cannabis benchmarks weekly report -- published october 13, 2017
U.S. Cannabis Spot Index up 0.4% to $1,461 per pound.
The simple average (non-volume weighted) price decreased nominally to $1,775 per pound, with 68% of transactions (one standard deviation) in the $1,109 to $2,442 per pound range. The average deal size decreased 1.2% to 15.3 pounds from 15.5 pounds last week. In grams, the Spot price was $3.22, and the simple average price was $3.91.
Transaction Stats this week indicate that the fall harvest continues to come to market. The relative frequency of trades for outdoor and greenhouse flower increased only slightly week-over-week, by 1% each. However, outdoor product this week made up a quarter of all observed volume traded, up from under two-fifths last week. This is the fourth consecutive week that the relative volume of such flower has been on the rise. The relative volume of greenhouse product also increased, by 3%.
Indoor flower spanned from $900 to $5,400 per pound; the median price was $1,900/lb.
Greenhouse flower spanned from $900 to $3,000 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $800 to $2,000 per pound; the median price was $1,200/lb.
The U.S. Spot Index ticked upward slightly this week, interrupting what had been a three-week-long skid. Volume-weighted average rates for all three grow types were up week-over-week. Average deal sizes for the sun-fueled grow types continued to expand, as they have in recent weeks, with trades for greenhouse flower averaging almost 18 pounds, while transactions involving outdoor product approached 55 pounds.
Oregon’s state Spot Index fell below the $1,900 per pound threshold for the first time since the beginning of September.
Nearly all of the product categories that established new annual low prices last week recovered this week. Indoor flower in California was the exception, dropping to $1,675 per pound, a new year-to-date low price for the second consecutive week, down $10 from last week. Michigan’s state Spot Index also declined to a new annual low rate, of $1,945 per pound, off the back of relatively low-priced greenhouse product.
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 for flower traded in medical markets declined for the fourth consecutive week, driven primarily by falling rates in California and Michigan, but despite a rise of 3.4% in Colorado’s medical sector, from $1,131 per pound last week to $1,196 per pound this week. The price for product traded in adult-use markets was on the upswing when viewed from a national perspective, due entirely to increases in both Colorado’s and Washington’s markets.
November Forward unchanged at $1,400 per pound.
The average forward deal increased again, climbing to 113 pounds, from 99 pounds last week, which had already more than doubled from 44 pounds two weeks ago. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 63%, 18.5%, and 18.5% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 149 pounds, 51 pounds, and 52 pounds, respectively. Forward arrangements for outdoor flower included multiple 300 and 500 pound lots.
At $1,400, the November Forward represents a discount of 4.2% relative to the current U.S. Spot Index of $1,461. 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:
The major story in California this week - both generally and in regard to cannabis commerce - is the severe wildfires that are raging in Sonoma, Napa, and Mendocino Counties. Reports from the Los Angeles Times, San Francisco Chronicle, and Forbes include accounts from growers and other industry participants in the area that attest to the loss of farms, as well as the inability of growers to care for crops due to the necessity of evacuating the area, not to mention the loss of lives, homes, and other businesses that have affected almost every resident of the region, either directly or indirectly.
The Cannabis Benchmarks team extends our condolences and support to those touched by this tragedy, and it is with difficulty that we turn to the purview of our reporting, wholesale cannabis pricing.
As we have reported frequently over the course of this year, individuals hoping to participate in California’s imminent licensed system have been working to bring their sites and facilities into compliance with new rules, investing significant time, effort, and capital in the process. Tragically, a number of those operations have been destroyed or damaged, according to accounts cited above, putting people in a difficult position, as insurance and other forms of aid accessible to traditional businesses have not yet been made available to operators in California. The California Growers Association has formed a fund to assist those impacted by the fires, which can be found here.
California’s state Spot Index continued its now four-week-long decline, falling by just over 1% this week to settle at $1,445 per pound.
The volume-weighted average price for warehouse-grown flower slid to a new year-to-date low for the second consecutive week, settling at $1,675 per pound. Indoor product was the only grow type to see a week-over-week price decrease; the drop in the state’s composite rate was due to the increased prevalence of lower-priced sun-grown flower observed to be traded in the state’s market.
A look to the past may help to put the future wholesale pricing situation into perspective. In our reporting during the 2015 harvest season we covered various severe wildfires burning in regions that were home to cannabis cultivation activities. (According to data from Cal Fire, the number of fires and acres burned this year is close to 2015’s statistics, and may yet surpass them, as the current fires affecting Sonoma and Napa have not yet been contained.)
In 2015, California’s composite volume-weighted average fell steeply over the course of the harvest months, despite the devastation experienced by growers in the affected regions, dipping by 9% from mid-September to the first week of October, from $1,884 to $1,716 per pound, then falling an additional 15.7% by late November, to $1,447 per pound in the week ending November 20, 2015. All told, California’s Spot Index dropped 23.2% in the period just outlined. Longer-term pricing was not affected by 2015’s fires either, at least on a statewide level, as 2016 saw wholesale prices in California continue to trend downward over the course of Q1 2016, as well as plummeting sharply in Q3 2016, due in part to the continued introduction of lower-priced outdoor supplies from 2015’s harvest into the market.
13 October 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved