cannabis benchmarks weekly report -- published october 20, 2017
U.S. Cannabis Spot Index down 4.6% to $1,394 per pound.
The simple average (non-volume weighted) price decreased $6 to $1,769 per pound, with 68% of transactions (one standard deviation) in the $1,102 to $2,436 per pound range. The average deal size decreased 3.6% to 14.8 pounds from 15.3 pounds last week. In grams, the Spot price was $3.07, and the simple average price was $3.90.
Continuing the trend observed in recent weeks, outdoor-grown flower made up an increasingly large share of the total observed volume traded; its relative volume expanded by 13% week-over-week. Combined with greenhouse product, which made up almost a third of all reported weight moved - down 5% compared to last week - the sun-fueled grow types accounted for over two-thirds of the product documented to have been traded. The relative frequency of trades for each grow type was stable.
Indoor flower spanned from $800 to $5,450 per pound; the median price was $1,900/lb.
Greenhouse flower spanned from $800 to $3,000 per pound; the median price was $1,325/lb.
Outdoor flower spanned from $500 to $2,000 per pound; the median price was $1,200/lb.
The U.S. Spot Index erased last week’s marginal gain, falling by nearly 5% this week. The overall volume-weighted average was dragged down by increasing volumes of lower-priced outdoor product brought in from the fall harvest, despite increases in volume-weighted average rates for the other two grow types. Average deal sizes for outdoor flower ballooned to over 70 pounds this week, while average trades for the other grow types both contracted.
Oregon’s state Spot Index fell below $1,800 per pound threshold for the first time since mid-August. California’s composite price approached $1,300 per pound.
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 we observed last year, the fall harvest price slump has resulted in the rate for product traded in medical markets falling below that of flower wholesaled in adult-use systems, an inversion of the typical state of affairs. In 2016, the inversion did not occur until late November, however. It is likely that this is the final year in which such a phenomenon will be observed. This is due primarily to the fact that all trading in California is through the end of this year still taking place in a medical-only market, whereas next year the adult-use sector will presumably be in place by harvest time, which will pull down national recreational pricing commensurately.
November Forward unchanged at $1,400 per pound.
The average forward deal declined to 100 pounds, down from 113 pounds last week, which had more than doubled from 44 pounds three weeks ago. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 50%, 30%, and 20% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 149 pounds (unchanged from last week), 53 pounds, and 48 pounds, respectively.
At $1,400, the November Forward represents a premium of 0.4% relative to the current U.S. Spot Index of $1,394. While our forward market analysis had recently suggested wholesale prices would reach their annual floor in November, it will be several weeks before the market internalizes and reacts to the impact on supplies resulting from the recent (and in some cases ongoing) fires. In this case, uncertainty is supporting upward price pressure. 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:
Through the first half of this month, Washington’s Spot Index price for October - $1,220 per pound through the week ending the 13th - is off 9.2% compared to September’s average of $1,343 per pound. Interestingly, last year saw an almost identical proportional drop off in Washington’s composite price between September and October, when the state’s Spot rate dipped from $1,415 to $1,282 per pound. This week, Washington’s overall volume-weighted average price settled at $1,269 per pound, up somewhat compared to last week, but not so much that it can yet be characterized as bucking the trends documented in 2016. As we noted in our report for September 22nd, the behavior of Washington’s Spot Index, as well as that of pricing for indoor and greenhouse flower, closed Q3 by displaying striking similarities to that which was observed in the same period the year prior.
In light of such similarities, a further examination of wholesale pricing in Q4 2016 may be useful. November 2016 saw Washington’s composite rate average $1,216 per pound, down just over 5% compared to the month prior. The state’s Spot price closed the year on the upswing, rising 7.6% in December to settle at $1,309 per pound for the month. Overall, Q4 2016 saw Washington’s overall volume-weighted rate average $1,286 per pound, down 12.7% compared to Q3 2016’s average price of $1,473 per pound. A downturn of equal proportion this year would lead to Q4 2017’s average wholesale rate in Washington settling at $1,189 per pound.
Complete monthly and quarterly data for individual state markets can be found in our recently-published 2017 Mid-Year Wholesale Market Report, as well as our Annual Review And Outlook: 2016-2017 Edition.
20 October 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved