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

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

CANADA CANNABIS SPOT INDEX — January 18, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 18, 2019

 

The CCSI jumped 3.9% this week to C$6.64 per gram, from C$6.38 per gram last week. The index has been stable over the past 4 weeks. C$6.64 per gram equates to US$2,271 per pound at current exchange rates.

 

On January 15th, Health Canada released preliminary data on sales, finished inventory and unfinished inventory for October and November, 2018. The Canadian government has instituted the Cannabis Tracking System to ensure illegal supply does not cross into legalized markets. This data snapshot gives the industry a fundamental view of the first complete month of non-medical cannabis sales in Canada with lots of interesting nuggets to consider.

With recreational cannabis being legalized on October 17th, Cannabis Benchmarks made adjustments to the reported October non-medical sales quantity to normalize for a full month of sales. This takes the reported non-medical sales quantity for October from 4,511 kg to 9,323 kg. Surprisingly, November non-medical sales dropped by 45% to 5,146 kg. There are many potential reasons for this massive sales decline but possibilities include:

 

1. Initial sales rush upon legalization leading to a higher October sales volume;

2. The lack of product availability at online and retail locations impacted November sales; and

3. High prices pushed customers back to the black market.

We’ll get a better perspective on the primary drivers for demand as we get more monthly data from Health Canada.


The reported amount of finished dried cannabis inventory, or product that is ready of sale, as of the end of November is also interesting. The combined inventory of Federal licence holders (inventory held by cultivators and processing facilities) and Provincial distributors/sellers (inventory held by government and privately run online and brick-and-mortar stores) was 25,607 kg., or 2.9x the total dried cannabis actually sold in November to medical and non-medical customers. Is there really a supply shortage?

The last piece of information provided is the end of month unfinished dried cannabis inventory, or product that has been cultivated but not packaged or labelled. According to monthly reported data, there was 93,254 kg of dried cannabis or 10.5x November consumption sitting at either cultivation or processing operations. Can the current reported supply shortage be resolved quickly?

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

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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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 $1,100 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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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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4 January 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved