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U.S. Cannabis Spot Index

U.S. Cannabis Spot Index — December 4, 2020

U.S. Cannabis Spot Index — Published December 4, 2020

U.S. Cannabis Spot Index down 3.8% to $1,534 per pound.

The simple average (non-volume weighted) price decreased $12 to $1,834 per pound, with 68% of transactions (one standard deviation) in the $1,106 to $2,562 per pound range. The average reported deal size increased from 2.3 pounds to 2.5 pounds. In grams, the Spot price was $3.38 and the simple average price was $4.04.

The relative frequency of trades for indoor flower decreased by almost 2%. The relative frequencies of deals for greenhouse and outdoor product increased by about 1% each.

The relative volume of outdoor flower expanded by 6% this week. The relative volumes of warehouse and greenhouse product contracted by 3% each.

With the end of 2020 approaching, a look back on our year-to-date wholesale price assessments reveals some interesting and surprising trends. The chart below shows the course of the U.S. Spot Index since Cannabis Benchmarks first began assessing this data point in April 2015.

Perhaps most notably, the behavior of the U.S. Spot in 2020 displays strong similarities to the course charted in 2019, despite the disruption caused by the COVID-19 pandemic this year. In both 2019 and 2020, the national composite price opened the year on a downward trend due to increased supplies of outdoor flower from the prior year’s fall harvest. The U.S. Spot began to climb in the spring in both years; in 2019 this ascent started in late March, in 2020 it would not commence until late May.

Additionally, a downturn in wholesale flower prices began in November with the autumn harvest both last year and this year, but 2020’s started earlier and has so far been more dramatic. This is somewhat surprising given significantly elevated demand and sales revenues in 2020, as well as questions surrounding the fall crop due to the severe wildfires that ravaged the West Coast.

Another surprise in this year’s data is that the ascent of the U.S. Spot in 2020 has so far not matched the magnitude of the wholesale price recovery observed in 2019. Regardless, the 10% year-to-date increase from the assessed price at the start of the year represents a notable rise, especially following the U.S. Spot’s climb in 2019. Barring a large downturn in the coming weeks, it appears likely that 2020 will be the second straight time that the U.S. Spot will close the year higher than at its outset. In the first three full years that Cannabis Benchmarks assessed wholesale flower prices, the national average ended each year off from where it started, often by a large margin.

June 2021 Implied Forward initially assessed at $1,600 per pound.

The average reported forward deal size was 32 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 43%, 34%, and 23% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 45 pounds, 19 pounds, and 28 pounds, respectively.

At $1,565 per pound, the January Implied Forward represents a premium of 2.0% relative to the current U.S. Spot Price of $1,534 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

CANADA CANNABIS SPOT INDEX

WHOLESALE MARKET OBSERVER

Arizona Medical Marijuana Sales Spike Prior to New Testing Requirement Implementation

Colorado Retail Marijuana Sales in 2020 Top $1.6 Billion Through September

HEMP MARKET INSIDER

Hemp Market Participants Assess Impact of 2020 Harvest, Look Ahead to 2021

November 2020 Hemp Spot Price Index Report

Headlines from this week’s Premium Report:

Newly-Released Q3 Cannabis Tax Revenues Show Continued Growth in Retail and Wholesale Sectors of Legal Market

Los Angeles Identifies 200 Retail License Applicants Eligible for Further Processing, Temporary Approval to Operate

Retail Revenues Through November Top $1B, but Monthly Sales in Autumn Down from Summer

New Adult-Use Delivery License Types and Other Rules Approved by Regulators; Industry Group Threatens Litigation

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

4 December 2020. Copyright © 2020 New Leaf Data Services, LLC. All rights reserved

U.S. Cannabis Spot Index — November 27, 2020

U.S. Cannabis Spot Index — Published November 27, 2020

U.S. Cannabis Spot Index down 0.5% to $1,594 per pound.

The simple average (non-volume weighted) price increased $19 to $1,846 per pound, with 68% of transactions (one standard deviation) in the $1,131 to $2,561 per pound range. The average reported deal size increased to 2.3 pounds. In grams, the Spot price was $3.51 and the simple average price was $4.07.

The relative frequency of trades for greenhouse flower decreased by 3%. The relative frequency of deals for indoor product increased by the same proportion, while that for transactions for outdoor flower was unchanged.

The relative volume of warehouse flower expanded by almost 2% this week. The relative volume of greenhouse product contracted by the same proportion, while that for outdoor flower was stable.

The U.S. Spot Index averaged $1,621 per pound in November, off by 1.3% from the mean price of $1,642 per pound observed last month. November is the first month to see a downturn in its average national composite price since May of this year, in the early months of the COVID-19 pandemic when record-breaking sales that extended into the summer – and autumn in some cases – were just beginning to pick up.

Notably, rates for each individual grow type on the national level were up in November relative to the prior month. The overall downturn in the U.S. Spot was due to increased proportions of lower-priced outdoor flower from this year’s harvest making its way to market.

Additionally, the Spot Indices of some of the country’s largest state markets – namely California, Colorado, Oregon, and Washington – have begun to trend downward recently. We have seen sales level off in those states – and others – after peaking in the mid-late summer. The four aforementioned markets are also the ones where outdoor cultivation is most prevalent and the largest volumes of flower are traded.

December Implied Forward closes unchanged at $1,590 per pound.

The average reported forward deal size was 31 pounds. The proportions of forward deals for outdoor, greenhouse, and indoor-grown flower were 46%, 32%, and 22% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 41 pounds, 18 pounds, and 27 pounds, respectively.

At $1,590 per pound, the December Forward represents a discount of 0.2% relative to the current U.S. Spot Price of $1,594 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.

CANADA CANNABIS SPOT INDEX

WHOLESALE MARKET OBSERVER

Colorado Retail Marijuana Sales in 2020 Top $1.6 Billion Through September

Return of Tourists Boosts Nevada Retail Sales to Record Highs

HEMP MARKET INSIDER

November 2020 Hemp Spot Price Index Report

Greener Pastures: Hemp’s Potential as Livestock Feed

Headlines from this week’s Premium Report:

State Working Toward Changing Product Testing Rules, Including Adding Screenings for Heavy Metals and Mycotoxins

Rulemaking to Implement New Mandatory Testing and Allow Tier 1 Producers to Expand Continues

State Officials Release Instructions on Applying for Adult-Use Licenses; Recreational Market Will Open to Any Eligible Applicant Beginning March 2021

Sales Volume Figures Jump to New Record in October; Wholesale Prices Rise on Strong Demand and New Required Testing

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

27 November 2020. Copyright © 2020 New Leaf Data Services, LLC. All rights reserved

U.S. Cannabis Spot Index — November 20, 2020

U.S. Cannabis Spot Index — Published November 20, 2020

U.S. Cannabis Spot Index down 2.4% to $1,603 per pound.

The simple average (non-volume weighted) price decreased $29 to $1,827 per pound, with 68% of transactions (one standard deviation) in the $1,124 to $2,529 per pound range. The average reported deal size was nominally unchanged at 2.2 pounds. In grams, the Spot price was $3.53 and the simple average price was $4.03.

The relative frequency of trades for greenhouse flower expanded by 3%. The relative frequency of deals for indoor product decreased by the same proportion, while that for transactions for outdoor flower was unchanged.

The relative volume of warehouse flower contracted by almost 5% this week. The relative volumes of greenhouse and outdoor product expanded by about 1% and 4%, respectively.

The U.S. Spot Index has leveled off in the first three weeks of this month on slowing sales growth in numerous major markets, as well as new supply from this year’s autumn crop beginning to make its way to market in the West Coast states and Colorado.

As Thanksgiving and the end-of-year holidays approach, the COVID-19 pandemic is reaching new levels of severity in the U.S. This has resulted in many states and localities with legal cannabis markets tightening restrictions recently. Based on data and observations from earlier this year, when even more strict coronavirus-related restrictions were implemented and sales soared to record levels, we do not expect that the current situation will on its own suppress demand in legal markets. Legal cannabis businesses were also declared essential and permitted to remain open during lockdowns imposed in the spring – with the exception of adult-use retailers in Massachusetts – and there have been no signs yet that state regulators are contemplating a different position should new stay-at-home orders be issued in the coming weeks.

On the other hand, no new stimulus or relief legislation has been forthcoming from the federal government since March. New restrictions on businesses could result in more furloughed and laid-off workers. Additionally, a “ benefits cliff ” will occur the day after Christmas for certain types of pandemic-related unemployment insurance unless Congress and the President act to renew it. Notably, however, these larger economic trends have not negatively impacted legal cannabis demand to this point.

U.S. Cannabis Spot Index U.S. Cannabis Spot Index — December 4, 2020 U.S. Cannabis Spot Index — Published December 4, 2020 U.S. Cannabis Spot Index down 3.8% to $1,534 per pound. The

How much does cannabis cost?

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Contents

  1. Factors that determine the cost of cannabis
  2. Bottom line

As legalization has spread across the country, consumers have been seeking out all sorts of cannabis products for both medicinal and recreational purposes.

Market demand for cannabis is pretty consistent across the board. But what’s not as consistent? Pricing. There’s no one-size-fits-all approach to cannabis pricing. But there are several factors that come into play when determining the prices of different cannabis products.

There are several factors that come into play when determining the prices of different cannabis products. Photo by: Gina Coleman/Weedmaps

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Factors that determine the cost of cannabis

Location

The first consideration is where the cannabis is grown, manufactured, and sold.

“The regulatory framework in any state or community will determine the market and the price,” says Andrew DeAngelo, cannabis industry consultant and strategic advisor and co-founder of California-based dispensary Harborside.

Every state (and, in some cases, individual cities) has its own set of laws and regulations, all of which impact the way cannabis is grown, manufactured, and sold, impacting in turn how cannabis products are priced. Cannabis pricing from state-to-state can vary widely. For example, according to LeafLink’s Wholesale Cannabis Pricing Guide, the average wholesale price for a pound of flower is $3,260. But in Oregon it’s just $915.

“The variables that most impact cannabis pricing are licensing regulatory frameworks, and by extension, state and local tax rates levied on both businesses and consumers,” says Colin Earl, cannabis consultant and CEO of SISU Consulting. “For example, with markets that have under 30 total licensed cultivators, the low supply will drive pricing more so than potency [or] perceived quality. For markets such as Colorado and Oregon that have ‘open’ licensing frameworks, wholesale pricing will be primarily dictated by the current supply, whereas retail pricing can vary based on locality due to local retail licensing limits.”

Taxes can also drive up costs for cannabis producers, which ultimately drives up both wholesale and retail prices. “This is most aptly demonstrated in the California market, where steadily increasing cultivation and excise taxes have left most businesses in a precarious position,” says Earl.

Growing Method

The way cannabis is grown can also factor into how the final product is priced.

“Overall the pricing for flower will mostly be categorized by growing method. with indoor being the most expensive, outdoor being the cheapest, and greenhouse in between,” says Earl.

For cannabis that’s grown outdoors, prices can also vary throughout the year, particularly during harvest time.

Indoor and greenhouse flower can be consistently harvested year-round, so the pricing is relatively stable. Photo by: Gina Coleman/Weedmaps

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“As indoor and greenhouse flower can be consistently harvested year-round, the pricing for those are relatively stable,” says Earl. “Outdoor flower is harvested once per year, which will generally lower prices around harvest time—depending on the microclimate from July-October.”

Quality

Not all cannabis is created equal. As such, not all cannabis products are going to be priced the same. Generally speaking, the higher the quality, the higher the price.

“Cannabis, each batch, each plant even. could turn out a little bit differently,” says DeAngelo. “So, after everything’s dried and cured, you go through a grading process of each batch and that grading process will determine the wholesale price for the batch generally.”

“There may be a large difference between the pricing of ‘low end’ and ‘top shelf’ flower to cater to multiple consumer segments,” says Earl. “Demand for specific genetics, cannabinoid, and terpene testing results. will greatly impact the price.”

Product Type

There are a huge variety of cannabis products on the market and different products are priced in different ways.

As mentioned, flower is typically priced strictly on quality or demand.

When it comes to extracts the properties of the flower also play a large part in the pricing, “with a heavy emphasis on the cannabinoid and terpene testing results,” says Earl. “After that the specific method of extraction’s respective yield and demand will largely dictate wholesale and retail pricing.”

“Ethanol extraction is going to have a different cost than steam distillation, which is going to have a different cost than water extraction, which is going to have a different cost than extracting in plant fats and oils,” says DeAngelo. Labor- and time-intensive processes can drive up the price of the end product. The equipment needed for extraction can also drive up prices. For example, according to cannabusiness consulting firm Cannabusiness Plans, a high-quality CO2 extraction machine can cost up to $450,000.

With regards to manufactured products such as edibles, topicals, and beverages, the materials used in packaging can greatly range and affect the price. Photo by: Gina Coleman/Weedmaps

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Packaging, which is standard for a variety of cannabis products, including edibles, topicals, and tinctures, can also have an impact on price. “Many state markets have mandated that cultivators, extractors, and product manufacturers utilize ‘child safe’ packaging, which establishes a consistent cost for all businesses,” says Earl. “With regards to manufactured products such as edibles, topicals, and beverages, the materials used in packaging can greatly range and affect the price.”

From a consumer standpoint, retail markups can also vary widely by product type. According to LeafLink’s Wholesale Cannabis Pricing Guide, the average price difference nationwide between wholesale and retail prices for edibles is 42%, but it’s 72% for flower.

Bottom line

There are so many variables involved in cannabis pricing that the real answer to the cost of cannabis is “it depends.” Cannabis prices will vary widely based on everything from where you’re buying weed to what kind of product your buying, and from the quality of the cannabis to the company’s overhead costs.

Cannabis prices will vary widely based on everything from where you’re buying weed to what kind of product your buying, and from the quality of the cannabis to the company’s overhead costs. Photo by: Gina Coleman/Weedmaps

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And while cannabis pricing is, for the most part, out of consumer control, if you want to make sure you’re getting a good deal, the best thing you can do is research your local market, get a sense of retail pricing, and shop at a reputable dispensary that offers reasonable prices.

How much does cannabis cost? Copy article link to clipboard. Link copied to clipboard. Contents Factors that determine the cost of cannabis Bottom line As legalization