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

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

CANADA CANNABIS SPOT INDEX — July 5, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 3, 2019
For Week Ending July 5, 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$7.16 per gram this week, down 1.1% from last week’s C$7.25 per gram. This week’s price equates to US$2,480 per pound at current exchange rates.

 

This week we outline the scope of the growing Canadian industrial hemp market. 

 

Under the Cannabis Act, which made cannabis legal last October, Health Canada also set out the Industrial Hemp Regulations (IHR). The rules define hemp as a cannabis plant with a concentration of less than 0.3% THC in the flowering heads and leaves. The IHR constructs a framework around certain activities involving hemp, such as its cultivation, sale, and processing, as well as its importation and exportation into and from Canada. A license needs to be obtained from Health Canada in order to conduct any of these activities.

 

Starting in the 1980’s, industrial hemp cultivation was permitted for scientific research purposes. The first license to grow industrial hemp for commercial purposes in Canada was issued in May 1998. Health Canada data compiled in 2018 shows there were 1,226 licences issued, with 711 of those for cultivation. Unsurprisingly, 63% of the total cultivation licenses in the country were issued to growers in the three prairie provinces: Alberta, Saskatchewan, and Manitoba.

A breakdown of the acreage licensed for cultivation of hemp by province shows a similar picture in which the three prairie provinces constitute most of the country’s production capacity.

According to Health Canada, a total of 31,537 hectares, or 77,929 acres, were approved to grow industrial hemp in 2018. Alberta led all provinces with 13 licencees holding cultivation permits encompassing approximately 30,000 acres.

*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

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

CANADA CANNABIS SPOT INDEX — June 28, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 28, 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$7.25 per gram this week, up 4.2% from last week’s C$6.81 per gram. This week’s price equates to US$2,500 per pound at current exchange rates.

 

This week we focus on the estimated wholesale to retail pricing for one of Canada’s largest licensed producers to the country’s four most populous provinces: British Columbia (BC), Quebec, Ontario, and Alberta.

 

We started our analysis by identifying the same five product names from a single licensed producer on each of the four online provincial sales portals (accessed June 27, 2019). Prices for each product varied quite a bit across the provincial sales sites. Additionally, there was no consistency to the variation, as no single province had either the lowest or the highest prices across any of the five products. To simplify the analysis, we calculated the average retail price per gram of the five products in each province.

  

 

The average retail price per gram for the five products, before sales tax, is shown in the chart below. As can be seen, Alberta has the highest retail prices, on average, for the products in question. Mean prices in Alberta were C$2/gram, or 22%, higher than the retail prices in BC. Ontario and Quebec fell in the middle.

Source:Cannabis Benchmarks, sqdc.ca, bccannabisstores.com, ocs.ca, albertacannabis.org

To calculate the average wholesale prices at which each of the provinces sells to public and private retailers, we reviewed order data and surveyed retailers on expected margins, revealing a typical retail markup in the range of 40-50%. By stripping out a 45% margin from the above retail prices, we determined the wholesale transaction prices of the five products and compared them to the aggregated wholesale transaction prices reflected in the weekly CCSI. 

 

The average estimated provincial selling (wholesale) price per gram for our group of products is shown in the chart below.

Source:Cannabis Benchmarks

The average across the four provinces was C$6.97, slightly below this week’s assessed price of C$7.25, but comparable to the CCSI’s trailing 4-week average, which is C$7.07.

 

The last piece of our analysis revolved around better understanding the average net selling price for this specific producer. To calculate the average net selling price, we deducted the Canadian federal and provincial excise duty using the framework provided by the government. Based on these calculations, a flat rate of C$1.00/gram was charged to the producer when selling into BC and Quebec. For dried cannabis sold to Alberta and Ontario, there was an additional cannabis duty, resulting in a total estimated excise taxes of C$1.71/gram for Alberta and C$1.18/gram for Ontario. 

 

After removing the excise taxes, we finally arrived at the average net selling price for the group of five products under examination.

Source:Cannabis Benchmarks

The average selling price across the four provinces was C$5.74. Coincidentally, this falls very much in line with their reported average net selling price from their most recent quarterly earnings statements. Our analysis shows that our spotlight producer gets a very similar price when selling into three of the four provinces, but receives up to 11% less when selling to the province of British Columbia.

*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

28 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — June 21, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 21, 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$6.96 per gram this week, down 3.9% from last week’s C$7.24 per gram. This week’s price equates to US$2,370 per pound at current exchange rates.

This week we focus on Health Canada’s newly released regulations on cannabis extracts, edibles, and other infused products. The rules will permit the production, distribution, and sale of three new product categories:

  • Edibles – candy, baked goods, beverages

  • Extracts – vapes, oils, resins

  • Topicals – ointments, oils, soaps, makeup

 

The plan sets mid-December as the launch date. The regulations contain very strict packaging and labelling guidelines to diminish appeal to minors and will be thoroughly assessed for flavour, shapes, and branding. Additionally, the proposed products will also be limited to individual packages not exceeding 10mg of THC. As a result, consumers should expect limited selection of products at the outset.

 

With the anticipation of these new products becoming available sometime around the first anniversary of cannabis legalization, there has been a massive build up of finished and unfinished cannabis oil. According to Health Canada’s Cannabis Tracking Program, as of the end of March, 62,188 litres of finished cannabis oil were sitting within facilities owned by the federally licensed producers (LPs) or distribution points. This inventory has been steadily growing, with a big transfer of product from LPs to retailers taking place in the month of March.

 

Source: Health Canada, Cannabis Benchmarks

In addition to that inventory, there was 35,867 litres of unfinished inventory waiting to be processed at the LPs’ sites.

Source: Health Canada, Cannabis Benchmarks

*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

21 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — June 14, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 14, 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$7.24 per gram this week, up 6.2% from last week’s C$6.81 per gram. This week’s price equates to US$2,466 per pound at current exchange rates.

 

This week we look at sales, tax revenue, and market dynamics in Quebec in the province’s first fiscal year of legal cannabis.

Quebec is the only large Canadian province that has kept a tight grip over cannabis sales, with its primary goal of ensuring safe consumption while minimizing the illicit market. The Quebec government mandated the Société des alcools du Québec (SAQ) to set up the Société québécoise du cannabis (SQDC) to bring legal cannabis to the market. Similar to Oregon and Washington State in the U.S., the province’s regulatory body overseeing alcohol was expanded to provide oversight of cannabis as well. The SQDC was established on June 12, 2018, ahead of legalization. Its first fiscal year of operation ended on March 30, 2019.

 

SQDC launched an online store and 12 brick and mortar locations in Quebec starting in October. With supply challenges looming at the onset of legalization, the SQDC dramatically cut store hours and slowed expansion plans. Since then the supply issues have been overcome and stores are now open seven days a week with a 13th store opened in March. The Crown corporation signed leases for three more locations in Montreal, the Laurentians, and the Montérégie.

 

SQDC reported robust sales figures despite some issues upfront. A total of C$71M in sales were tallied in the first fiscal year that ended at the close of March, with in-store sales making up roughly 81% of the sales and volume sold. The 12 locations also processed approximately 1.3M transactions with an average spend of C$51.07. Online sales were not as robust with 257,000 transactions that generated an average spend of C$61.06.

 

For this past fiscal year, the SQDC reported a balanced year when excluding C$4.9M of non-recurring start-up costs. The Quebec government received C$29.7M in consumption and excise taxes from this new industry. For the 2019-2020 fiscal year, the SQDC is projecting significantly higher earnings of C$20M with the province taking in C$89M in consumption and excise taxes.

*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

14 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — June 7, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published June 7, 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 came in at C$6.81 per gram this week, from last week’s C$7.96 per gram. This week’s price equates to US$2,301 per pound at current exchange rates.

 

The AGLC, the Government of Alberta’s Crown agency that oversees the gaming, liquor and cannabis industries in Alberta, lifted the province’s retail cannabis license moratorium. The bulletin, which was published on May 30th, indicated that with the “steady increase” in supply the AGLC is once again in a position to issue five licences a week. AGLC currently has contracts with 26 licensed producers (LPs) and 111 licensed retail outlets.


Alberta is the fourth largest province with approximately 553,000 cannabis users according to a survey conducted by Statistics Canada. Statistics Canada also reports on retail sales for each province. With the limited supply of retail outlets, retail sales in Alberta have flatlined through Q1 2019 at approximately C$450,000 per day. The addition of new storefronts should help the development of the legal cannabis market by providing convenient access to customers that currently purchase from the illicit market.

 

Cannabis Benchmarks also analyzed the state of the AGLC-run online store. The online store shows 76% of 249 dried flower products available, 49% of 53 pre-rolled products available, and 85% of the oils available.

 

After taking this step forward to provide additional access to the cannabis industry, AGLS plans to closely monitor supply to ensure that existing and new retailers have access to consistent deliveries of product.

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

7 June 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 31, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 31, 2019

The CCSI came in at C$6.96 per gram this week, from last week’s C$7.33 per gram. This week’s price equates to US$2,341 per pound at current exchange rates.

 

Health Canada released the latest Canadian sales data on May 24th through the Cannabis Tracking System program. Non-medical sales continue to grow across Canada with average daily sales reaching 191 kg/day, while medical sales slid further to 54 kg/day. Although these are preliminary estimates, the revisions in sales have been minimal for the past few months. In the recent report, February non-medical sales figures were lowered by 2.3%.

 

Our expectation is that non-medical sales will pick up significantly in next month’s report with the release of April data, as a result of the opening of Ontario retail stores on April 1st. Ten retail stores were opened on day one, with another 15 added by the end of the month, providing Ontario cannabis consumers with greater access to the legal, regulated market.

From the data we see that non-medical sales are on the rise versus medical sales. As of March, sales to non-medical consumers were 350% of medical sales.

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

31 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 24, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 24, 2019

The CCSI moved higher to C$7.33 per gram this week, from last week’s C$6.96 per gram. This week’s price equates to US$2,346 per pound at current exchange rates.

 

This week we take a closer look at the cannabis excise duty rates charged by each province.

 

The Government of Canada’s Department of Finance lays out the Federal and Provincial excise duty rates payable by licensed cannabis producers. These duties are paid when the cannabis products they produce and package are delivered to a provincially-authorized distributor/retailer or final consumer.

 

The Cannabis Benchmarks’ CCSI monitors wholesale transactions between the provincial regulatory bodies and market distribution centers, such as the online provincial stores and private or public brick and mortar stores; hence the CCSI is inclusive of the average Canadian cannabis excise duties.

 

Based on Cannabis Benchmarks’ calculation for this week’s price assessment of C$7.33, the duties vary widely from on province to the next. Manitoba has the lowest cannabis excise duties at C$0.25 per gram, while Alberta’s inclusion of a sales tax adjustment takes the duties to a whopping C$1.75 per gram.

Source: Govt of Canada Department of Finance, Cannabis Benchmarks

This week, the average Canadian excise duty (population weighted average) is calculated to be C$1.14 per gram. Therefore, without the duty, this week’s average LP selling price is C$6.19 per gram, or US$2,086 per pound at current exchange rates.

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

24 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 17, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 17, 2019

The CCSI declined by 7.8% to C$6.96 per gram this week, from last week’s C$7.55 per gram. After a momentary uptick last week, prices returned to levels observed throughout April and May. This week’s price equates to US$2,346 per pound at current exchange rates.

 

After a challenging start to the legalization of dry cannabis last year, major licensed producers (LPs) are better prepared for the upcoming launch of vapes and edibles. While supply shortages and the slow opening of retail cannabis stores set the new industry off to a slow start, conditions might be different for phase two of the Canadian cannabis market with strong consumer demand for vapes and edibles. The official launch date has not been released, but it has been stated that these new product categories will commence sometime before October 17, 2019.

 

 

On Tuesday, one of the largest LPs, Aurora Cannabis, stated in its earnings call that it is working towards reducing its production cost while building inventory for the launch of edibles and vaping products. It is doing so by controlling costs and taking advantage of economies of scale as it makes strides towards its goal of building out a production capacity of 625,000 kg/year of dry cannabis.

 

With the start of the Edmonton Aurora Sky and Bradford facilities, Aurora’s production has increased to 150,000 kg and they have brought their cost per gram of dried product down to $1.42 from $1.92. The company anticipates continued reduction in its production and manufacturing costs with an expectation of it trending below $1 per gram. It should be noted that their average net selling price was also down to $6.40 from $6.80 per gram.

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

17 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — May 10, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published May 10, 2019

The CCSI moved higher by 6.5% to C$7.55 per gram this week, from last week’s C$7.09 per gram. This is the first week since the one ending March 1st that we have observed price movement of a magnitude greater than 5%. This week’s price equates to US$2,546 per pound at current exchange rates.

 

This week we take a look at cannabis usage in Canada during the first quarter of 2019. Statistics Canada conducts the National Cannabis Survey each quarter to assess changes in demand amongst Canadians as recreational cannabis supply and availability increases. The survey reports 5.3 million or 18% of Canadians aged 15 years and older reported using cannabis in the last three months. This was 27% higher than the previous quarter, with 646,000 new individuals reporting cannabis use for the first time in Q1 2019. Initial data from the survey also indicates that more users obtained cannabis from the legal markets. An estimated 47% of cannabis users or 2.5 million Canadians obtained cannabis from legal sources in the first three months of 2019.

Cannabis use continued to be higher among males than females.

Alberta took the top spot for cannabis usage with 22% of the population buying either legal or illegal cannabis. Ontario and British Columbia followed closely, with Quebec showing the lowest usage.

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

10 May 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved