cannabis benchmarks weekly report -- published 5 may 2017
U.S. Cannabis Spot Index down 1.1% to $1,630 per pound.
The simple average (non-volume weighted) price increased $37 to $1,836 per pound, with 68% of transactions (one standard deviation) in the $1,068 to $2,603 per pound range. The average deal size increased 8.8% to 7.7 pounds this week, from 7.1 pounds last week. In grams, the Spot price was $3.59, and the simple average price was $4.05.
This week, the trading of indoor product was less prevalent, with the relative frequency of transactions for such flower and the relative volume traded down by 6% and 3%, respectively, compared to last week. Outdoor flower experienced a corresponding uptick in its relative volume, which increased to account for just over one-fifth of the total observed weight moved. Greenhouse product’s share of the total documented volume traded held largely steady at just under one-third.
November Forward assessed at $1,365 per pound.
Forward arrangements represented 3.6% of overall market activity this week. The average forward deal increased to 16.1 pounds, from 14.4 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 33%, 58%, and 8% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 18 pounds, 13 pounds, and 30 pounds, respectively.
At $1,700 per pound, the June Forward represents a premium of 5.2% relative to the current U.S. Spot Index of $1,630. The November Forward, initially assessed at $1,365, currently represents a discount of 10.4%. For context, the average national price for last October and November was $1,511 and $1,414, respectively, with November declining nearly $100, or 6.4% from October. At $1,365, the November Forward is anticipated to experience a similar decline of 6.5% as the supply surge of the fall pushes prices down further in that month, perhaps to the annual low. Of course, unknowns remain, including weather conditions during flowering, as well as how growers with uncertain futures, particularly in California, manage inventory in the face of potentially cost-prohibitive regulation. The premium or discount for each forward price, relative to the U.S. Spot Index, is illustrated in the table below.
Indoor flower spanned from $800 to $6,500 per pound; the median price was $2,000/lb.
Greenhouse flower spanned from $900 to $3,100 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $600 to $2,000 per pound; the median price was $1,150/lb.
The U.S. Spot Index continued to decline gradually this week, falling by 1.1% to settle at $1,630 per pound. The overall decrease in the national composite volume-weighted average was driven primarily by a nearly 2% drop in rates for greenhouse flower, as well as higher-priced indoor product accounting for a smaller portion of the total observed weight moved. Despite the decline in composite rates, pricing for outdoor flower vaulted upward to approach the $1,150 per pound threshold this 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.
Product designated to be sold in both medical and adult-use markets saw falling prices this week, with the former declining at a greater rate. Falling prices in California, Arizona, and Nevada drove the decline in rates for flower traded in medical markets. In Oregon, the volume-weighted average rate for product in the medical sector ($1,484 per pound) is over $350 less than in the still relatively new adult-use system ($1,840 per pound), bucking the national trend. Oregon’s reversal on this front is due to unique market dynamics - namely, a dearth of buyers for the production of medical growers - that are discussed in greater detail in this week's Premium Report.
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A recent update from the Illinois Department of Public Health (IDPH), which oversees the state’s medical cannabis program, shows that the significant sales gains posted in March were sustained in April. We discussed March retail and wholesale sales in Illinois’ medical cannabis system in our report for April 7th.
In April, 53 licensed dispensaries sold $6,657,194 worth of product to registered patients. That is a 4.8% month-over-month increase from March’s sales of $6.35 million. March’s sales were especially notable, as they represented a jump of over 25% compared to February’s. In April, flower accounted for 54% of all sales, which is down slightly from 57% in March. 317,168 grams of dry cannabis were sold retail, indicating an average retail price of $11.42 per gram of flower. That figure is down from $12.18 per gram in March.
On the wholesale side, Illinois producers racked up $3,910,836 in supply-side sales in April. Similar to the retail realm, wholesale sales in Illinois increased by 4% month-over-month compared to March’s $3.75 million.
Overall, while April sales in Illinois’ medical cannabis market did see a month-over-month increase, that bump appears to reflect a growing market more so than the influence of 4/20, particularly when considering the dramatic month-over-month sales increases that occurred between February and March.
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5 May 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved.