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..

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

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..

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

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..

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

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