U.S. Cannabis Spot Index — July 26, 2019

U.S. Cannabis Spot Index — Published July 26, 2019

U.S. Cannabis Spot Index up 0.7% to $1,359 per pound.

 

The simple average (non-volume weighted) price increased $27 to $1,555 per pound, with 68% of transactions (one standard deviation) in the $782 to $2,327 per pound range. The average reported deal size declined to 2.2 pounds from 2.3 pounds last week. In grams, the Spot price was $3.00 and the simple average price was $3.43.

 

The relative frequency of trades for indoor flower increased by 3% week-over-week. The relative frequencies of transactions involving greenhouse and outdoor product decreased by 1% and 2%, respectively. Greenhouse flower’s share of the total documented weight moved nationally contracted by 4% this week. The relative volumes of warehouse and outdoor product each expanded by 2% relative to the week prior.

The U.S. Spot Index rose by 0.7% this week to settle at $1,359 per pound, establishing a new year-to-date high for the third straight week. Monthly average prices have also been on the rise recently. July is the third consecutive month to see an increase in its average Spot price. While demand has been strong in the major adult-use markets, there are signs that downward pressure on wholesale prices could emerge in some states in the weeks and months ahead. California’s legal market has been experiencing growing pains as it works to establish itself, but with nearly all temporary cultivation licenses expired, those businesses that gained annual and provisional permits appear poised to generate sufficient, if not excessive, supply. In Oregon, mid and late summer harvests boosted supply around this point in both 2017 and 2018. Finally, the volume and quality of the fall harvest has yet to be determined, as is whether record-setting demand levels are enough to absorb the surge of new inventory that will come in Q4.  

The national volume-weighted price for flower to be sold to general consumers increased for the second consecutive week on rises in that sector of the market in California and Colorado, as well as in Oregon’s and Alaska’s licensed systems. Prices for medical flower sank for the second straight week, despite many medical-only markets seeing increases in their Spot Indices. However, downturns in the medical portion of California’s market, along with a slight decline in Michigan and a decrease in Maine’s Spot, were the primary drivers of the downward slide in national rates for product designated as medical.

August Forward assessed up $25 to $1,300 per pound.

 

The average reported forward deal size was 48 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 29%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 52 pounds, and 64 pounds, respectively.

 

At $1,300 per pound, the August Forward represents a discount of 4.3% relative to the current U.S. Spot Price of $1,359 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

 

Headlines From This Week’s Premium Report:

  • California

  • State Cultivation Licensing Data Shows Permitted Growers Outnumber Legal Storefronts by About 2:1, Similar to Ratio in Oregon
  •  
  • Colorado

    State Spot Index Rises to New Annual Peak for the Fifth Straight Week as Rates for Both Indoor and Greenhouse Product Ascend

  • Oregon

  • Retail Sales Revenue for June Reaches Record High for State’s Market, But Sales Volume Figures Show Plateauing or Decreasing Demand in Q2
  •  
  • Washington

  • Regulators Loosen Some Reporting Requirements as Problems with Traceability System Persist
  •  
  • Nevada

  • Sales Rebound in May, State Spot Index Also on the Rise in that Month
  •  
  • Massachusetts

  • Adult-Use Retailers Gross Over $40 Million in Sales in June; State Spot Index Inched Upward as Harvest Data Showed Contraction in Production Compared to May

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

26 July 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — July 26, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 26, 2019

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$6.92 per gram this week, down 2.2% from last week’s C$7.07 per gram. This week’s price equates to US$2,391 per pound at current exchange rates.

This week we examine newly released May sales figures from Health Canada. The government’s official Cannabis Tracking System data shows sales of both dry cannabis and oils increasing over the past couple of months. 

 

Total sales of non-medical dried cannabis in May increased by 11.8% from April, to 252 kg/d. Sales of medical dried cannabis in May decreased by 22.8% to 55 kg/d after a momentary burst in demand in April.

Source: Health Canada, Cannabis Benchmarks

Total sales of cannabis oils continue to expand as customers become more comfortable with this new product category, with increasing availability also contributing to the rise. Both non-medical and medical cannabis oil sales volumes increased in May by 15% from April, to 132 L/d and 183 L/d, respectively.

Source: Health Canada, Cannabis Benchmarks

The recent growth has been encouraging for an industry that is still educating Canadians to become more accustomed to cannabis as a recreational pastime and medical alternative. The ultimate goal of such efforts has always been to move customers away from the robust illicit market to the newly created legal framework, but progress on this front has been slow. 

 

The main culprits impeding consumers from the country’s legal market are lack of retail locations, lack of product quality and variation, and price. An example of how more retail outlets increase access to the regulated market and promote sales can be seen in the chart below. Specifically in regard to Ontario’s retail sales revenues, the growth reported in April and May can be attributed to additional storefronts opening their doors across the province. Retail sales in Ontario in May were almost triple the average monthly revenues documented in Q1.

 

Source: Health Canada, Cannabis Benchmarks

We expect these sales figures to continue to increase as Ontario’s government moves from 25 retail locations today to authorizing an additional 50 cannabis retail stores starting in October. This will coincide with the introduction of oils, edibles, and vapes, which will increase the variety of product available and presumably boost sales further. With such major shifts to the market landscape on the horizon, both nationally and in various provinces, Q4 of this year looks as if it will be a very interesting period for Canadian cannabis.

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

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

26 July 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — July 19, 2019

U.S. Cannabis Spot Index — Published July 19, 2019

U.S. Cannabis Spot Index up 4.3% to $1,349 per pound.

 

The simple average (non-volume weighted) price increased $85 to $1,528 per pound, with 68% of transactions (one standard deviation) in the $736 to $2,319 per pound range. The average reported deal size increased to 2.3 pounds from 2.2 pounds last week. In grams, the Spot price was $2.97 and the simple average price was $3.37.

 

The relative frequency of trades for outdoor flower decreased by more than 6% week-over-week. The relative frequencies of transactions involving indoor and greenhouse product increased by about 2% and 5% respectively. Outdoor flower’s share of the total documented weight moved nationally contracted by 9% this week. The relative volumes of warehouse and greenhouse flower expanded by 5% and 4%, respectively, relative to the week prior.

The U.S. Spot Index rose by 4.3% this week to settle at $1,349 per pound, establishing a new year-to-date high for the second straight week. Emphasizing the extent of the recent recovery in U.S wholesale cannabis rates this year, this week’s national composite price would have been the fifth-highest recorded in all of 2018. Strong year-over-year demand growth in the four major Western markets continues to apply upward pressure on prices, especially as licensing and harvest data out of California, Colorado, and Oregon indicate that legal production capacity has either decreased or stabilized relative to a year ago. A significant contraction in the relative volume of outdoor product also underpinned this week’s rise in the U.S. Spot, as wholesale buyers on the West Coast continue to spurn last year’s harvest and are turning to summer light-deprivation crops, which come with higher prices than 2018’s outdoor product.  

The national volume-weighted price for flower to be sold to general consumers jumped this week on rises in that sector of the market in California and Colorado, as well as in Oregon’s licensed system, which makes no distinction between adult-use and medical product at the point of wholesale transfer. Prices for medical flower sank this week. Despite a rise in rates in that portion of California’s market, week-over-week declines were observed in essentially every sizeable medical-only legal cannabis program – namely Arizona, Illinois, Maine, Michigan, and Rhode Island. 

August Forward assessed up $75 to $1,275 per pound.

 

The average reported forward deal size was 49 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 29%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 53 pounds, and 64 pounds, respectively.

 

The entire Six-Month Implied Forward Curve was assessed upward this week. Continued demand growth in the major Western markets this year appears as if it is straining production capacities that have stabilized or diminished relative to a year ago. Meanwhile, despite robust harvests cut down at the end of last year, buyers are reportedly dissatisfied with the remaining inventory on offer and are turning increasingly to higher-priced indoor, greenhouse, and light-deprivation product that has been cut down more recently.  

 

 

At $1,275 per pound, the August Forward represents a discount of 5.5% relative to the current U.S. Spot Price of $1,349 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

Headlines From This Week’s Premium Report:

  • California

  • Audit of BCC Indicates that Oversight and Enforcement of Licensed Businesses Has Room to Become Significantly More Stringent
  •  
  • Colorado

    Retail Revenues Rise to Reach New Record High in May, YTD Sales Up Almost 9% Compared to First Five Months of 2018

  • Oregon

  • Historical Harvest Data Shows Large Increases in July 2018 and August 2017, Suggesting New Supplies Could Reach Market in the Coming Weeks
  •  
  • Washington

  • Traceability System Issues Hamper Wholesale Trading this Week as State Spot Index Continues to Climb
  •  
  • Arizona

  • June Sales Volume to Patients Declines After Two Straight Months of Record Demand, State Spot Index Also Slips Slightly

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

19 July 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved