cannabis benchmarks weekly report -- published september 8, 2017
U.S. Cannabis Spot Index up 2.0% to $1,658 per pound.
The simple average (non-volume weighted) price decreased $20 to $1,849 per pound, with 68% of transactions (one standard deviation) in the $1,073 to $2,626 per pound range. The average deal size increased 4.3% to 10.8 pounds from 10.4 pounds last week. In grams, the Spot price was $3.65, and the simple average price was $4.08.
The relative frequency of trades involving each individual grow type was essentially identical to last week. Meanwhile, both indoor and greenhouse flower increased their shares of the total observed weight moved week-over-week, by 2% and 6%, respectively. The corresponding decline in the relative volume of outdoor product documented this week suggests that supplies from last year’s harvest may be dwindling, although we may yet see a surge of cheap outdoor prior to this year’s crop coming in.
Indoor flower spanned from $999 to $6,200 per pound; the median price was $1,925/lb.
Greenhouse flower spanned from $800 to $3,200 per pound; the median price was $1,350/lb.
Outdoor flower spanned from $500 to $1,650 per pound; the median price was $1,250/lb.
The U.S. Spot Index rose for the third consecutive week, climbing by 2% to exceed the $1,650 per pound threshold. This despite the national volume-weighted average rate for outdoor product tumbling to below $850 per pound. Pricing for warehouse-grown flower also declined week-over-week, but by just under $20 per pound. Like the overall national average, rates for greenhouse product have been on the upswing for three straight weeks.
This week saw several new annual low rates established. On the national level, the U.S. volume-weighted average for outdoor-grown product fell to a year-to-date low of $836 per pound. The same product type also established a new annual trough in California, where outdoor flower was observed to move for $828 per pound this week. Arizona’s state Spot Index declined to a year-to-date low of $1,926 per pound; this week is the first time this year that the state’s composite rate has settled below $2,000 per pound.
The trend line of the U.S. Spot this week regained some positive, albeit modest, momentum, behavior mimicked by the Trailing 4-Week Average of California’s composite price. Indeed, both Colorado and Washington State are also experiencing a slight upward trend in their overall volume-weighted average price in recent weeks, while Oregon’s trailing average is again on the upswing for the first time since July. The addition this week of Nevada to the chart below illustrates the rising wholesale rates that were observed in the state in the leadup to adult-use sales, which commenced in July, as well as the maintenance of elevated pricing in that market in recent weeks.
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 product designated as medical and adult-use both ticked upward this week, the former by almost $50 per pound and the latter by only $5. In a departure from recent trends, flower traded in Colorado’s medical market commanded a premium of $54 over product wholesaled in the adult-use sector this week, after a period in which pricing in both markets had been virtually identical.
October Forward unchanged at $1,470 per pound.
Forward arrangements represented nearly 7% of overall market activity this week. The average forward deal decreased to 34 pounds, from 35 pounds last week. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower represented 15%, 59%, and 26% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 38 pounds, 38 pounds, and 23 pounds, respectively.
At $1,470 per pound, the October Forward represents a discount of 11.3% relative to the current U.S. Spot Index of $1,658. 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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The surge of greenhouse supply that began last week continued and was amplified this week. Such product made up nearly two-thirds of all observed volume traded, up 9% compared to last week. The relative frequency of deals for greenhouse-grown flower also increased significantly, from just over two-fifths of all documented trades last week to roughly one-third this week. Outdoor product bore the brunt of the corresponding decline in both metrics, as the relative frequency of trades for such flower decreased by 11% week-over-week and its share of the total observed weight moved was more than cut in half.
Oregon's developing adult-use market experienced significant pricing movement over the past week. This week, the sharp uptick in Oregon’s Spot Index was due entirely to an 11.4% rise in the volume-weighted average rate for greenhouse-grown product, which leaped to settle at $1,982 per pound. This is the first time that wholesale pricing for such flower in Oregon has been observed to exceed the $1,900 per pound threshold since June 30th and is the highest documented weekly rate since late April.
Interestingly, an almost identical phenomenon was observed in regard to pricing for greenhouse product in California. It is possible that growers in southern Oregon are on similar schedules to those in northern California, as the neighboring regions share roughly the same climate zones.
Oregon’s state Spot Index jumped upward this week, rising by 7.2% to settle at $1,990 per pound with the beginning of the fall harvest roughly a couple weeks away. Though a similar weekly composite price was observed in late July, this week’s overall volume-weighted average rate is technically the highest documented since the week ending April 21st, which of course is distinguished by the 4/20 holiday.
The Beaver State’s Spot price was also on the rise at this time last year, but year-over-year comparisons have limited value due to the distinct market conditions that characterized this point in 2016; namely, the fact that Oregon’s strict new testing regime was about to be implemented and the first adult-use storefronts would open their doors beginning in October.
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8 September 2017. Copyright © 2017 New Leaf Data Services, LLC. All rights reserved