CANADA CANNABIS SPOT INDEX — February 15, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published February 15, 2019

The CCSI declined 5.4% this week to C$6.04 per gram, from C$6.39 per gram. The index has moved to the lowest point since legalization. C$6.04 per gram equates to US$2,062 per pound at current exchange rates.

 

This week we saw quarterly earnings from the two largest licensed producer, Aurora Cannabis and Canopy Growth. The earning period for both companies end Dec 31st, 2018 cover the first full quarter of legalized Canadian markets. This week, we drill in to the quantity of total dry cannabis sold, and its average net selling price from the top two LPs.

 

Canopy broke out their recreation and medical sales with the addition of recreation sales this quarter. Total volumes of dry and cannabis extract sold increased to 10,102 kg from 2,330 kg reported the previous quarter.  Recreational sales made up 82% of total sales, with dry flower accounting for 62% of total sales. The average net selling prices for dry and cannabis extracts was reported at C$6.96/gram, while medical averaged C$8.49/gram.



Aurora Cannabis kept their numbers at a higher level by lumping medical and recreational sales together. Aurora Cannabis produced 7,822 kg over the quarter with 6,999 kg sold. Digging into the Management Discussion & Analysis we managed to find total recreational dry cannabis sold was 3,500 kg and total cannabis extracts was 306 kg, suggesting that 54% of their production was sold into the newly legalized market. The average net selling prices for dry and cannabis extracts for both the medical and recreational markets was reported to be C$6.23/gram.

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

15 February 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — February 8, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published February 8, 2019

The CCSI moved 2.2% lower this week to C$6.39 per gram, from C$6.53 per gram. The index looks to have found its sweet spot within a narrow C$0.28 range. C$6.39 per gram equates to US$2,196 per pound at current exchange rates.

 

This week we take a deeper look at the final price consumers are paying for dry cannabis products. Each provincial retail structure is set up slightly differently, but ultimately consumers purchase recreational cannabis in pre-rolls or canisters. Unlike products sold in the U.S., Canadian cannabis packaging enforces strict volume and labelling guidelines. The canisters are mainly sold in one gram, 3.5 gram, and 7 gram increments with a strict labelling protocol that includes the producer’s brand, strain information and Health Canada warning labels. Many of the recent supply issues have been attributed to faulty packaging.

For this week’s analysis, we specifically focussed in on the retail price of 14 out of the 80 listed dry cannabis products on the Ontario Cannabis Store (https://ocs.ca/). We chose a variety of products from different licensed producers (LP), varying THC and CBD levels, and assorted flower types (Sativa, Indica, or Hybrids).

 

Of the 14 products, the calculated average selling price for one gram was C$11.66 (inclusive of the 13% retail sales tax) with a range of C$9.25 to C$17.25.

Source: Cannabis Benchmarks, Ontario Cannabis Store

Using our in-house pricing models, we were able to back calculate the average LP’s selling price to C$6.72/gram. This falls roughly inline with the posted CCSI price over the past 7 weeks. Here are the components of our pricing model:

Lastly, we looked at the volume discount customers are given when they buy quantities larger than one gram. For many of the 14 products we analyzed, there were prices listed but no product available in those larger quantities.

 

As can be seen in the chart below, the discount was almost standardized as consumers purchased larger quantities with a 4.9% discount when customer purchased 3.5g, and 9.7% discount when customers purchased 7g.

Source: Cannabis Benchmarks, Ontario Cannabis Store

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

1 February 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — February 8, 2019

U.S. Cannabis Spot Index — Published February 8, 2019

U.S. Cannabis Spot Index down 1.4% at $1,142 per pound.

 

The simple average (non-volume weighted) price decreased by $8 to $1,248 per pound, with 68% of transactions (one standard deviation) in the $429 to $2,067 per pound range. The average reported deal size declined to 3.2 pounds this week from 3.3 pounds last week. In grams, the Spot price was $2.52, and the simple average price was $2.75.


The relative frequency of trades for outdoor flower increased week-over-week, by almost 2%, while transactions involving indoor and greenhouse product each saw an almost 1% decline in this metric. Similar movement was observed in regard to the relative volumes of the three grow types: That for outdoor flower expanded by 2% compared to last week, while warehouse and greenhouse product’s shares of the total reported weight moved each contracted by 1%.  

The U.S. Spot Index slipped by 1.4% this week to settle at $1,142 per pound. Although several mid-sized markets saw notable increases in their Spot Indices this week – including Massachusetts and Illinois – that upward price pressure was overwhelmed by declines in the composite rates of California, Colorado, and Oregon, with the West Coast markets just mentioned each seeing decreases of over $30 compared to last week. As of this week, the tug-of-war between the upward-trending national price for warehouse flower and the slowly-sliding U.S. averages for greenhouse and outdoor product saw the latter gain the upper hand. Elevated rates in California have for the time being buoyed the national price for indoor flower against sliding prices for such product in Colorado and Oregon this year.

The Trailing 4-Week Average of the U.S. Spot Index persisted this week in the very gradual downward slide that has so far marked 2019, though its negative momentum accelerated somewhat this week. At the moment, the national average is being pulled down by declines in the trend lines of the Spot Indices of California and Oregon. Nevada’s Trailing 4-Week Average price also applying negative pressure, even as sales in the Silver State appear to be growing, at least as of late last year, as we discuss below. The trend line of Michigan’s Spot Index continued to rise this week, as more product recalls likely have buyers looking for inventory that they can be assured will not run afoul of regulators, despite being technically allowed to sell untested product.       

March 2019 Forward unchanged at $1,100 per pound.

 

The average reported forward deal size decreased to 53.8 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 56%, 28%, and 15% of forward arrangements, respectively. The average forward deal size for monthly delivery for outdoor, greenhouse, and indoor-grown flower was 60 pounds, 48 pounds, and 43 pounds, respectively.

 

At $1,100 per pound, the March Forward represents a discount of 3.7% relative to the current U.S. Spot Price of $1,142 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

    BCC Data Provides Glimpse of Volume of Flower Traded in California’s Licensed System from July 2018 through January 2019

  • Colorado

    State Spot Index Sees Small Week-Over-Week Decline, First Downward Movement Since Early November 2018

  • Oregon

  • OLCC’s Supply & Demand Report Contains Insights on Inventory Management by License Type
  •  
  • Washington

  • LCB Reminds Producer / Processors that Volume Discounting in Deals with Retailers is Prohibited
  •  
  • Nevada

  • Cumulative and Adult-Use Sales Both Reach New Record Highs for State’s Market in November 2018, but Stable Spot Index Indicates Sufficient Supply
  •  

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

8 February 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved