Do you have the information that you need to make informed pricing decisions?
Eliminate the guesswork. Eliminate the uncertainty.
In the evolving legal cannabis market pricing information is often opaque and privy to few.
Now you have the price transparency of a validated benchmark to help you price transactions based on the quality of your product in your market.
Obtain insight into market driven pricing.
Spend less time determining appropriate wholesale pricing and more time promoting your product.
cannabis benchmarks weekly report -- published november 10, 2017
U.S. Cannabis Spot Index up nominally to $1,444 per pound.
The simple average (non-volume weighted) price decreased $105 to $1,704 per pound, with 68% of transactions (one standard deviation) in the $993 to $2,415 per pound range. The average deal size decreased 16.7% to 13.4 pounds from 16.1 pounds last week. In grams, the Spot price was $3.18, and the simple average price was $3.76.
Sun-grown flower accounted for an increased share of the total observed volume traded this week, even as the relative frequency of deals for the two sun-fueled grow types contracted. The relative volumes of greenhouse and outdoor-grown product increased week-over-week by 1% and 3%, respectively, as the relative frequency of trades for each declined by about 4% and 1%, respectively. Last year at this time, outdoor product alone accounted for 55% of the total reported weight moved in the week ending November 11, 2016.
Indoor flower spanned from $700 to $5,600 per pound; the median price was $1,650/lb.
Greenhouse flower spanned from $800 to $3,000 per pound; the median price was $1,255/lb.
Outdoor flower spanned from $700 to $1,700 per pound; the median price was $1,000/lb.
The U.S. Spot Index showed upward momentum for the second straight week, though its positive movement was as modest as possible. Almost no dramatic week-over-week price shifts were observed, both at the national level and in the major and mid-sized state markets, as we expand upon below. In a reversal of last week, indoor and greenhouse product saw declines in their average deal sizes, while that for outdoor-grown flower increased.
As seen in the chart above, the national volume-weighted average price for outdoor product has been remarkably flat since late October.
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.
The national volume-weighted average rate for product traded in medical markets maintained its premium over that dealt in adult-use systems after the inversion observed just two weeks ago. However, the difference between the two shrank this week, to just $59, down from $96 last week. The decline in the national wholesale price for flower intended for sale to medical cannabis patients was due to sliding rates in California and Michigan.
December Forward unchanged at $1,465 per pound.
The average forward deal declined to 84 pounds, down from 88 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 39%, 43%, and 18% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 133 pounds, 59 pounds, and 38 pounds, respectively.
At $1,465 per pound, the December Forward represents a premium of 1.4% relative to the current U.S. Spot Index of $1,444 per pound. For comparative purposes, the U.S. Spot Index averaged $1,526 per pound in December 2016. 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:
Sample content from this week's Premium Report:
California State Treasurer John Chiang this week released a report laying out a series of recommendations for the state and local governments to address the banking difficulties faced by the cannabis industry. The report recognizes that current issues in regard to banking the cannabis industry will not be resolved fully barring changes at the federal level. As such, some interim proposals, if adopted, could facilitate dealing with large cash tax payments, while also potentially encouraging more California financial institutions to bank cannabis businesses. Both recommendations carry with them potential implications on the cost of doing business for the state’s soon-to-be-licensed cannabis operations.
First, the report proposes: “State and local public agencies contracting with armored courier services to collect tax and licensing payments made in cash. The armored courier operator would count the money. While the physical cash would be taken to the Federal Reserve or a commercial bank willing to take such funds, a credit would be made to the state or local taxing agencies’ respective bank accounts.” Chiang believes that this approach would encourage increased tax compliance by eliminating the need for licensed businesses to haul large sums of cash to state and local offices, in addition to relieving the latter of the burden of dealing with mountains of currency. However, the report also notes that such services could become quite costly and does not make recommendations as to how those expenses would be paid for. If such a scheme were to be adopted, it is possible that licensees could see additional fees or other costs to cover the expense of the armored courier services.
The second recommendation made by the report has the potential to reduce the compliance burden borne by banks that do choose to serve the cannabis industry, savings that could presumably be passed along to banks’ customers, licensed cannabis businesses. Currently, many banks are hesitant to take on accounts from state-licensed cannabis operations due to the high compliance burden that they must meet, which includes ensuring that the businesses are abiding by state law and verifying that all deposits stem from transactions made within the state-licensed system, among other requirements. Due to the myriad requirements faced by banks serving the cannabis industry, the cost of banking for cannabis businesses can be significantly higher than that for traditional commercial enterprises.
Chiang’s report proposes the creation of a statewide database, including, “an online portal to collect data from local governments and state regulatory agencies. The information would help banks fulfill a federal obligation to “know their customers” before accepting deposits.” Such a service would presumably allow banks to serve the cannabis industry while incurring less overhead themselves, potentially making the cost of banking for cannabis businesses a bit lower. Overall, it remains to be seen whether the recommendations put forward in the State Treasurer’s report will be undertaken.
10 November 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved