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A total of 5,094 parties expressed interest, of which 4.5% were disqualified, withdrawn, or deemed incomplete.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

Leave a Reply

Your email address will not be published. Required fields are marked *