Cannabis Benchmarks Archives - Green Market Report

Video StaffVideo StaffJune 4, 2019

1min12560

The Economics of the New Hemp Market is a panel that was held on May 7 at the Green Market Summit in Chicago. The legalization of hemp is so new that the regulations are still being written. Data will be key to unlocking this industry and industrial grade price assessments will be needed over the next few months to support futures trading on a major commodity exchange sometime early 2019. This panel was led by moderator Peter Vogel, CEO Leafwire and he was joined by Jonathan Rubin, Founder – Cannabis Benchmarks, Kevin Pilarski Chief Commercial Officer – Revolution and Bethany Gomez, Director of Research – Brightfield Group.


StaffStaffApril 24, 2019
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3min5590

STAMFORD, Conn., April 24, 2019 /AxisWire/ New Leaf Data Services, LLC (NLDS), the cannabis and hemp industry’s only independent Price Reporting Agency, has announced that Hemp Benchmarks® is now collecting, assessing and reporting on the wholesale price of biomass, dry flower, clones, seeds, crude hemp oil, refined hemp oil and CBD isolate. For more information, please visit: www.hempbenchmarks.com.

In the months ahead, Hemp Benchmarks® will expand its price assessments to cover additional end markets for hemp fiber and grain and begin to report on international markets as well.

“With the passage of the 2018 Farm Bill last year, the hemp market is poised for massive growth with unprecedented interest from farmers, processors and consumers, fueled in part by the extraordinary demand for CBD-based products. Industry participants will be seeking price transparency to analyze and navigate what we believe will be a dynamic and chaotic market as the projected supply and demand for hemp and hemp derived end-products comes into focus over the next few years.” said Jonathan Rubin, CEO of NLDS. “We are pleased to offer the market another independent reference benchmark to support strategic, operational and investment related decisions.”

These new assessments expand NLDS’ portfolio of benchmarks, which include more than eighty weekly benchmarks covering the wholesale price of cannabis in legal U.S. and Canadian markets through its Cannabis Benchmarks® division.

“We expect volatile hemp and CBD markets until supply and demand reach an equilibrium,” noted Rubin. “Price Reporting Agencies play a critical role in managing risk associated with volatile markets, enabling buyers and sellers to transact with confidence, support fundamental analysis by investors and equity analysts, and provide definitive benchmarks for commodity traders.”

About Hemp Benchmarks®
Hemp Benchmarks® is a division of New Leaf Data Services, LLC. Our mission is to bring price transparency and efficiency to cultivators, processors, distributors, investors, traders and other hemp market participants through validated, standardized wholesale price benchmarks and market intelligence.

Media Contact:
support@newleafdataservices.com
(888) 502-7298


Debra BorchardtDebra BorchardtOctober 17, 2018
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3min11880

As Canada launches its adult use cannabis sales, the focus from investors has been on production size and facilities. Canadian cannabis companies have been racing each other to claim the crown as the biggest producer with the largest facilities and greatest yields. The industry north of the border has seemed to ignore the lessons already learned in the U.S. when there is a race to produce more than is needed.

Jonathan Rubins of Cannabis Benchmarks said, “We have been observing and assessing prices in multiple U.S. markets for over three years, and we have watched a steady erosion of prices in the most mature, competitive markets – specifically CO, OR and WA – as greater production capacity, innovation in technology and production techniques, and improved supply chain management have driven wholesale prices down.” His company diligently records the prices of wholesale cannabis and this is what they’ve seen:

    • Colorado is down 22% YTD at $865 per pound
    • Oregon is down 62% YTD at $677 per pound
    • Washington is down 42% YTD at $693 per pound

Rubin noted that cannabis investors have pushed the Canadian company stocks to lofty levels as the companies raise millions upon millions of dollars to fuel this production expansion. “However, investors appear to be betting more on potential future valuations than on fundamental analysis, and there seems to be greater weight being put on a company’s production capacity rather than the value of that production and how its value may change over time,” he said.

If the Canadian analysts have used Colorado as a guide for consumption per person data, Rubin believes they can’t ignore the pricing side of the equation.

“Some companies are being rewarded with higher valuations for pursuing a strategy of vertical integration as a means of controlling exogenous variables. We are not aware of a single commodity-based industry in which vertical integration resulted in the best long-term results,” said Rubin.  “Simply put, vertical integration reduces the ability to hedge various aspects of the business with other industry participants and requires companies to be best-in-class operators in every segment of the value chain.”

 

 


Video StaffVideo StaffSeptember 24, 2018
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3min9580

Cannabis is one of the most popular recreational drugs on the planet, and its potentially
wide-ranging medical uses show promise. Given its low rates of addiction and lack of adverse
health outcomes, cannabis has the potential to replace common pharmaceutical treatments
for chronic pain, seizures, insomnia and other conditions that afflict hundreds of millions of
people worldwide. Likewise, cannabis also has the potential to disrupt the alcohol industry
by serving as a substitute for beverages such as wine, beer, and spirits.

Along with the United States and Canada, several countries have followed suit in relaxing
their cannabis laws and allowing for the use of medical cannabis; which in turn paves the
way for a fully regulated and legal recreational market. Several potentially large international
cannabis markets include Germany, Spain, Australia, Israel, and Colombia.

It is difficult to estimate global cannabis prices because cannabis sales usually occur in the
illicit market. Typically, cannabis prices vary depending upon location. Germany has some of
the lowest cannabis prices in the world. Other countries, such as Israel, are starting to see
higher prices as cannabis begins to move into regulated pharmacies.

Due to complex regulations and various international laws, international cannabis supply
chains are fragmented, with only a handful of companies operating internationally. The
largest of these global companies is Canopy Growth Corp., which has a presence in seven
countries along with the United States and Canada.

International Pricing

Due to its status as an illicit or semi-legal substance in much of the world, there has yet to
be a set international commodity price for cannabis. Even in countries like the U.S., where
recreational cannabis is legal in nine states, the price of cannabis can vary significantly by
state.

In Oregon, for example, extreme competition among cultivators has driven down cannabis
prices to roughly $1 per gram. However, in California, a newly open recreational market,
cannabis prices are between $11 and $14 per gram. According to Cannabis Benchmarks,
which tracks the wholesale pricing of cannabis, the national average price of a pound of high-quality
cannabis is approximately $1,285.

Due to federal legalization, cannabis prices in Canada are slightly more consistent. Most
provincial governments are aiming to price cannabis at CAD$10 per gram. On average,
medical cannabis in Canada costs around CAD$8 per gram. However, as legalization goes
into full effect in Canada, prices may fall within the first several years as competition
increases in the cannabis space and as large-scale cannabis production is actualized.

You can read the full report titled “The Economics of International Cannabis Companies” here.


Debra BorchardtDebra BorchardtSeptember 25, 2017
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4min21990

It’s a good thing to be a cannabis grower in California these days. The wholesale prices are settling above the U.S. Spot, which is a phenomenon not seen over the past 18 months according to a new report from Cannabis Benchmarks. However, growers can’t rest easy because the market is about to be disrupted as new regulations take hold.

The Mid 2017 Cannabis Benchmark report noted that California’s spot index opened 2017 at $1,413 per pound and has tracked higher for the first half of the year. Prices peaked at $1,724 per pound just popping above the U.S. average price of $1,614. Unfortunately, prices are still lower than 2016. The average price for the first half of 2017 was $1,525 per pound, a drop of 12.2%

Outdoor growers are getting the worst prices for their crops. Those prices  have averaged $1,133 per pound, plunging 27% from 2016. Indoor and green-house grown products fell 8% and 7.4% respectively. This signals trouble to the analysts at Cannabis Benchmarks. According to the report, this trend is troubling for existing outdoor farmers hoping to enter California’s imminent licensed system. Such operations can require significant capital to come into compliance with the state’s extensive water and environmental quality regulations.

For 20 years, California has been allowing the legal sale of medical marijuana in an unregulated environment and that will change in January 2018. State and local officials are now tasked with bringing in line all of the players that have operated without any oversight. According to cannabis benchmarks, the reason prices have been climbing is that growers are working to hold onto the current value of their crops knowing that it will be expensive to operate in compliance with the new rules. He believes that prices in the California market could become erratic as the year-end approaches.

The black market that operates in the state mostly exports their crops. However, the Cannabis Benchmarks report noted that illegal cannabis has been finding its way into the legal market and vice versa. The historical lack of stringent tracking and reporting in California’s medical cannabis program has allowed the black market and legal market to essentially maintain an equilibrium, with supply and demand shifting between the two to maximize revenue for sellers and minimize price for buyers.

The report suggests that many farmers will probably continue to operate outside of the regulated market at least through the fourth quarter and possibly into the first quarter of next year. Compounding the switchover to regulation is that the five largest cities in the state have only permitted a small number of retailers and two of the five cities have rejected adult-use marijuana completely. On the one hand, prices could rise as there are fewer options for trading and a fragmented retail market.

However, growers that need thousands of dollars to comply with environmental and water quality standards may find themselves dumping large supplies in the market for fast cash. This could put pressure on pricing. Since the black market is well-established and thriving, these growers may decide to roll the dice on getting caught and continue to operate making the switch to a regulated market even more challenging.



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