parts of California’s Emerald Triangle was discussed in our report for May 19th.
The July, August and September Forwards are each down, with the July Forward representing a discount of 1.8% relative to the current U.S. Spot Index of $1,553. At $1,465, the December Forward represents the expectation for some price recovery as the depths of the fall harvest pass and holiday demand increases. For context, the December 2016 average price was $1,526 per pound, nearly 8% higher than the November 2016 average of $1,414. As outdoor planting has now been completed in the vast majority of the country’s major cultivation regions, looking ahead, a key uncertainty is the impact of potentially bad weather on what is otherwise expected to be an expanded outdoor crop.
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:
Nevada transaction specifics are shown in the accompanying chart. All prices are volume weighted averages.
In last week’s report, we discussed a lawsuit that had the potential to delay Nevada’s early recreational sales program, which had been slated to begin in July. This week, the Las Vegas Review-Journal reported that the state Attorney General determined that the Tax Commission had not broken open meeting laws, as the suit alleged. As such, it appears that Nevada remains on track to allow sales to general adult consumers beginning in mid-summer.
According to a report from the Las Vegas Sun, the lawsuit does not appear to have slowed businesses from preparing to participate in the early sales. The Sun reported this week that almost 150 applications for the temporary adult-use licenses had been received as of last Friday. The deadline for such applications was May 31st.
Meanwhile, estimates from the Las Vegas Medical Marijuana Association show that the state’s medical industry is growing apace. After fluctuating between about $5.33 and $5.85 million in estimated sales per month between November 2016 and January of this year, estimated sales jumped to $6.13 million in February and increased further in March, to $7.42 million. Nevada counted just under 28,000 registered patients as of the end of April.
Sample headlines from this week's Premium Report:
2 June 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved.