Cannabis Benchmarks Weekly Report -- Published September 22, 2017
U.S. Cannabis Spot Index down 6.3% to $1,565 per pound.
The simple average (non-volume weighted) price decreased $76 to $1,818 per pound, with 68% of transactions (one standard deviation) in the $1,131 to $2,504 per pound range. The average deal size increased 25.5% to 13.3 pounds from 10.6 pounds last week. In grams, the Spot price was $3.45, and the simple average price was $4.01.
National Transaction Stats were largely unchanged week-over-week, though the prevalence of both sun-fueled grow types did increase slightly. Greenhouse and outdoor-grown flower each saw their shares of the total documented weight moved increase by about 1% compared to last week, as did the relative frequency of trades for the former. The relative frequency of trades for outdoor product doubled week-over-week, but remained marginal as fall harvests have yet to reach market in earnest.
Indoor flower spanned from $999 to $6,000 per pound; the median price was $1,825/lb.
Greenhouse flower spanned from $800 to $2,800 per pound; the median price was $1,305/lb.
Outdoor flower spanned from $500 to $1,600 per pound; the median price was $1,100/lb.
The U.S. Spot Index declined this week after four consecutive weeks on the upswing, falling by over 6% to settle at $1,565 per pound. The nearly 20% increase in the volume-weighted average rate for outdoor product did not materially affect the national composite price, as such flower made up only a small share of the documented weight moved. Rates for both warehouse and greenhouse product dipped substantially week-over-week, driving the overall price drop.
The national rate for indoor-grown flower has been on the decline for four consecutive weeks, while this week saw greenhouse product pricing break its recent upward trend.
New year-to-date low rates were established this week for greenhouse product in Colorado, which settled at $1,164 per pound, as well as outdoor flower in Oregon, which moved, on average, for $864 per pound. Volume-weighted average prices for greenhouse product in Washington State settled just $8 above their current annual trough, while the U.S. Spot this week was just $34 above its previous year-to-date low, set just over a month ago.
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.
National rates for flower traded in adult-use markets both declined markedly this week, with the former dipping more so than the latter. Despite upward momentum in the Spot Indices of Arizona and Michigan, the nationwide volume-weighted average price for product in medical markets dipped by almost 6% due to a week-over-week decline in California’s Spot, as well as in the medical sectors of Colorado’s and Oregon’s markets. Adult-use markets in Colorado, Oregon, and Washington State all dipped week-over-week.
October Forward up $25 to $1,495.
While national prices have been relatively stable over the past few months, uncertainty regarding the fall harvest and the pace of new capacity in higher priced markets, such as Nevada, are challenging the conventional wisdom regarding the likely magnitude of the typical fall harvest price declines. In Oregon, mite problems and poor air quality due to wildfires are helping support higher prices. Meanwhile, California has been tracking above the national average, which is atypical any time of the year, while regulatory uncertainty remains a constant concern of market participants as the state works to implement its licensed system. These factors are contributing to a slight rise in expected prices in the coming months, relative to last week’s Implied Forward Curve.
The average forward deal increased to 43 pounds, from 31 pounds last week, largely driven by more greenhouse deals of larger size. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 12%, 72%, and 16% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 67 pounds, 44 pounds, and 19 pounds, respectively. The premium or discount for each forward price, relative to the current U.S. Spot Index of $1,565, is illustrated in the table below.
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Indoor product saw its share of the total documented weight moved in Colorado increase by 5% this week, after a similar expansion was observed last week. The relative frequency of trades for warehouse-grown flower rose by the same proportion to make up over two-thirds of all documented deals. Average deal sizes for both grow types observed in Colorado’s market increased week-over-week, with that for indoor product swelling by 1.5 pounds, while the average deal for greenhouse flower this week was nearly three pounds larger than last week. The composite average deal size in the state was up over 20%, from 8.2 pounds last week.
The decrease in the state’s overall volume-weighted average rate this week was driven entirely by an over 9% decline in the going price for greenhouse flower, which dropped to settle at a new year-to-date low of $1,146 per pound. Several large deals for such flower were reported to settle for $1,100 per pound and below, tanking the volume-weighted average rate for that grow type. According to those familiar with Colorado’s market, new high-producing greenhouse facilities continue to come online in the state.
Retail sales of medical cannabis typically make up just under 30% of the state’s total revenues. In July, though, the most recent month for which we have tax and sales data, which is discussed in last week’s report, medical cannabis sales accounted for 26% of total cannabis revenues, constituting just under $36 million of the nearly $137 million in combined medical and adult-use sales, according to The Cannabist. Even though the state’s patient count jumped between June and July, retail sales of medical cannabis declined slightly in that span, as they have in nearly every month since February.
Last year, medical cannabis revenues experienced an uptick in August, when they rose to almost $41.4 million, though trends this year make such a spike unlikely. However, wholesale pricing data suggests that demand did increase over the course of last month - relative to supply, at least - as the observed volume-weighted average composite rate in Colorado’s medical market climbed from $1,233 per pound in the week ending August 4th to peak at $1,363 per pound in the week ending September 1st, a 10.5% rise. Contrastingly, the composite wholesale price in the state’s adult-use sector only ticked up by just over 1% in the same span, from $1,257 to $1,271 per pound. Wholesale pricing in the state’s medical market has since declined, settling at $1,228 per pound last week, and $1,124 per pound this week.
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22 September 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved