CANADA CANNABIS SPOT INDEX — February 1, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published February 1, 2019

 

The CCSI moved 2.6% higher this week to C$6.53 per gram, from C$6.35 per gram. The index continues to fluctuate within a narrow C$0.28 range. C$6.53 per gram equates to US$2,240 per pound at current exchange rates.

 

On January 29th, Health Canada released another snapshot of the preliminary data on sales, finished inventory and unfinished inventory with December 2018 included. This data is released as part of the Cannabis Tracking System instituted by the Canadian government to ensure illegal supply does not cross into legalized markets. This data set is important for many reasons, but primarily to give industry participants a look at the fundamentals of non-medical cannabis sales in Canada.

 

With three full months of operation behind us we have more data on consumer habits and inventory. Let’s start by looking at total non-medical sales. From the report we see that total recreational sales in December grew by 5% or to 7,252 kg, but that is not actually the case because December has 31 days. When we normalize for the number of days in each month, sales are essentially flat, more clearly showing Canada currently consumes approximately 232 kg per day.

 

Next let’s look at the Inventory on hand. The reported amount of finished dried cannabis inventory, or product that is ready of sale, as of the end of December was 19,085 kg, or 2.7x the total dried cannabis actually sold on average during November and December to medical and non-medical customers. Perhaps more thought provoking is the December end of month unfinished dried cannabis inventory, or product that has been cultivated but not packaged or labelled. This inventory sits at 109,236 kg of dried cannabis or 15x the total dried cannabis actually sold on average during November and December to medical and non-medical customers. Lets ask the same question again: Is there really a supply shortage?

This dataset is released every two weeks, and its labelled as “Preliminary”; therefore we want to discuss how much the October and November data changed. The table below gives the full comparison, but in this report we focus on a couple of the big moving factors.

 

First to note is the total medical sales in November dropped by 1,922 kg. This could be a result of a consumers that have a medical prescription procuring product from the non-medical sector.

 

The next piece of information that has changed is the finished inventory ready for sale. The end of month volume held by Federally licensed holders dropped by 4,785 kg in November. Simultaneously, the unfinished end of month inventory held by Federally licensed holders jumped by similar amount or 4,470 kg. Our quick take is that product that was assumed to be ready for sale in fact was not quite ready.

With each release of the report we will continuously assess data and highlight the changes.

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

1 February 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 25, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 25, 2019

 

The CCSI dropped 4.5% this week to C$6.35 per gram, from C$6.64 per gram last week. The index has been particularly stable over the past five weeks, with prices bouncing within a tight C$0.29 range. C$6.35 per gram equates to US$2,164 per pound at current exchange rates.

On January 23rd, Statistics Canada issued more detailed market data – the monthly retail sales by province and territory. This published dataset gives us a full glimpse into a complete month of post-legalization sales from the provincial online stores and brick & mortar stores. Initial revenue figures are relatively low. November sales across Canada totalled C$54M.

With recreational cannabis being legalized on October 17th, Cannabis Benchmarks made adjustments to the reported October sales numbers to normalize for a full month of sales. This takes the total sales for October from C$43M to C$89M. With that adjustment, we observe November sales dropping by 39%. As we outlined last week, there are many potential reasons for this massive sales decline, with possibilities including October numbers being inflated by initial excitement about legalization. Alternatively, lack of product availability and high prices may have pushed customers back to the black market. The two aforementioned possibilities may also have been occurring simultaneously.

Drilling deeper into the provincial data exposes even more critical information. British Columbia’s total adjusted October sales dropped by 79% to C$1M, while Ontario total adjusted October sales dropped by 58% to C$10M. Alberta was one of the few provinces that did not see massive month-on-month declines, with only a 19% drop when compared to the total adjusted October sales.

 

Taking the analysis one step further, we broke down these figures into a monthly sales per person.

These simple calculations give an even more brutal look at the start of legalization. In this analysis we assume that every Canadian citizen is of legal age and would be willing to consume cannabis. On average during November, each Canadian citizen spent only C$1.55 to purchase cannabis from a legal outlet, less than many individuals spend on a coffee. British Columbia saw the lowest spend per person at only C$0.22. Low per-person spending figures indicate that the black market still likely looms large over the legal one in the early days of legalization in Canada.

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

25 January 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved

CANADA CANNABIS SPOT INDEX — January 18, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published January 18, 2019

 

The CCSI jumped 3.9% this week to C$6.64 per gram, from C$6.38 per gram last week. The index has been stable over the past 4 weeks. C$6.64 per gram equates to US$2,271 per pound at current exchange rates.

 

On January 15th, Health Canada released preliminary data on sales, finished inventory and unfinished inventory for October and November, 2018. The Canadian government has instituted the Cannabis Tracking System to ensure illegal supply does not cross into legalized markets. This data snapshot gives the industry a fundamental view of the first complete month of non-medical cannabis sales in Canada with lots of interesting nuggets to consider.

With recreational cannabis being legalized on October 17th, Cannabis Benchmarks made adjustments to the reported October non-medical sales quantity to normalize for a full month of sales. This takes the reported non-medical sales quantity for October from 4,511 kg to 9,323 kg. Surprisingly, November non-medical sales dropped by 45% to 5,146 kg. There are many potential reasons for this massive sales decline but possibilities include:

 

1. Initial sales rush upon legalization leading to a higher October sales volume;

2. The lack of product availability at online and retail locations impacted November sales; and

3. High prices pushed customers back to the black market.

We’ll get a better perspective on the primary drivers for demand as we get more monthly data from Health Canada.


The reported amount of finished dried cannabis inventory, or product that is ready of sale, as of the end of November is also interesting. The combined inventory of Federal licence holders (inventory held by cultivators and processing facilities) and Provincial distributors/sellers (inventory held by government and privately run online and brick-and-mortar stores) was 25,607 kg., or 2.9x the total dried cannabis actually sold in November to medical and non-medical customers. Is there really a supply shortage?

The last piece of information provided is the end of month unfinished dried cannabis inventory, or product that has been cultivated but not packaged or labelled. According to monthly reported data, there was 93,254 kg of dried cannabis or 10.5x November consumption sitting at either cultivation or processing operations. Can the current reported supply shortage be resolved quickly?

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Do you support wholesale market transparency?

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

18 January 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved