U.S. Cannabis Spot Index down 0.4% to $1,391 per pound.
The simple average (non-volume weighted) price decreased $30 to $1,576 per pound, with 68% of transactions (one standard deviation) in the $929 to $2,224 per pound range. The average reported deal size was nominally unchanged at 2.1 pounds. In grams, the Spot price was $3.07 and the simple average price was $3.48.
The chart below shows the course of the Cannabis Benchmarks® U.S. Spot Index from its inception in April 2015 through the end of 2019.
The U.S. Spot Index declined by 0.4% this week to settle at $1,391 per pound. The significant Q4 price decline typically observed in prior years did not come to fruition in 2019. However, since around mid-November the national composite price has displayed a modest downward trend. Wholesale prices also trended downward a bit from the final week of 2018 through the end of January 2019, a period in which they declined by by 1.5%, from $1,175 to $1,157 per pound. Product from a prior year’s fall harvest continuing to come to market, along with generally depressed sales in the wake of the end-of-year holiday season, traditionally apply downward pressure to wholesale cannabis prices to open any given year. Based on early data from the opening weeks of 2020, it appears that such trends are holding in California, Colorado, and Oregon.
As we noted last week, though, the new and expanding adult-use markets of Massachusetts, Michigan, and Illinois will influence national wholesale rates in a manner that they have not in prior years. Still, at the moment those markets are relatively small in terms of the volume of product being moved, despite posting some impressive gross sales figures. For example, Massachusetts adult-use retailers racked up over $445 million in sales in 2019, almost a third of Colorado’s combined adult-use and medical retail revenue in 2018. However, Massachusetts growers harvested less than a tenth of the number of plants in 2019 that Colorado cultivators did in 2018, emphasizing the significantly higher prices in the East Coast’s only regulated adult-use market.
Upward pressure on the national price for recreational product came from the new markets of Michigan and Illinois, where adult-use flower prices were assessed at $3,499 and $3,036 per pound, respectively. Additionally, the rate for adult-use product in Massachusetts was observed to settle at $3,355 per pound this week. However, downturns in the recreational sectors of the markets of California and Colorado, as well as in Oregon, outweighed the higher prices in the newer, smaller markets and resulted in the small decrease in the national rate.
February Forward unchanged at $1,450 per pound.
The average reported forward deal size was 47.5 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 46%, 36%, and 18% 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 50 pounds, respectively.
At $1,450 per pound, the February Forward represents a premium of 3.8% relative to the current U.S. Spot Price of $1,391 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:
California
Volume-Weighted Price for Indoor Flower Jumps Over $2,000 Per Pound for First Time in Over Three Years
Oregon
State Spot Index Has Stabilized from November 2019 to Present After Significant Volatility Earlier in 2019
Nevada
Total Sales in October 2019 Reached Over $62.5 Million, Just Short of Record Set in August 2019
Michigan
State Spot Index Jumps to Over $2,500 Per Pound for First Time in Over Three Years
Massachusetts
Adult-Use Retailers Realized Over $445 Million in Gross Sales in 2019, Despite Small Number of Storefronts Licensed
Illinois
State Spot Index Climbs Almost $200 in Two Weeks as Retailers Rang Up Over $10 Million in Sales in First Five Days of Adult-Use Legalization