CANADA CANNABIS SPOT INDEX — July 19, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 19, 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$7.07 per gram this week, down 4.1% from last week’s C$7.38 per gram. This week’s price equates to US$2,458 per pound at current exchange rates.

 

This week we return to an examination of the final price consumers are paying for dry cannabis products. (See our original report published on February 8, 2019 here.) Each provincial retail structure is set up slightly differently, but consumers ultimately purchase recreational cannabis in pre-rolls or canisters regardless of such variations. For this analysis we concentrate specifically on dry cannabis sold in one gram, 3.5 gram, and seven gram canisters.

 

In the original study, we focused in on the retail price of 14 out of the 80 listed dry cannabis products on the Ontario Cannabis Store. We chose a variety of products from different licensed producers (LPs), with varying THC and CBD levels, and assorted flower types (Sativa, Indica, or Hybrids). For this week’s analysis, we attempted to find the same 14 products but discovered that only eight of them are now available, despite a greater number of products on offer overall.

 

Of the same eight products from both studies, the calculated average selling price for one gram has moved up slightly from C$11.97 to C$12.30 (inclusive of the 13% retail sales tax). One specifically, San Rafael ’71 Tangerine Dream, experienced a 30% increase in price over this five-month period. We should note that not all of the products are currently available in each of the amounts specified above, but prices were listed for each size.

The volume discount customers receive when they buy quantities larger than one gram also looks quite different relative to our earlier analysis. The discount to purchase larger volumes was quite consistent across all the products we reviewed in February, when consumers received a roughly 5% savings on purchasing a 3.5 gram canister and around a 10% discount on seven grams. This is no longer the case, as some LPs have apparently changed their product pricing strategy. Five of the eight products still employ the same volume pricing strategy, but the three products produced by Aurora, Altavie, and San Rafael show vastly different product pricing on the larger increments today. The commonality shared by these three producers was to decrease or eliminate the discount received when moving from the 3.5 gram to the seven gram canister.

Source: Cannabis Benchmarks, Statistics Canada [Table  20-10-0008-01]

This change in pricing strategy could be a result of these LPs having more data to understand customer purchase habits, packaging and shipping costs, or competitors, with such metrics presumably indicating that sales revenue could be optimized by refraining from offering or reducing a significant volume discount for purchasing seven grams relative to 3.5. 

*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

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

CANADA CANNABIS SPOT INDEX — July 12, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 12, 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$7.38 per gram this week, up 3% from last week’s C$7.16 per gram. This week’s price equates to US$2,557 per pound at current exchange rates.

 

This week we examine data from Statistics Canada showing monthly cannabis stores sales figures by province. This latest issue of the data is quite important. Not only does it give us a glimpse into April sales figures, but more importantly it shows us Ontario retail sales with the opening of the first set of private cannabis stores. Prior to April, the only outlet that sold cannabis legally in Ontario was the provincially-run online store. On April 1, 10 privately-owned storefronts opened across the province, with the number growing to 22 today. With fewer supply concerns, last week the Ontario government announced it will expand the number of authorized brick-and-mortar retail locations to 75.


As seen in the map below, of the current operational stores only seven are located in the Greater Toronto Area, which has a population of 5.9 million people. To put this in perspective, each one of those stores is set up to service an average of 842,000 people, or 2.4% of the entire Canadian population.

As expected, the new Ontario retail outlets did boost cannabis sales. The average daily cannabis spend for Canada as a whole jumped by 27% in April to C$2.5M per day. Daily Ontario cannabis sales grew by a whopping 164% to C$656,000 per day. With the opening of more Ontario stores the expectation is that daily Ontario sales will continue to climb.

Source: Cannabis Benchmarks, Statistics Canada [Table  20-10-0008-01]

Some other provinces also saw a boost in sales in April. Alberta and Saskatchewan sales jumped by 13% and 24%, respectively. The one province that continues to stick out as a laggard is British Columbia, which saw an 8% month-on-month drop to C$84,000 per day. 

 

The chart below compares each province’s proportion of the country’s total population to the proportion of total cannabis sales. At this point, any correlation between the two is virtually nonexistent. Numerous factors contribute to the disconnect between the two data points, such as number of retail locations, the provincial regulation and excise tax structure, age demographics, and more.

*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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Do you support wholesale market transparency?

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

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

U.S. Cannabis Spot Index — July 12, 2019

U.S. Cannabis Spot Index — Published July 12, 2019

U.S. Cannabis Spot Index up 1.2% to $1,293 per pound.

 

The simple average (non-volume weighted) price decreased $13 to $1,442 per pound, with 68% of transactions (one standard deviation) in the $640 to $2,245 per pound range. The average reported deal size declined to 2.2 pounds from 2.5 pounds last week. In grams, the Spot price was $2.85 and the simple average price was $3.18.

 

The relative frequency of trades for indoor flower decreased by more than 2% week-over-week. The relative frequency of transactions involving greenhouse product increased by the same proportion, while that for outdoor flower was unchanged. Greenhouse product’s share of the total documented weight moved nationally expanded by over 8% this week. The relative volumes of warehouse and outdoor flower contracted by about 6% and 3% respectively, relative to the week prior. 

The U.S. Spot Index rose by 1.2% this week to settle at $1,293 per pound, establishing a new year-to-date high after a small decline last week. The upward trend in the national composite price is being observed even in the face of injections of supply from summer light-deprivation crops, particularly in California. However, we have in the past observed wholesale price rises at the outset of light-dep or outdoor harvests, as fresher plant material is more appealing and can garner higher rates than that which was cut down months ago, or even the year prior. Market participants are also reporting lower demand from retailers in the wake of July 4, due to shops stocking up on extra inventory ahead of time. Yet rates in the four major Western markets all ticked upward this week, with Nevada the only large market to see a decline in its Spot.  

The national volume-weighted price for flower to be sold to general consumers declined this week as downturns in California and Nevada overwhelmed increases in Colorado, Oregon, and Washington State. Prices for medical flower increased sharply this week thanks to a notable jump in rates for such product in California. Additionally, apart from Maine and Vermont, every medical-only market covered in our reporting saw an increase in its Spot Index this week.

August Forward up $50 to $1,200 per pound.

 

The average reported forward deal size was 48.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 56%, 29%, and 15% 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 63 pounds, respectively.

 

At $1,200 per pound, the August Forward represents a discount of 7.2% relative to the current U.S. Spot Price of $1,293 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

  • Changes to Provisional Licensing Should Expand and Stabilize Number of Businesses Able to Participate in the State’s Licensed System
  •  
  • Colorado

    Volume-Weighted Rates for Indoor Flower Showed Notable Stability through First Half of 2019

  • Oregon

  • Behavior of State Spot Index in Q2 Shows that Wholesale Prices in Oregon Remain Some of Most Volatile in the U.S.
  •  
  • Washington

  • Average Price for Outdoor Flower in Q2 Down Compared to Prior Quarter, Bucking Trends Observed in Other West Coast Markets
  •  
  • Illinois

  • Demand Continues to Boom in State’s Medical Market; YTD Dispensary Sales for H1 2019 up 70% Compared to H1 2018, Retail Revenues for June Up 93% YOY

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

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