cannabis benchmarks weekly report -- published october 27, 2017
U.S. Cannabis Spot Index down 1.5% to $1,373 per pound.
The simple average (non-volume weighted) price decreased $22 to $1,747 per pound, with 68% of transactions (one standard deviation) in the $1,078 to $2,415 per pound range. The average deal size increased 5% to 15.5 pounds from 14.8 pounds last week. In grams, the Spot price was $3.03, and the simple average price was $3.85.
The relative frequency of trades observed for each grow type was largely steady for the second straight week. However, the relative volume of outdoor-grown flower declined for the first time in recent memory, after making up nearly 40% of all documented weight moved last week. The majority of the corresponding increase accrued to warehouse product, which saw its relative volume swell by 8% week-over-week, while that for greenhouse flower was up by only about 1%.
Indoor flower spanned from $700 to $5,555 per pound; the median price was $2,000/lb.
Greenhouse flower spanned from $800 to $3,000 per pound; the median price was $1,300/lb.
Outdoor flower spanned from $450 to $2,000 per pound; the median price was $1,000/lb.
The U.S. Spot Index ticked downward for the second consecutive week, in addition to falling for the fifth time in the last six weeks, settling at just under $1,375 per pound. After increasing dramatically in recent weeks, the average deal size of trades for outdoor flower contracted this week, while those for both indoor and greenhouse product swelled. The volume-weighted average price for outdoor flower held virtually flat, as those for the other grow types declined.
After settling above the rates observed for warehouse and greenhouse product in Colorado in the previous two weeks, the price of outdoor-grown flower in Oregon was reported to decline sharply this week, making it the most inexpensive product type in the country.
Maine’s Spot Index increased its distance above the national volume-weighted average by over $125 compared to last week. The state is facing significant uncertainty in regard to the rollout of its commercial adult-use market, which we discuss in the Premium Report Forward Curve commentary.
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.
This week saw product designated for sale in medical cannabis markets regain its premium over that traded in adult-use systems, although it is a small one of only $10 per pound. Steadiness in California’s still medical-only market tempered the decline in the national price for flower designated as such, while declines in Colorado and Oregon pushed down the overall volume-weighted average price for product that changed hands in recreational markets.
November Forward closes down $40 at $1,360 per pound.
The average forward deal declined to 97 pounds, down from 100 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 50%, 31%, and 19% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 145 pounds, 51 pounds, and 46 pounds, respectively.
At $1,360 per pound, the November Forward represents a discount of 0.9% relative to the current U.S. Spot Index of $1,373 per pound. With the remaining major California fires contained, and despite speculation as to the final disposition regarding damaged product (discussed in detail in the California Forward commentary), the typical fall price decline appears to be continuing with the U.S. Spot Index settling below $1,400 per pound for two weeks in a row. These declines are driving further decreases in near-term Forward prices. For comparison, the U.S. Spot index reached a low of $1,386 per pound last year on November 11th. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
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In recent months, Colorado’s state Spot Index has not echoed the monthly trends observed in Q3 2016, and October was no different. In 2016, the state’s composite price trended downward consistently in each month of Q3; July 2016’s Spot price averaged $1,669 per pound, which fell by 7.4% to $1,545 per pound in August 2016, before declining again by another 7.4% to $1,430 per pound in September. Over the course of Q3 2016, Colorado’s Spot Index averaged $1,548 per pound.
This year saw very different behavior over the course of the same span. July’s average composite rate of $1,222 per pound actually increased in August, by 2.8%, to $1,256 per pound. September saw Colorado’s Spot Index dip by 1.7% month-over-month to settle at $1,235 per pound. For Q3 of this year, the state’s composite volume-weighted price averaged $1,238 per pound, off 20% from the same quarter in 2016.
Q4 2016 would see Colorado’s Spot steady itself after Q3’s consistent declines. October 2016’s monthly composite price was up compared to that of September, by 3.3%, at $1,477 per pound. Again, this year saw a departure from 2016’s trends: With this week’s Spot Index of $1,128 per pound, October 2017’s overall average is $1,153 per pound, down from the month prior by 6.9%. Colorado’s volume-weighted average rate would drop to its annual monthly low in November 2016, of $1,399 per pound, before closing the year by rising almost 2% month-over-month to settle at $1,426 per pound in December 2016. An uptick in December this year would not be unexpected, as such a phenomenon has been observed to occur in both 2015 and 2016, likely due to increased holiday season demand. In 2016, Q4’s average Spot price in Colorado was $1,434 per pound, down 7.4% from Q3 2016’s average composite rate. An analogous decline this year would result in an average Spot Index of $1,146 per pound in Q4 2017.
Further analysis of monthly and quarterly prices on the national level, as well as for the country’s major adult-use and medical cannabis markets can be found in our 2017 Mid-Year Wholesale Market Report.
27 October 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved