U.S. Cannabis Spot Index — November 22, 2019

U.S. Cannabis Spot Index — Published November 22, 2019

U.S. Cannabis Spot Index down 0.5% to $1,456 per pound.

 

The simple average (non-volume weighted) price decreased $23 to $1,661 per pound, with 68% of transactions (one standard deviation) in the $988 to $2,334 per pound range. The average reported deal size decreased to 2.1 pounds. In grams, the Spot price was $3.21 and the simple average price was $3.66.

 

The relative frequency of trades for indoor flower decreased by 2% this week. The relative frequency of deals for outdoor product increased by the same proportion, while that for greenhouse flower was unchanged. 

 

Outdoor product’s share of the total reported weight moved nationally expanded by over 3% this week. The relative volume of warehouse flower contracted by the same proportion, while that for greenhouse product was unchanged.

The U.S. Spot Index declined by 0.5% this week to settle at $1,456 per pound. The decrease in the national composite price resulted in the U.S. Spot’s Trailing 4-Week Average turning downward for the first time since late August. Despite the harvest season, the trend lines of the Spot prices of three of the four largest markets remain on the rise, however, with Oregon’s the exception.

 

New data from Oregon officials reveals that the overall volume of this year’s fall crop exceeded those cut down in 2017 and 2018 by about 20%, although its quality and saleability remains to be determined as poor weather reportedly plagued many growers and resulted in mold issues. Still, the significant uptick in harvest volume in Oregon even in the face of less-than-ideal conditions in the state in late September and October suggests that large crops were also realized in California and Washington, where harvest-season weather was reportedly better in the areas of those states where outdoor cultivation is concentrated. 

 

Nevertheless, prices for outdoor flower were on the rise in all four of the major Western states this week, although the increase in the relative volume of such product on the national level was largely responsible for the small downturn in the U.S. Spot.

The national volume-weighted price for flower to be sold to general consumers declined this week on decreases in the adult-use sectors of the markets of California and Colorado, as well as downturns in Washington State and Nevada. 

 

The national price for medical flower rebounded this week on an uptick in that section of the market in California, in addition to increasing prices in the medical-only systems of Maine, New Hampshire, and New Mexico.

December Forward unchanged at $1,470 per pound.

 

The average reported forward deal size was 51 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 51%, 34%, and 15% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 52 pounds, 43 pounds, and 60 pounds, respectively.

 

At $1,470 per pound, the December Forward represents a premium of 0.9% relative to the current U.S. Spot Price of $1,456 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

  • Taxes on Retailers and Cultivators to Increase in 2020
  •  
  • Colorado

    MED Urges Businesses to Immediately Stop Sale of Vape Products with Vitamin E Acetate, But Actual Deadline for Compliance is January 1, 2020

  • Oregon

  • Official Data for October Shows Sales of Concentrates & Extracts Increased Even as Ban on Flavored Vapes Was Implemented Mid-Month
  • Volume of Wet Plant Material Harvested in September & October This Year Reaches Roughly 3.6 Million Pounds, Up About 20% Compared to Same Months in 2017 & 2018
  •  
  • Washington

  • Regulators Implemented Ban on Vape Products With Vitamin E Acetate This Week
  •  
  • Michigan

  • Adult-Use Sales Can Start in Just Over Two Weeks, as Officials Announce 
  •  
  • Arizona

  • Almost 14,000 Pounds of Flower Sold to Patients in October, A New Record for the State’s Medical Market

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

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

22 November 2019.  Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — November 15, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published November 15, 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$6.47 per gram this week, down 4.3% from last week’s C$6.76 per gram. This week’s price equates to US$2,219 per pound at the current exchange rate.

 

This week four major licensed producers (LPs) – Tilray, Aurora Cannabis, Canopy Growth, and Cronos – reported quarterly earnings that sent their stock prices diving while giving the market more insight into their operations, financials, and future plans. In a nutshell, the fundamentals are catching up to the inflated stock prices.

 

The consumption of cannabis is not keeping pace with the accelerated growth in kilograms being harvested. The main culprit that the management of all the companies reported was the substantial size of the illicit market due to the lack of a sufficient network of legal retail operations. Ontario was the market that most of these LPs were counting on due to the size of its population, but with only 24 operating stores sales have been disappointing. Canopy management reported that Ontario will be announcing revised plans in the very near future to grow the number of stores in 2020. Canopy’s CEO said that Ontario would likely need 40 stores per month starting in 2020 to help rebalance the market by late summer of 2020. Aurora also acknowledged the oversupply amd announced their future Aurora Sun facility in Alberta would now only be constructed to 238,000 square feet of production space, compared to an original target of 1.6 million square feet, to rationalize production and slash capital expenditures to conserve cash.

 

A major theme of the quarterly reports was the need to expand the network of retail sales and cut the wholesale cost of cannabis in order to expand the legal market, which currently represents less than 20% of the total projected market. The four LPs continue to show an increase in total cannabis produced each quarter as new facilities come online and efficiencies in production are gained. Both Aurora and Canopy reported producing over 40,000 kg over the three-month period. Each company currently produces enough each month to fulfill all of Canada’s current legal recreational cannabis demand – a staggering fact when Health Canada has licensed over 120 producers nationwide.

Source: Cannabis Benchmarks, Company MD&A reports

With production hitting new records, total cannabis sales from LPs have not kept pace. Both Aurora and Canopy sold approximately 30% of their harvests, meaning that the rest went into inventory. As inventory levels build and age, the inventory degrades and leads to LPs writing off bad inventory. Canopy Growth reported a C$15.9 million inventory write-down this past quarter.

Source: Cannabis Benchmarks, Company MD&A reports

In order to compete with the lower priced illicit market, the large LPs have begun cutting their wholesale prices. This quarter we saw average selling prices from all the LPs continuing to decrease, with Cronos and Tilray showing the largest quarter-on-quarter drop. All the LPs referenced a changing product mix this quarter, which simply translates to introducing new budget brands selling at lower price points.

Source: Cannabis Benchmarks, Company MD&A reports

One of the bright spots in the cannabis sector has been the drop in production costs. For the current quarter, we see that three of the LPs reported decreasing costs. Aurora reported that it had cut the cash cost per gram to just above C$1. The lower wholesale prices will be partially mitigated by these cost efficiencies, but margins will still be under pressure. 

Source: Cannabis Benchmarks, Company MD&A reports

For more data and analytics like this, please sign up to become a BETA client of our market fundamentals dashboard. Please click the link below to register and we will email you directly as our platform becomes available.

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

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

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

U.S. Cannabis Spot Index — November 15, 2019

U.S. Cannabis Spot Index — Published November 15, 2019

U.S. Cannabis Spot Index up 0.8% to $1,464 per pound.

 

The simple average (non-volume weighted) price increased $31 to $1,684 per pound, with 68% of transactions (one standard deviation) in the $988 to $2,379 per pound range. The average reported deal size decreased nominally to 2.2 pounds. In grams, the Spot price was $3.23 and the simple average price was $3.71.

 

The relative frequency of trades for indoor flower increased by about 3% this week. The relative frequency of deals for greenhouse product decreased by the same proportion, while that for outdoor flower was unchanged. 

 

Outdoor product’s share of the total reported weight moved nationally contracted by over 3% this week. The relative volumes of warehouse and greenhouse flower grew by about 1% and 2%, respectively.

The U.S. Spot Index rose by 0.8% this week to settle at $1,464 per pound. This week’s national composite price once again represents a new year-to-date peak. In numerous previous years, the U.S. Spot Index frequently fell to its annual trough around early-mid November.   

 

On the state level, the Trailing 4-Week Average prices of California, Colorado, and Washington State are all still on the upswing as of this week, with Oregon the only one of the four major Western markets to see its trend line currently in decline. 

 

Still, increased supply from the fall harvest does appear to be having some impact on wholesale pricing. Rates for outdoor product fell this week in California after ascending consistently since mid-September. Prices for such flower in Colorado and Washington have stabilized in recent weeks at levels below peaks that were observed in late October and early November, respectively. Meanwhile, rates for outdoor flower in Oregon have been on the decline since the week ending October 11. As we discuss below, new data from state regulators shows that a very large amount of plant material was harvested in September, with Oregon growers likely attempting to pull their crops down because of the threat of mold from early autumn rains.

 

Apart from Oregon, though, declines in prices for outdoor flower have not been significant this harvest season. At the moment, demand from wholesale buyers attempting to bring in more inventory ahead of the Thanksgiving holiday may be contributing to upward pressure on rates.

The national volume-weighted price for flower to be sold to general consumers rose this week on increases in the adult-use sectors of the markets of California, Colorado, and Massachusetts, as well as an uptick in Oregon’s Spot. The national price for medical flower sank again this week on declines in that section of the market in California and Colorado, in addition to the medical-only systems of Arizona, Maine, New Hampshire, New Mexico, Rhode Island, and Vermont.

December Forward up $20 to $1,470 per pound.

 

The average reported forward deal size was nominally unchanged at 50 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 50%, 36%, and 14% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 51 pounds, 43 pounds, and 61 pounds, respectively.

 

At $1,470 per pound, the December Forward represents a premium of 0.4% relative to the current U.S. Spot Price of $1,464 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

  • Volume-Weighted Average Price for Outdoor Flower Up 35% Year-Over-Year
  •  
  • Colorado

    Demand Slumped in September, But Downturn in Monthly Sales Did Not Impede Upward Trend in State Spot Index

  • Oregon

  • September Sales Down About 10% Month-Over-Month as Harvest Volume Nearly Doubles in Same Span
  •  
  • Washington

  • Retail Demand Reportedly Increasing Year-Over-Year, But Not to Same Degree as in Colorado or Oregon
  •  
  • Michigan

  • Adult-Use Sales Can Start in Just Over Two Weeks, as Officials Announce Inventory Transfers from Equivalent Medical to Adult-Use Licenses Will be Allowed Beginning December 1
  •  
  • Illinois

  • Retail Sales of Medical Cannabis in October Are Double Those from Same Month Last Year

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

Do you support wholesale market transparency?

Become a member of our Price Contributor Network and receive discounted pricing and exclusive analysis!

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

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