CANADA CANNABIS SPOT INDEX — May 24, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 24, 2019

The CCSI moved higher to C$7.33 per gram this week, from last week’s C$6.96 per gram. This week’s price equates to US$2,346 per pound at current exchange rates.

 

This week we take a closer look at the cannabis excise duty rates charged by each province.

 

The Government of Canada’s Department of Finance lays out the Federal and Provincial excise duty rates payable by licensed cannabis producers. These duties are paid when the cannabis products they produce and package are delivered to a provincially-authorized distributor/retailer or final consumer.

 

The Cannabis Benchmarks’ CCSI monitors wholesale transactions between the provincial regulatory bodies and market distribution centers, such as the online provincial stores and private or public brick and mortar stores; hence the CCSI is inclusive of the average Canadian cannabis excise duties.

 

Based on Cannabis Benchmarks’ calculation for this week’s price assessment of C$7.33, the duties vary widely from on province to the next. Manitoba has the lowest cannabis excise duties at C$0.25 per gram, while Alberta’s inclusion of a sales tax adjustment takes the duties to a whopping C$1.75 per gram.

Source: Govt of Canada Department of Finance, Cannabis Benchmarks

This week, the average Canadian excise duty (population weighted average) is calculated to be C$1.14 per gram. Therefore, without the duty, this week’s average LP selling price is C$6.19 per gram, or US$2,086 per pound at current exchange rates.

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

24 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 17, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 17, 2019

The CCSI declined by 7.8% to C$6.96 per gram this week, from last week’s C$7.55 per gram. After a momentary uptick last week, prices returned to levels observed throughout April and May. This week’s price equates to US$2,346 per pound at current exchange rates.

 

After a challenging start to the legalization of dry cannabis last year, major licensed producers (LPs) are better prepared for the upcoming launch of vapes and edibles. While supply shortages and the slow opening of retail cannabis stores set the new industry off to a slow start, conditions might be different for phase two of the Canadian cannabis market with strong consumer demand for vapes and edibles. The official launch date has not been released, but it has been stated that these new product categories will commence sometime before October 17, 2019.

 

 

On Tuesday, one of the largest LPs, Aurora Cannabis, stated in its earnings call that it is working towards reducing its production cost while building inventory for the launch of edibles and vaping products. It is doing so by controlling costs and taking advantage of economies of scale as it makes strides towards its goal of building out a production capacity of 625,000 kg/year of dry cannabis.

 

With the start of the Edmonton Aurora Sky and Bradford facilities, Aurora’s production has increased to 150,000 kg and they have brought their cost per gram of dried product down to $1.42 from $1.92. The company anticipates continued reduction in its production and manufacturing costs with an expectation of it trending below $1 per gram. It should be noted that their average net selling price was also down to $6.40 from $6.80 per gram.

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

17 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — May 17, 2019

U.S. Cannabis Spot Index — Published May 17, 2019

U.S. Cannabis Spot Index up 1.6% to $1,123 per pound. The simple average (non-volume weighted) price increased $23 to $1,236 per pound, with 68% of transactions (one standard deviation) in the $510 to $1,961 per pound range. The average reported deal size increased 7% to 3.3 pounds from 3.1 pounds last week. In grams, the Spot price was $2.48 and the simple average price was $2.72.

 

The relative frequency of trades for greenhouse flower increased by 2%. The relative frequency of transactions involving outdoor product decreased by the same proportion, while that for deals involving indoor flower was unchanged. Outdoor product’s share of the total documented weight moved nationally grew by 2% this week. The relative volumes of warehouse and greenhouse flower both contracted by 1% compared to last week.  

 

The U.S. Spot Index rose by 1.6% this week to settle at $1,123 per pound, matching the national average composite rate documented two weeks ago. Rumblings of undesirable inventory in Oregon’s ostensibly oversupplied market and a shrinking pool of licensed cultivators in California appear to be contributing to the modest upswing in national wholesale prices. The Spot Indices of Washington and Nevada are also currently experiencing recoveries after sinking to historic lows for those markets earlier this year. Further upward pressure on supply side rates is originating from smaller medical cannabis markets that are experiencing significant increases in demand in 2019. Still, the U.S. Spot has demonstrated relative steadiness so far this year, underpinned by stability in pricing in California and Colorado, the country’s two largest markets.    

The national volume-weighted price for flower to be sold in adult-use markets once again declined marginally this week, due almost entirely to a decrease in that sector of California’s market. Falling prices in Alaska also provided some downward pressure on the national rate.

 

Prices for medical product were up this week on rising rates in California, Arizona, Michigan, Maine, New Hampshire, Rhode Island, and Vermont.

June Forward unchanged at $1,035 per pound. The average reported forward deal size was 42 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 31%, and 14% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 36 pounds, 49 pounds, and 48 pounds, respectively.

 

At $1,035 per pound, the June Forward represents a discount of 7.9% relative to the current U.S. Spot Price of $1,123 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

  • Review of Cultivation Licensing Data Shows Less Than 1,200 Distinct Growing Operations Now Hold Active, Valid Licenses
  •  
  • Colorado

    Total Retail Sales and Revenues from Adult-Use Market Both Reached New Record Highs in March, As State Spot Index Rose Slightly

  • Oregon

  • Retail Sales Revenue and Volume Down Slightly in April, Monthly Spot Index Off by Almost 7% from March
  •  
  • Washington

  • State Composite Price Down by 17% Year-Over-Year, But is Up by Over 23% Since Start of 2019
  •  
  • Arizona

  • Sales Volume to Patients Climbed to Historic Peak in April; Day of 4/20 Accounted for 10% of Total Monthly Sales

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

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

17 May 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved