CANADA CANNABIS SPOT INDEX — August 9, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published August 9, 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$6.98 per gram this week, down 4.3% from last week’s C$7.29 per gram. This week’s price equates to US$2,400 per pound at current exchange rates.

 

Last month, Ontario’s government announced it will hold another lottery to award 50 new cannabis retail licences, significantly expanding legal cannabis sales in the country’s most densely populated province. However, the first lottery for 25 retail locations held in January was perceived by many industry professionals as unfair, as the application process did little to vet an applicant’s product expertise or retail experience. 

 

The second lottery, which is currently underway, is expected to have fewer applicants due to a stricter vetting process. To avoid the perception of unfair practices, the Alcohol and Gaming Commission of Ontario (AGCO) has hired accounting experts KPMG to monitor the application process and lottery.

Of the 50 licenses to be issued, 42 of the new licences will be for private-sector retailers who successfully pre-qualify to be part of the new lottery system, while the remaining eight licences will be allocated to First Nations communities.

 

Current timeline for new stores:
Aug 7 to 9: Interested parties submit their applications to the AGCO. Each application must include a letter of secured retail space, a certified bank letter confirming access to C$250,000, and another letter confirming the ability to obtain a C$50,000 letter of credit. 

 

Aug 10 to 19: AGCO will review and vet applicants.

 

Aug 20: The lottery will be conducted to choose the 42 new licence holders, with the winners to be notified within 24 hours.

 

Oct 17: New license holders must be prepared to open their doors.

Ontario sales forecast:

Since the Ontario private stores opened in April, daily cannabis sales in the province have jumped by 259% to an average of C$696,850 per day, according to Statistics Canada. Cannabis Benchmarks estimates that each storefront currently generates average revenue of C$22,183 per day. The new physical locations have surely helped to capture some of the demand being served previously by the illicit industry. The addition of the new retail locations will further improve the ability of consumers to access the legal market.

 

Source: Health Canada, AGCO, Cannabis Benchmarks

Ultimately, Cannabis Benchmarks projects online sales to remain stable, with all new sales growth in the remainder of this year generated by the 42 new storefronts that are to be opened starting mid-October. Assuming that the new locations will generate the same daily sales estimates stated above, total daily cannabis sales in Ontario could reach C$1.73M by year’s end, roughly two-and-a-half times current levels.

*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

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

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