CANNABIS BENCHMARKS WEEKLY REPORT -- PUBLISHED MAY 4, 2018
U.S. Cannabis Spot Index down 0.7% to $1,303 per pound.
The simple average (non-volume weighted) price decreased by $30 to $1,414 per pound, with 68% of transactions (one standard deviation) in the $642 to $2,187 per pound range. The average deal size decreased 5% to 5.5 pounds from 5.8 pounds last week. In grams, the Spot price was $2.87, and the simple average price was $3.12.
National Transaction Stats continued to be very steady this week, a trend that has now held in each of the two weeks since 4/20. The relative volumes of each individual grow type were virtually identical to last week, as indoor product continues to wield the greatest influence on the national average, which is not unexpected at this time of year. The relative frequency of trades for warehouse flower decreased slightly, by just 1% compared to last week, with the corresponding increase accruing to deals for greenhouse product.
With this week’s small downturn, the U.S. Spot Index has now been on the decline for over a month straight. The volume-weighted average price for each individual grow type ticked downward slightly for at least the third consecutive week. Average deal sizes contracted across the board, with the average volume of a transaction for outdoor flower shrinking this week after expanding in each of the prior two.
Upward momentum observed in the markets of Nevada and Michigan in the weeks leading up to 4/20 ceased this week. The trend line of the former’s Spot price showed distinct downward movement, while that of the latter was virtually flat. Trailing 4-Week Average prices in both Colorado and Oregon were also nearly flat, but marginal downward slides can still be observed in each. Meanwhile, the negative momentum of the U.S. Spot Index has been gradually accelerating in recent weeks, pulled down by wholesale prices in both California and Washington State that have both trended downward consistently for nearly two months.
November Forward initially assessed at $1,275 per pound.
The average forward deal was just under 62 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 51%, 33%, and 15% of forward arrangements, respectively, with the share of forward deals satisfied by outdoor grown flower continuing its week-on-week increase. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 62 pounds, 70 pounds, and 42 pounds, respectively.
This week saw significant downward adjustments to the Forward prices of several months. Robust oversupply in Western markets is forcing market participants to reassess prior expectations regarding wholesale pricing in the upcoming period. Additionally, July and August should bring with them summer greenhouse harvests, injecting new inventory into the markets of major adult-use states and potentially pushing prices lower with increasing relative volumes of lower-priced greenhouse flower.
However - as we discuss below, in the Forward Curve commentary for California - significant new uncertainty was introduced into the Forward market in the Golden State this week, with the news that regulators are contemplating adjustments to the timeline for implementing more stringent rules on various fronts. No concrete decisions have yet been reached, but a delay in introducing new compliance requirements would allow product to continue to flow more easily and reduce anticipated market disruption. At $1,350 per pound, the June Forward represents a premium of 3.6% relative to the current U.S. Spot Price of $1,303 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:
4 May 2018. Copyright © 2018 New Leaf Data Services, LLC. All rights reserved