The Canada Cannabis Spot Index was assessed at C$5.55 per gram this week, up 0.4% from last week’s C$5.53 per gram. This week’s price equates to US$2,055 per pound at the current exchange rate.
In today’s report, Cannabis Benchmarks provides an update on the supply and demand associated with edibles and extracts. To date, Health Canada has compiled and published monthly data for production, consumption, and inventory of packaged units through March 2021.
Starting with edibles, we see the production of packaged units by licensed producers ramping up through the end of Q3 2020, and then declining slightly since. The production of packaged units increased at a greater rate than non-medical and medical sales, leading to excess production going into inventory at the federal, provincial, or retail level. The current inventory of edible packaged units sits at 16M, which is approximately 7.1 months’ worth of supply at March’s consumption rate.
The story for extracts is somewhat similar. Both production, as well as medical and non-medical sales, increased at relatively steady rates throughout 2020, but eased in Q1 2021. Still, production outpaced domestic consumption, leading to growing inventories. The current inventory of packaged units of extracts has not grown as quickly as edibles, but still sits at 12.6M, which is approximately 6.6 months’ worth of supply at March’s consumption rate.
The yellow lines in the accompanying charts denote the typical timing of the autumn harvest of outdoor-grown cannabis, which provides a good deal of feedstock from which extracts and edibles are manufactured. Increased supply of raw materials for these products from expanding outdoor cultivation is likely helping to push down prices. Since 2020’s fall harvest, the total packaged inventory of edibles and extracts looks to be on a corrective path, as increased inventory and lower prices signal to producers of these derivative products to pull back on manufacturing.