CANADA CANNABIS SPOT INDEX — January 25, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 25, 2019

 

The CCSI dropped 4.5% this week to C$6.35 per gram, from C$6.64 per gram last week. The index has been particularly stable over the past five weeks, with prices bouncing within a tight C$0.29 range. C$6.35 per gram equates to US$2,164 per pound at current exchange rates.

On January 23rd, Statistics Canada issued more detailed market data – the monthly retail sales by province and territory. This published dataset gives us a full glimpse into a complete month of post-legalization sales from the provincial online stores and brick & mortar stores. Initial revenue figures are relatively low. November sales across Canada totalled C$54M.

With recreational cannabis being legalized on October 17th, Cannabis Benchmarks made adjustments to the reported October sales numbers to normalize for a full month of sales. This takes the total sales for October from C$43M to C$89M. With that adjustment, we observe November sales dropping by 39%. As we outlined last week, there are many potential reasons for this massive sales decline, with possibilities including October numbers being inflated by initial excitement about legalization. Alternatively, lack of product availability and high prices may have pushed customers back to the black market. The two aforementioned possibilities may also have been occurring simultaneously.

Drilling deeper into the provincial data exposes even more critical information. British Columbia’s total adjusted October sales dropped by 79% to C$1M, while Ontario total adjusted October sales dropped by 58% to C$10M. Alberta was one of the few provinces that did not see massive month-on-month declines, with only a 19% drop when compared to the total adjusted October sales.

 

Taking the analysis one step further, we broke down these figures into a monthly sales per person.

These simple calculations give an even more brutal look at the start of legalization. In this analysis we assume that every Canadian citizen is of legal age and would be willing to consume cannabis. On average during November, each Canadian citizen spent only C$1.55 to purchase cannabis from a legal outlet, less than many individuals spend on a coffee. British Columbia saw the lowest spend per person at only C$0.22. Low per-person spending figures indicate that the black market still likely looms large over the legal one in the early days of legalization in Canada.

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

25 January 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — January 25, 2019

U.S. Cannabis Spot Index — Published January 25, 2019

U.S. Cannabis Spot Index up 1.1% at $1,157 per pound.

 

The simple average (non-volume weighted) price increased by $30 to $1,253 per pound, with 68% of transactions (one standard deviation) in the $464 to $2,043 per pound range. The average reported deal size declined to 3.4 pounds this week from 3.5 pounds last week. In grams, the Spot price was $2.55, and the simple average price was $2.76.


The relative frequency of trades for indoor flower grew this week, by 1%, while that for greenhouse product decreased by the same proportion. The relative frequency of transactions for outdoor flower was unchanged compared to last week. The relative volumes of warehouse and greenhouse flower both contracted week-over-week, by less than 1% each. Meanwhile, outdoor product’s share of the total documented weight moved nationally grew by about 1% compared to the week prior.   

The U.S. Spot Index ticked upward this week, by 1.1%, to settle at $1,157 per pound, which was also the monthly average price for January. This month marks the second consecutive one in which the national monthly mean has risen, after slipping to its annual low for 2018 in November. Still, January 2019’s monthly rate is down by almost 14% compared to a year ago, when the U.S. Spot averaged $1,343 per pound in the same month in 2018. California and Alaska were the only two state markets covered by our reporting to see declines in their Spot Indices this week, while that of Nevada was flat compared to last week.

The national volume-weighted price for flower to be sold in adult-use markets rose this week. Rising rates in Colorado, Oregon, Washington, and Massachusetts outweighed decreases in that sector of the market in California, as well as in Alaska. Decreasing wholesale rates in the medical section of California’s market were almost wholly responsible for the dip in the national price for product designated for registered patients recorded this week.     

February 2019 Forward closing assessment up $30 to $1,150 per pound.

 

The average reported forward deal size decreased nominally to 55.2 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 56%, 28%, and 16% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 62 pounds, 49 pounds, and 43 pounds, respectively.

