CANADA CANNABIS SPOT INDEX — September 13, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 13, 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$7.22 per gram this week, up 6.3% from last week’s C$6.79 per gram. This week’s price equates to US$2,479 per pound at current exchange rates.

 

This week we examine the Q2 2019 cannabis usage data collected by Statistics Canada through the National Cannabis Survey (NCS).  The survey is conducted each quarter by the government to better understand usage habits and monitor societal changes that might have occurred as a result of legalization. The survey targets Canadians aged 15 and over, and the data for Q2 was collected after the fact, between August 14 and September 12. 

 

According to the report, 4.9 million – or 16.1% – of Canadians used cannabis during the three months ending June 30. With data going back to the beginning of 2018, we can see more Canadians are using cannabis. In Q1 2018, 4.2 million – or 14% – reported using cannabis. We calculated the compound annual growth rate (CAGR) in this metric to be 10.9% when reviewing the data over the past 18 months.

Source: Cannabis Benchmarks, Statistics Canada

The same data for the four largest provinces, which can be seen in the chart below, shows Ontario accounting for the bulk of Canadian cannabis usage. Ontario CAGR was calculated to be 16.9% over the past 18 months, while Alberta also had significant growth with a CAGR of 15.4%. We expect the upward trend in usage to continue as more retail outlets open to increase availability; legal products expand to include edibles, extracts, beverages and topicals; and cannabis education continues to develop.

Source: Cannabis Benchmarks, Statistics Canada

The survey also breaks out usage habits by gender. Although it dropped from Q1, male consumption has continued to grow overall with 3 million Canadian males reporting using cannabis in the last quarter. Growth in male consumption has been robust, with a CAGR of 18.7% since the beginning of 2018. Female usage has been relatively flat with 1.9 million females reporting using in Q2 2019, and a CAGR of only 0.2%.

Source: Cannabis Benchmarks, Statistics Canada

The data from the NCS also drills into the differing methods of both obtaining and consuming cannabis products post-legalization. The data clearly shows that males are more likely to consume cannabis more frequently for non-medical use, buy their cannabis, and smoke flower over other derivative products. Meanwhile, only 12% of females report using cannabis and are more inclined to use to alternatives such as lotions and orally consumed products.

Source: Cannabis Benchmarks, Statistics Canada

*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

13 September 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — September 6, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 6, 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$6.79 per gram this week, up 1.1% from last week’s C$6.72 per gram. This week’s price equates to US$2,320 per pound at current exchange rates.

 

This week we examine June sales figures from Health Canada. The government’s official Cannabis Tracking System data shows sales of both dry cannabis and oils increasing substantially over the past few months, driven mainly by the opening of new storefronts in Ontario.  

 

 

Total sales of non-medical dried cannabis in June increased by 8% from May, to a total of 8,441 kg sold (or 281 kg/d on average). The growth comes as new retail outlets provide increased availability and Canadians become more familiar with the product. As the non-medical market expands, total sales of medical dried cannabis dropped for the second straight month. In June, total sales of medical dried cannabis decreased by 10% to 1,535 kg (or 51 kg/d on average), the lowest sales volume figure for medical cannabis since adult-use legalization in October 2018.

Source: Cannabis Benchmarks, Health Canada

Non-medical cannabis sales volume now exceeds that in the medical sector by a factor of five-and-a-half. This is an increase from January, when non-medical sales volume outpaced medical by a factor of about three. 

 

As has been observed in state-legal cannabis markets in the U.S., medical cannabis patients in Canada seem to be turning to recreational outlets for their supply, rather than ordering online from government sources. It is likely the trend in this ratio will continue even if medical sales remain steady; more Canadians will likely give the licensed recreational markets a chance in the future, either as a first time user or one making the switch from purchasing from the illicit markets.

Source: Cannabis Benchmarks, Health Canada

The Cannabis Tracking System also reports total finished and unfinished inventory for the end of each month. We have observed inventory climbing steadily as Canadian licensed producers (LPs) bring on more cultivation capacity. New figures from the recent report report show finished inventory ballooning to almost 49,000 kg, with 62% of that inventory held by distributors and retailers. Our calculations based on the three-month average demand from all consumers indicates this finished inventory represents over five months of supply.

Source: Cannabis Benchmarks, Health Canada

The amount of unfinished inventory is even more staggering at 263,333 kg ready to be processed, packaged, and distributed. Our calculations based on the three-month average demand indicates that the unfinished inventory held by LPs represents 28 months of supply.

Source: Cannabis Benchmarks, Health Canada

*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..

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

6 September 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — August 30, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published August 30, 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$6.72 per gram this week, down 3.9% from last week’s C$7.00 per gram. This week’s price equates to US$2,293 per pound at current exchange rates.

 

This week we examine the results of the lottery for retail store licenses held by the Alcohol and Gaming Commission of Ontario (AGCO). On August 21, AGCO unveiled the 42 winners that can potentially open a physical outlet. The license winners are allocated across five structured regions of the province. 

 

This was the second lottery held in Ontario after the first, held in January, was deemed unfair. This time around AGCO initiated a more strict and controlled process.





Here is our review of the lottery results in a nutshell:

A total of 5,094 parties expressed interest, of which 4.5% were disqualified, withdrawn, or deemed incomplete. The remaining 4,864 applications entered the lottery across the five regions, with 42.2% of the applications submitted to open storefronts in Toronto or the Greater Toronto Area (GTA). From these applications only 0.9% were given the special email or call to congratulate them for being winners. 

 

Ontario has been one of the slowest provinces to open licensed cannabis stores, which has both hurt sales and contributed to the prevalence of the illicit market. That looks to change soon with the opening of new legal outlets and the introduction of new products nationwide in Canada’s licensed market. Today we are revisiting our forecast for sales in Ontario through the end of the year, adjusted to include June data released recently by Health Canada. The June sales data showed a significant increase from May; therefore we have updated our projection higher for the rest of the year.

Source: Cannabis Benchmarks

Health Canada’s Cannabis Retail Trade Sales by Province and Territory showed Ontario sales increasing in June to C$25.9M, up by 13.2% compared to the month prior. We anticipate July and August sales to be slightly higher with 31 days in each month. After that, we expect sales to pick up significantly. 

 

First, we assume that baseline online sales will grow by 20% each month starting in October as new products such as edibles, vapes, and beverages become available. Second, we assume the same for daily sales at existing shops, as well as newly licensed storefronts from the second lottery. Overall, our calculations show that Ontario cannabis sales could grow by as much as 300% from June’s monthly revenues, to as high as C$79M in December of this year.

*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..

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

30 August 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved