Cannabis benchmarks weekly report -- published 30 june 2017
U.S. Cannabis Spot Index up 3.6% to $1,635/lb
The simple average (non-volume weighted) price increased $47 to $1,858 per pound, with 68% of transactions (one standard deviation) in the $1,188 to $2,527 per pound range. The average deal size decreased 21% to 7.8 pounds from 9.9 pounds last week. In grams, the Spot price was $3.60, and the simple average price was $4.10.
The first light-deprivation greenhouse harvests are beginning to make their way to market. This week saw greenhouse flower increase its share of the total observed volume traded to over one-third of all documented weight moved, up from 27% last week. The relative frequency of deals for greenhouse product was largely steady. The increase came at the expense of outdoor flower, which saw its relative volume decrease by 9% week-over-week, while that of indoor product expanded by 2%.
Indoor flower spanned from $900 to $6,250 per pound; the median price was $2,100/lb.
Greenhouse flower spanned from $850 to $3,147 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $700 to $1,800 per pound; the median price was $1,400/lb.
The U.S. Spot Index saw its second consecutive week of upward movement, exceeding last week’s 2.3% rise to settle within $50 of the current year-to-date high of $1,682 per pound. This week’s almost 4% uptick in the national composite rate was driven almost entirely by a sharp spike in rates for field-grown product, in part due to elevated prices observed for high-CBD flower in Oregon, discussed further in the Premium Report. Pricing for indoor and greenhouse product were steady.
Colorado’s Spot Index dropped below $1,200 per pound this week and is the lowest state-level composite price observed in the history of our reporting.
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.
As they have throughout this month, rates for product in medical and adult-use markets this week largely mimicked the movement of the U.S. Spot. This week, flower to be sold to patients in state-legal medical cannabis programs commanded a premium of $312 compared to product intended for general consumers, up from $298 last week. A jump in composite pricing in California buoyed national rates for flower in medical markets. On the adult-use side, price rises in Oregon and Washington State overrode continually-declining rates in Colorado.
July Forward closes at $1,525/lb.
Forward arrangements represented more than 6% of overall market activity this week. The average forward deal decreased to 31 pounds, from 33 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 39%, 39%, and 22% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 40 pounds, 27 pounds, and 22 pounds, respectively.
At $1,525, the July Forward represents a discount of 6.7% relative to the current U.S. Spot Index of $1,635. 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:
After weeks of uncertainty, detailed in prior reports, early recreational sales will indeed commence on July 1st, with currently operational medical dispensaries that have received the appropriate state and local permits allowed to sell to general consumers beginning at midnight tonight. Just under 40 dispensaries in the Las Vegas area have received permission to retail product to any adult over 21, while a handful in other areas of the state, such as Reno, have done so as well. According to market participants, several retailers are planning to foster a festive atmosphere, with fireworks, free food, live music, and other promotions for those customers willing to stay up into the early morning in order to be among the first to purchase cannabis under a legal adult-use program in the state.
While July 1st is being celebrated as a major milestone toward the legalization of the commercial production and sale of cannabis in Nevada, complications lurk on the horizon. As we have discussed in previous reports, the uncertainty as to whether the early sales program would even begin on time is due to a dispute between alcohol distributors and the state. The former were granted exclusive distribution rights for the first 18 months of adult-use sales in the ballot initiative that legalized a recreational cannabis market, approved last November. The state moved to issue distribution licenses to other parties, resulting in a lawsuit brought by an association of alcohol distributors; a judge decided in favor of the alcohol distributors and imposed an injunction preventing the state from granting distributor licenses to other entities.
Consequently, the early adult-use sales program is moving forward as scheduled, but a statement from the Nevada Department of Taxation (NDOT), which is overseeing adult-use cannabis in the state, tells licensees that they may only sell what they have currently in inventory; resupplying must take place through a licensed distributor. Reports from several outlets have noted that it is uncertain when distributors will be licensed. Moving product intended for sale to medical cannabis patients from a producer or processor to a dispensary does not and will not require a distributor.
The eve of early recreational sales saw the continuation of trends observed throughout June; namely, gradual week-over-week price rises. This week, Nevada’s Spot Index rose very slightly, by just $5, or 0.2%, to settle at $2,286 per pound. While the opening of Oregon’s early adult-use sales program saw a much more significant rise in that state’s composite rate, it must be remembered that, though not required, Nevada’s medical cannabis market is largely vertically integrated. Earlier this year, John Laub, head of the Las Vegas Medical Marijuana Association (LVMMA) stated to our analysts that he estimated roughly two-thirds of the state’s licensed growers were associated with a dispensary outlet, in addition to noting general oversupply in the market. Such conditions would go a long way to explain the modest pricing movements in the leadup to such a significant market shift, which will undoubtedly cause demand in Nevada to spike as the state’s licensed businesses go from serving roughly 30,000 patients to having the ability to sell to a portion of the over 40 million tourists that visit Las Vegas annually.
Sample headlines from this week's Premium Report:
30 June 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved.