CANADA CANNABIS SPOT INDEX — January 11, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 11, 2019

 

The CCSI declined another 3.4% this week to C$6.38 per gram, from C$6.60 per gram last week. The index has been steadily dropping over the past 5 weeks. C$6.38 per gram equates to US$2,178 per pound at current exchange rates.

StatsCan analysis found that recreational dried cannabis sold from a licensed supplier sold for C$9.70 per gram on average since legalization. This is drastically higher than the calculated C$6.51 per gram paid by consumers in the still thriving illicit markets. The entire industry is closely watching these prices as legalization was expected to set back the illegal supply while also controlling quality and bringing in tax revenue. Cannabis Benchmarks expects the price of cannabis to continue to drop as the current licensed producers increase business operation efficiencies and add capacity over the next 18 months. This follows a similar trend to that observed in the early years of most recreational U.S. markets.

One of the major Canadian licensed producer, Aurora Cannabis, gave industry watchers some additional insight into how the legalization process has been going so far. On January 8th, Aurora announced guidance for its Q2 2019 results, or quarter ending December 31. These early estimates show revenue of C$50 to C$55 million, net of the excise tax. The guidance indicates C$17 million in recreational sales from the start of legalization (C$20.6 million extrapolated back to the beginning of the quarter), which is lower than analyst estimates. Aurora earnings are scheduled to be released on February 11, 2019.

 

Lastly, up to 8,000 entrants are expected to enter a lottery today for licenses for the first 25 cannabis stores to open in Ontario starting April 1. The licences are being divided regionally, with five going to the east of the province, seven in the west, two in the north, six in the Greater Toronto Area and five in Toronto itself. Recreational cannabis can only be bought through the Ontario government-run website at the moment.

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

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

U.S. Cannabis Spot Index — January 11, 2019

U.S. Cannabis Spot Index — Published January 11, 2019

U.S. Cannabis Spot Index down nominally 0.2% at $1,163 per pound.

 

The simple average (non-volume weighted) price decreased by $36 to $1,257 per pound, with 68% of transactions (one standard deviation) in the $496 to $2,017 per pound range. The average reported deal size declined to 4.0 pounds this week from 4.1 pounds last week. In grams, the Spot price was $2.56, and the simple average price was $2.77.

 

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. Warehouse product’s share of the total reported weight moved nationally grew by 3% this week, while the relative volumes of greenhouse and outdoor flower contracted by 1% and 2%, respectively. The relative volume of outdoor product is down from its harvest-season peak of 33%, where it settled over several weeks in November.

The U.S. Spot Index slipped downward for the second consecutive week, decreasing slightly, by 0.2%, to $1,163 per pound. Prices for indoor flower dipped notably in multiple major markets this week, which depressed the national average for such product and pulled down the U.S. composite rate. The nation’s two largest markets – California and Colorado – saw their Spot Indices hold fairly steady compared to last week, with both seeing nominal rises, with the same going for Nevada. Meanwhile, Oregon and Arizona were the two most sizeable state markets to see downturns in their composite prices, while decreases in the Spot prices of Illinois and New Mexico also applied downward pressure on the national average. Overall, this week’s U.S. Spot Index is down by 13.2% year-over-year, compared to the rate of $1,340 per pound documented in the week ending January 12, 2017.

The national volume-weighted price for flower to be sold in adult-use markets rose slightly this week. Rising rates in Colorado, Washington, and Nevada, with assistance from upticks in Alaska and Massachusetts, outweighed a decrease in Oregon. The composite price in California’s adult-use sector was virtually flat week-over-week. Sinking wholesale rates in Arizona, Illinois, and New Mexico were primarily responsible for a marginal decrease in the national price for product designated for registered patients.     

February 2019 Forward unchanged at $1,000 per pound.

 

The average reported forward deal size declined nominally to 55.2 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 29%, and 17% 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 $1,100 per pound, the February 2019 Forward represents a discount of 5.4% relative to the current U.S. Spot Price of $1,163 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

    State Spot Index Climbs Gradually in Early Weeks of 2019, Continuing Trend from End of 2018

  • Colorado

    December’s Monthly Spot Index Up Over 9% Compared to Prior Month, But Quarterly Composite Prices Virtually Flat from Q3 to Q4 2018

  • Oregon

  • Volume-Weighted Price for Indoor Flower Declines for Fifth Straight Week, Falls to Historic Low for Oregon’s Market
  •  
  • Washington

  • Average Spot Rate for Q4 2018 Down by 18% Compared to Previous Quarter
  •  
  • Massachusetts

  • Spot Index Rises for Twelfth Consecutive Week, Exceeding 2018’s Annual High Price
  •  
  • Illinois

  • Medical Market Expands Dramatically in 2018: Retail and Wholesale Revenues Up by 58% and 55%, Respectively, from 2017, Driving 17% Rise in Spot Index Over the Course of Last Year

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

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

U.S. Cannabis Spot Index — January 4, 2019

U.S. Cannabis Spot Index — Published January 4, 2019

U.S. Cannabis Spot Index opens 2019 down 0.9% at $1,165 per pound.

