U.S. Cannabis Spot Index — January 17, 2020

U.S. Cannabis Spot Index — Published January 17, 2020

U.S. Cannabis Spot Index up 0.7% to $1,401 per pound.

 

The simple average (non-volume weighted) price increased $3 to $1,579 per pound, with 68% of transactions (one standard deviation) in the $911 to $2,247 per pound range. The average reported deal size declined to 2.0 pounds. In grams, the Spot price was $3.09 and the simple average price was $3.48.

 

The relative frequency of trades for greenhouse flower increased by almost 3% this week. The relative frequencies of deals for indoor and outdoor product decreased by about 2% and 1%, respectively.

 

 

Warehouse flower’s share of the total reported weight moved nationally expanded by almost 2% this week. The relative volume of outdoor product contracted by the same proportion, while that for greenhouse flower was unchanged.

The U.S. Spot Index rose by 0.7% this week to settle at $1,401 per pound. At the state level, upticks in the major markets of Washington State, Oregon, and Nevada combined with increases in the Spot Indices of mid-sized markets such as Michigan, Massachusetts, and Illinois to outweigh downturns in California, Colorado, and Arizona.

 

Some notable milestones were observed this week outside of the big five state markets. Michigan’s Spot Index settled this week at its highest point since the summer of 2016. Below, we analyze sales and production data for the months of Q4 2019 in Michigan, which shows short supply that could get even tighter at some point this quarter.

 

On the other hand, the Spot Indices of Alaska and Arizona both dropped to historic lows this week, emphasizing the continued maturation of those states’ legal cannabis systems. In regard to Arizona, falling wholesale flower prices come despite monthly sales volume figures routinely climbing to new heights in 2019. Cultivators in Arizona do not have restrictions on their production capacity and are permitted to grow as much as necessary to meet demand.

 

Finally, New Mexico’s Spot also sank to its lowest point on record. (Cannabis Benchmarks began reporting on wholesale flower prices in the state in October 2017.) This indicates that the reduction in permitted plant count put in place late last year left New Mexico cultivators with more than sufficient production capacity to meet current demand from patients.

Adult-use flower prices remained high in the new markets of Michigan ($3,477 per pound), Illinois ($3,029 per pound), and in Massachusetts’ 14-month old recreational sector ($3,362 per pound). However, downturns in the adult-use markets of California and Colorado once again outweighed the higher prices in the newer, smaller markets and resulted in the small decrease in the national rate. As we note below, only 400 pounds of flower were sold by adult-use retailers in Michigan in December 2019.     

February Forward unchanged at $1,450 per pound.

 

The average reported forward deal size was 47 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 50 pounds, 42 pounds, and 48 pounds, respectively.

 

At $1,450 per pound, the February Forward represents a premium of 3.5% relative to the current U.S. Spot Price of $1,401 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

  • Governor Proposes Changes to Cannabis Taxation in Budget Legislation
  •  
  • Colorado

  • YTD Retail Sales Through November 2019 Reach $1.6 Billion, Surpassing Total Revenue Generated in All of 2018
  •  
  • Washington

  • Number of Producers Reporting Sales in 2019 Generally Up Significantly Compared to Prior Year, But Dropped Almost 15% Month-Over-Month in November
  •  
  • Michigan
  • Medical Sales Revenue and Flower Sales Volume Decreased in Each Month of Q4 2019, While Production Data Suggests Tight Supply Will Continue this Quarter

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

17 January 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 17, 2020

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 17, 2020

*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$6.46 per gram this week, down 0.7% from last week’s C$6.51 per gram. This week’s price equates to US$2,246 per pound at the current exchange rate.

This week we continue our discussion of both the current availability and prospects related to the Cannabis 2.0 market. As a quick reminder, Cannabis 2.0 refers to the legalization of edibles, extracts, and topicals. Unlike last year at the onset of legalization – when there appeared to be a massive shortage of flower and supply dynamics were opaque – the provincial governments, licensed producers, and retailers have this time been vocal in setting expectations. They have been open about both the timeline to release products and their limited initial availability. That said, demand for the new products has been roaring. Most shops sell out their stocks immediately.

As part of the roll out of Cannabis 2.0, Health Canada has put strict regulations on the level of THC contained in each product, as well as on packaging and labeling. 

  1. These products cannot contain nicotine, caffeine, or alcohol; hence no infused coffee or alcoholic beverages will be available. 
  2. Edibles (food, candy, or beverages) cannot contain more than 10 milligrams of THC per container. For example, a package of the Grape Oasis Gummies shown below comes with five pieces that contain two milligrams of THC each. 
  3. Cannabis oil extracts are limited to 1,000 milligrams of THC per container.
  4. Topicals, such as lotions, cannot contain more than 1,000 milligrams of THC in a container.

