U.S. Cannabis Spot Index — Published January 17, 2020
U.S. Cannabis Spot Index up 0.7% to $1,401 per pound.
The simple average (non-volume weighted) price increased $3 to $1,579 per pound, with 68% of transactions (one standard deviation) in the $911 to $2,247 per pound range. The average reported deal size declined to 2.0 pounds. In grams, the Spot price was $3.09 and the simple average price was $3.48.
The relative frequency of trades for greenhouse flower increased by almost 3% this week. The relative frequencies of deals for indoor and outdoor product decreased by about 2% and 1%, respectively.
Warehouse flower’s share of the total reported weight moved nationally expanded by almost 2% this week. The relative volume of outdoor product contracted by the same proportion, while that for greenhouse flower was unchanged.
The U.S. Spot Index rose by 0.7% this week to settle at $1,401 per pound. At the state level, upticks in the major markets of Washington State, Oregon, and Nevada combined with increases in the Spot Indices of mid-sized markets such as Michigan, Massachusetts, and Illinois to outweigh downturns in California, Colorado, and Arizona.
Some notable milestones were observed this week outside of the big five state markets. Michigan’s Spot Index settled this week at its highest point since the summer of 2016. Below, we analyze sales and production data for the months of Q4 2019 in Michigan, which shows short supply that could get even tighter at some point this quarter.
On the other hand, the Spot Indices of Alaska and Arizona both dropped to historic lows this week, emphasizing the continued maturation of those states’ legal cannabis systems. In regard to Arizona, falling wholesale flower prices come despite monthly sales volume figures routinely climbing to new heights in 2019. Cultivators in Arizona do not have restrictions on their production capacity and are permitted to grow as much as necessary to meet demand.
Finally, New Mexico’s Spot also sank to its lowest point on record. (Cannabis Benchmarks began reporting on wholesale flower prices in the state in October 2017.) This indicates that the reduction in permitted plant count put in place late last year left New Mexico cultivators with more than sufficient production capacity to meet current demand from patients.
Adult-use flower prices remained high in the new markets of Michigan ($3,477 per pound), Illinois ($3,029 per pound), and in Massachusetts’ 14-month old recreational sector ($3,362 per pound). However, downturns in the adult-use markets of California and Colorado once again outweighed the higher prices in the newer, smaller markets and resulted in the small decrease in the national rate. As we note below, only 400 pounds of flower were sold by adult-use retailers in Michigan in December 2019.
February Forward unchanged at $1,450 per pound.
The average reported forward deal size was 47 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 47%, 37%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 50 pounds, 42 pounds, and 48 pounds, respectively.
At $1,450 per pound, the February Forward represents a premium of 3.5% relative to the current U.S. Spot Price of $1,401 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
Headlines From This Week’s Premium Report:
- Governor Proposes Changes to Cannabis Taxation in Budget Legislation
- YTD Retail Sales Through November 2019 Reach $1.6 Billion, Surpassing Total Revenue Generated in All of 2018
- Number of Producers Reporting Sales in 2019 Generally Up Significantly Compared to Prior Year, But Dropped Almost 15% Month-Over-Month in November
- Medical Sales Revenue and Flower Sales Volume Decreased in Each Month of Q4 2019, While Production Data Suggests Tight Supply Will Continue this Quarter
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Cannabis Benchmarks®, a division of New Leaf Data Services, LLC
17 January 2020. Copyright © 2020 New Leaf Data Services, LLC. All rights reserved