 

The simple average (non-volume weighted) price decreased by $48 to $1,292 per pound, with 68% of transactions (one standard deviation) in the $524 to $2,061 per pound range. The average reported deal size was nominally unchanged at 4.1 pounds. In grams, the Spot price was $2.57, and the simple average price was $2.85.

 

The relative frequency of trades for outdoor flower grew this week, by over 1%, while that for indoor product decreased by the same proportion. The relative frequency of transactions for greenhouse flower was unchanged compared to last week. Similarly, each individual grow type’s share of the total reported weight moved nationwide was stable compared to the final week of 2018. One year ago, in the opening week of 2018, the relative volumes of warehouse, greenhouse, and outdoor product were documented at 46%, 37%, and 17%, respectively.

The U.S. Spot Index opened 2019 with a small decline, sliding by 0.9% to settle at $1,165 per pound. A decrease in the national volume-weighted price for indoor-grown flower was primarily responsible for pulling down the U.S. composite price. The national price for warehouse flower slipped mainly due to declines in the going rate for that grow type in all three West Coast markets. Also from a state-level perspective, week-over-week decreases in the Spot Indices of Oregon, Washington State, and Arizona outweighed upward price movement in California, Colorado, and Michigan. This week’s U.S. Spot Index is off by 22.5% year-over-year, compared to the national composite price of $1,503 per pound, documented in the opening week of 2018.

The national volume-weighted price for flower to be sold in adult-use markets declined this week. Decreases in California’s adult-use sector, as well as in Oregon and Washington, outweighed upticks in Colorado and Alaska. Sinking wholesale rates in Arizona, Illinois, Maine, and New Mexico were primarily responsible for pushing down slightly the national price for product designated for registered patients.   

July 2019 Forward assessed at $1,000 per pound.

 

The average reported forward deal was unchanged at 55.8 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 54%, 29%, and 17% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 63 pounds, 50 pounds, and 43 pounds, respectively.

 

At $1,100 per pound, the February 2019 Forward represents a discount of 5.6% relative to the current U.S. Spot Price of $1,165 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

    Licensed Cultivators Outnumber Retailers by About Four to One as of End of 2018, the Largest Disparity of Any Adult-Use Market

  • Oregon

    State Officials Predict that Incorporating Industrial Hemp Products into Licensed Cannabis Market Could Hurt Growers, but May Improve Bottom Lines of Processors, Wholesalers, and Retailers

  • Nevada

  • Total Retail Sales Top $50 Million for the First Time in October, But State Spot Index Ticked Downward Over the Course of the Month
  •  
  • Michigan

  • Regulators Force Unlicensed Businesses to Shutter with Close of 2018, Shrinking Significantly the Number of Operations Serving the State’s 300,000 Patients
  •  

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

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

CANADA CANNABIS SPOT INDEX — January 4, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 4, 2019

 

The CCSI declined 0.5% this week to C$6.60 per gram, from C$6.63 per gram last week. The index has dropped 18% over the past four weeks. C$6.60 per gram equates to US$2,204 per pound at current exchange rates.

 

The stability in prices adds some reassurance to the developing industry. Supply shortages are not expected to be resolved quickly, but the Alberta Gaming, Liquor and Cannabis Commission (AGLC) reported that the situation is slowly improving. Even though some producers had stockpiled product ahead of legalization, issues with packaging and logistics prevented product from hitting the marketplace in a timely manner.

 

The halt of new Alberta retail licenses remains in place to ensure current licensees can keep their shelves adequately stocked. Ontario announced it will be accepting entries next week from those looking to enter a lottery to apply for the first 25 retail cannabis licenses in the province. There is a C$75 fee and those selected will have five business days to submit their application, a C$6,000 non-refundable fee and a C$50,000 letter of credit. The short time frame for submittal of applications is to ensure that these operations can be up and running by April 1. The retail licenses will be distributed throughout the province – five to the eastern side of the province, seven to the western side, two in the north, six in the Greater Toronto Area and five in Toronto itself.

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

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