Ontario was one of the few provinces that gave private brick and mortar stores a head start on receiving and selling Cannabis 2.0 products. Starting January 6, the 25 Ontario retailers were able to procure a limited range of products to sell ahead of the government-run Ontario Cannabis Store (OCS). Yesterday, was the first day that the OCS online store sold Cannabis 2.0 products and they were sold out of edibles within hours of their initial availability. In fact, there was a digital queue of thousands of orders showing the strong demand. Currently there is only one cannabis edible product listed on the OCS, but even that is out of stock.

The coming months will be interesting in this industry as the Canadian population becomes accustomed to the new product types. We will be tracking the sales growth associated with these new products, as well as how dry flower sales might be impacted.

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

17 January 2020 Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved

U.S. Cannabis Spot Index — January 10, 2020

U.S. Cannabis Spot Index — Published January 10, 2020

U.S. Cannabis Spot Index down 0.4% to $1,391 per pound.

 

The simple average (non-volume weighted) price decreased $30 to $1,576 per pound, with 68% of transactions (one standard deviation) in the $929 to $2,224 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.07 and the simple average price was $3.48.

 

The chart below shows the course of the Cannabis Benchmarks® U.S. Spot Index from its inception in April 2015 through the end of 2019.

The U.S. Spot Index declined by 0.4% this week to settle at $1,391 per pound. The significant Q4 price decline typically observed in prior years did not come to fruition in 2019. However, since around mid-November the national composite price has displayed a modest downward trend. Wholesale prices also trended downward a bit from the final week of 2018 through the end of January 2019, a period in which they declined by by 1.5%, from $1,175 to $1,157 per pound. Product from a prior year’s fall harvest continuing to come to market, along with generally depressed sales in the wake of the end-of-year holiday season, traditionally apply downward pressure to wholesale cannabis prices to open any given year. Based on early data from the opening weeks of 2020, it appears that such trends are holding in California, Colorado, and Oregon. 

 

As we noted last week, though, the new and expanding adult-use markets of Massachusetts, Michigan, and Illinois will influence national wholesale rates in a manner that they have not in prior years. Still, at the moment those markets are relatively small in terms of the volume of product being moved, despite posting some impressive gross sales figures. For example, Massachusetts adult-use retailers racked up over $445 million in sales in 2019, almost a third of Colorado’s combined adult-use and medical retail revenue in 2018. However, Massachusetts growers harvested less than a tenth of the number of plants in 2019 that Colorado cultivators did in 2018, emphasizing the significantly higher prices in the East Coast’s only regulated adult-use market.

Upward pressure on the national price for recreational product came from the new markets of Michigan and Illinois, where adult-use flower prices were assessed at $3,499 and $3,036 per pound, respectively. Additionally, the rate for adult-use product in Massachusetts was observed to settle at $3,355 per pound this week. However, downturns in the recreational sectors of the markets of California and Colorado, as well as in Oregon, outweighed the higher prices in the newer, smaller markets and resulted in the small decrease in the national rate.

February Forward unchanged at $1,450 per pound.

 

The average reported forward deal size was 47.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 46%, 36%, and 18% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 50 pounds, 42 pounds, and 50 pounds, respectively.

 

At $1,450 per pound, the February Forward represents a premium of 3.8% relative to the current U.S. Spot Price of $1,391 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 Price for Indoor Flower Jumps Over $2,000 Per Pound for First Time in Over Three Years
  •  
  • Oregon

  • State Spot Index Has Stabilized from November 2019 to Present After Significant Volatility Earlier in 2019
  •  
  • Nevada

  • Total Sales in October 2019 Reached Over $62.5 Million, Just Short of Record Set in August 2019
  •  
  • Michigan
  • State Spot Index Jumps to Over $2,500 Per Pound for First Time in Over Three Years
  •  
  • Massachusetts
  • Adult-Use Retailers Realized Over $445 Million in Gross Sales in 2019, Despite Small Number of Storefronts Licensed
  •  
  • Illinois

  • State Spot Index Climbs Almost $200 in Two Weeks as Retailers Rang Up Over $10 Million in Sales in First Five Days of Adult-Use Legalization

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

Do you support wholesale market transparency?

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

10 January 2020.  Copyright © 2020 New Leaf Data Services, LLC.  All rights reserved