 

At $1,150 per pound, the February 2019 Forward represents a discount of 0.6% relative to the current U.S. Spot Price of $1,157 per pound. 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:

  • California

    Increased Relative Volumes of Lower-Priced Greenhouse and Outdoor Flower Pull Down State Spot Index After Steadiness in the First Three Weeks of 2019

  • Colorado

    Upward Trend in Wholesale Pricing Continues, Composite Price Up 18% From 2018’s Annual Low in November

  • Oregon

  • Growing Sales of Extracts and Infused Products May Help Draw Down State’s Oversupply of Flower and Trim
  •  
  • Washington

  • State Spot Index Reaches Highest Point Since Early November 2018
  •  
  • Massachusetts

  • State Spot Index Continues to Rise as Adult-Use Sales Increase, But Most Wholesale Deals Still Taking Place in Medical Sector
  •  
  • Illinois

  • Opioid Alternative Program Could Increase Demand in Coming Months in Market Already Seeing Wholesale Prices Above $3,000 Per Pound

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

25 January 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — January 18, 2019

U.S. Cannabis Spot Index — Published January 18, 2019

U.S. Cannabis Spot Index down 1.6% at $1,144 per pound.

 

The simple average (non-volume weighted) price decreased by $33 to $1,223 per pound, with 68% of transactions (one standard deviation) in the $460 to $1,987 per pound range. The average reported deal size declined to 3.5 pounds this week from 4.0 pounds last week. In grams, the Spot price was $2.52, and the simple average price was $2.70.

 

The relative frequency of trades for outdoor flower grew this week, by 1%, while that for greenhouse product decreased by the same proportion. The relative frequency of transactions for indoor flower was unchanged compared to last week. Each grow type’s share of the observed volume traded nationally was virtually unchanged week-over-week. The only shift discernible in the chart below is a less than 1% increase in the relative volume of outdoor product.

The U.S. Spot Index decreased for the third straight week, sliding by 1.6% to settle at $1,144 per pound. A sizeable week-over-week decline in the national volume-weighted price for outdoor flower was primarily responsible for pushing down the national composite rate, with such product seeing the most notable price erosion in California and Washington State this week. On the state level, Colorado and Washington were the only two major markets to see increases in their Spot rates, and relatively modest ones at that. Meanwhile, the second-tier markets of Arizona, Nevada, and Michigan all saw week-over-week downturns in their composite rates. Prices in Massachusetts continue to rise, as they have since the beginning of adult-use sales in late November, but trading volumes remain relatively small in the young market and have not yet exerted notable influence on the U.S. Spot Index.

Three straight weeks of declines have caused the Trailing 4-Week Average of the U.S. Spot to reverse course this week, ending – at least for the moment – the upward trend that commenced in mid-November. The trend line of California’s Spot Index also saw its positive momentum disrupted this week, flattening compared to last week after rising for a period slightly longer than the national average. Additionally, the Trailing 4-Week Average of Nevada’s composite price changed direction this week, turning upward slightly after sliding gradually from late November through last week. Meanwhile, the trend lines of the Spot Indices of Colorado, Oregon, Washington, and Michigan, remained fairly steady relative to the courses that they were on to close 2018.     

February 2019 Forward up $20 to $1,120 per pound.* The average reported forward deal size increased nominally to 55.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 28%, and 16% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 62 pounds, 49 pounds, and 43 pounds, respectively.

 

At $1,120 per pound, the February 2019 Forward represents a discount of 2.1% relative to the current U.S. Spot Price of $1,144 per pound. 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:

  • California

    Permanent Rules Allowing Cannabis Deliveries Statewide Now In Effect May Help Regulated Market Capture More of State’s Latent Demand

  • Colorado

    November 2018’s Monthly Retail Sales Dipped to Lowest Levels Since May, But State Spot Index Rose in the Weeks Prior to Thanksgiving

  • Oregon

  • 2018 Flower Sales Volume Up by About 55% Compared to Year Prior, But Increased Demand Overwhelmed by Voluminous Excess Supply as Prices Continue to Fall
  •  
  • Washington

  • State Spot Index Rises for Second Straight Week to Highest Price Since the End of November, But Still Below $550 Per Pound
  •  
  • Michigan

  • Regulators Allow Unlicensed Dispensaries to Reopen, Purchase Inventory from Caregivers, and Sell Untested Product in Effort to Ameliorate Supply Shortage in New Licensed Medical System
  •  
  • Arizona

  • Monthly Flower Sales Volume Once Again Sets New Record in December, Annual Total for 2018 Up by 40% Year-Over-Year

Are you a licensed market participant in the U.S. or Canada? 

Do you support wholesale market transparency?

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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC

18 January 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved