Cannabis Benchmarks 1-27-2017

Premium Weekly Report Published on 27 January 2017
U.S. Cannabis Spot Index up 2.9% to

$1,641 per pound. The simple average
(non-volume weighted) price increased $126
to $1,916 per pound, with 68% of
transactions (one standard deviation) in the
$1,277 to $2,555 per pound range. The
average deal size increased 31.5% to 8.3
pounds this week, from 6.3 pounds last
week. In grams, the Spot price was $3.62,
and the simple average price was $4.22.
Transaction stats this week are an example of
the increased influence of indoor flower on
the overall volume-weighted average that can
take place outside the harvest season. The
relative volumes of greenhouse and outdoor product traded as a percent of the total shrank by
about 3% and 6%, respectively, with warehouse flower of course seeing a corresponding 9%
increase. The relative frequency of deals for the three grow types held steady for the most part,
with a 2% week-over-week decrease for outdoor product in this metric, while the corresponding
increase was split evenly amongst indoor and greenhouse flower.
Cannabis Benchmarks is a division of New Leaf Data Services.

27 January 2017. Copyright 2017 New Leaf Data Services, LLC. All rights reserved.
Indoor flower spanned from $900 to $3,500 per pound; the median price was $1,913/lb.
Greenhouse flower spanned from $900 to $3,200 per pound; the median price was $1,650/lb.
Outdoor flower spanned from $700 to $1,500 per pound; the median price was $1,200/lb.
Deal sizes for indoor flower ranged from 0.3 to 50 pounds.

Deal sizes for greenhouse flower ranged from 0.25 to 75 pounds.
Deal sizes for outdoor flower ranged from 0.5 to 100 pounds.
The U.S. Spot Index continued its rising ways for the third straight week, climbing almost 3% to
nearly $1,650 per pound. After approaching the $2,000 per pound threshold last week, indoor
product saw a week-over-week decline of over 7% to push rates for such flower below $1,850.
Pricing for greenhouse product rose above the $1,600 per pound level for the first time in 2017,
while rates for outdoor flower recovered almost completely from last weeks significant dip.

Overall pricing in New Mexico and Vermont topped $3,000 per pound, just as Washington, D.C.
did last week. Prices were up week-over-week in the four major Western markets.

Colorados state Spot Index rose above $1,400 per pound this week for the first time in 2017,
while Washington States approached that threshold in a recovery from last weeks steep decline;
both Spot prices are year-to-date highs. Rates in Oregon also reached their highest point thus far
in this young year.
The table below illustrates the U.S. Spot Index, along with the volume weighted averages for all
transactions accompanied by a medical or recreational / adult-use designation.
The gap between wholesale pricing for product designated as medical and recreational shrunk
sharply this week, from just under $400 last week to less than $250. As noted just above, the
adult-use states Colorado, Oregon, and Washington State all saw price rises from last week.
Declines in rates for cannabis flower destined for sale to patients was driven primarily by falling
rates in Arizonas sizeable medical market. Despite this weeks contraction in the difference
between the two categories, pricing in medical cannabis markets has separated itself from rates
in adult-use ones after tracking closely from mid-November through early December.

In every market observed, greenhouse product prices were extremely close to, or greater than,
those for indoor flower. Colorados inversion of indoor and greenhouse pricing is beginning to
become customary, as this is the sixth consecutive week in which such a phenomenon has been
observed.
The Spot Indices of eight of the fifteen markets observed are at least $1,000 above the national
volume-weighted average, attesting to the fact that a significant majority of the countrys
state-legal wholesale cannabis trading takes place in the four major Western markets.

The U.S. Spot Indexs trailing average returned to the gradually rising path its has been on since
mid-November after last weeks very slight downturn. After three consecutive weeks of
downward movement, Oregons trend line is again on the upswing. Those of California,
Colorado, and Washington State are relatively flat, though the latter two are demonstrating
modest positive movement. The trailing averages of Colorado and Washington, the countrys
two most longstanding adult-use markets, have been tracking nearly in sync - with the former
slightly above the latter - for the past three weeks.
The U.S. Spot Index saw a continuation of its rising ways this week, closing January with a 2.9%
increase to settle at $1,641 per pound. The national composite volume-weighted average rose in
each week this month, climbing 7.1% from the rate of $1,532 per pound that opened the year on
January 6th. This weeks national rate is the highest observed since September of last year, prior
to the harvest season. While sellers may be heartened by the quick recovery from the seasonal
lows of October and November, such a rapid return to pre-harvest pricing suggests that outdoor
and full-term greenhouse growers may be holding back product for sale later, as we observed
subsequent to 2015s harvest season. As 2016s legal harvests were larger than in years past,
market participants should expect to see significant volumes of sun-grown product at some point
this year. Buyers and sellers can employ forward deals to hedge against the uncertainty in pricing
that can be created by the sudden introduction into the market of previously-harvested flower.

The two histograms below show all price observations for January this year and last year.
In January 2016, just over a third of all observed greenhouse deals settled at or less than $1,750
per pound. This year, about two-thirds of such transactions did so. Similarly, but more
dramatically, a third of observed trades for outdoor product closed at or below $1,500 per pound
in January last year, while 90% of such deals did so this month.

CALIFORNIA
Volume weighted average price was $1,470 per pound (or $3.24 per gram)
Up 4.8%, or $67, from $1,403 per pound last week
Simple average price was $1,734 per pound
Median price was $1,700 per pound
Prices ranged from $700 to $3,000 per pound
Average deal size was 11.7 pounds
Transactions ranged from 0.5 to 100 pounds
California transaction specifics are shown in the accompanying table and charts; all prices are
volume weighted averages.
After making up over 70% of the total observed volume traded last week, sun-grown products
share of the total observed weight moved shrank to just under 60% this week. Correspondingly,
warehouse flower increased its share of the total observed volume by about 11%
week-over-week. The relative frequency of transactions for each grow type was virtually
identical to last weeks.

Outdoor deals spanned from 1 to 100 pounds; the median price was $1,150 per pound.
Greenhouse deals spanned from 1 to 50 pounds; the median price was $1,650 per pound.
Indoor deals spanned 0.5 to 50 pounds; the median price was $1,820 per pound.
Californias state Spot Index closed the first month of 2017 by maintaining the up-and-down
ways observed in recent weeks, following last weeks over 5% decline with a 4.8% rise this
week to settle at $1,470 per pound. Despite the ping-pong-like movement of the states
composite rate week to week, Californias trend line - as shown in the chart on page 6 - has been

for the most part flat throughout this month, due to the fact that the weekly increases and
decreases have been of similar magnitude.
While last week saw only warehouse-grown flower increase in rates, this week such product was
the only grow type to see a decline in pricing. After approaching $1,950 per pound last week,
rates for indoor product fell almost 10% week-over-week to $1,748 per pound.
Pricing for greenhouse flower was on the rise this week, increasing by over 6% to settle at
$1,613 per pound. This week is the first time that rates for product grown under tarp or glass
exceeded the $1,600 per pound threshold since the final week of 2016, ahead of the New Years
Eve holiday when prices for all grow types in California were on the rise. Prior to that, rates for
greenhouse flower achieved that level in the week ending October 7th, just as the harvest season
was getting underway.
Rates for outdoor-grown product saw the largest relative week-over-week increase of any grow
type in the state, rising almost 14% to $1,116 per pound. The opposite movement of pricing for
indoor and outdoor product shrank the difference in rates between the two grow types, which has
in recent weeks consistently been the largest in the country. Last week, warehouse flower in
California commanded a premium of $955 over outdoor product, a figure that contracted to $632
this week. While the difference in rates between indoor and outdoor flower in Washington State
is fairly small at $248, a steep decline in outdoor pricing in Oregon resulted in indoor product
commanding a remarkable premium of $1,188 over outdoor in that states still relatively new
adult-use market. No deals for outdoor flower were observed in Colorado this week.
California this week lost the distinction of possessing the largest average deal size in the country
to Washington State. While Californias average deal size was up week-over-week, from 10.3 to
11.7 pounds, Washington saw an average deal size this week of 17.3 pounds, due largely to a
preponderance of hefty trades involving sun-grown product.

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COLORADO
Transactions ranged from 0.5 to 50 pounds
Colorado transaction specifics are shown in the accompanying table and charts; all prices are
This week saw a significant increase in the relative frequency of deals for greenhouse flower,
which also corresponded to such product accounting for a greater share of the total observed
volume traded. Compared to last week, the relative frequency of transactions for product grown
under glass was up 11%, while the relative volume of such flower swelled by 8% to account for
almost one-third of the total observed weight moved.

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Indoor deals spanned from 0.5 to 50 pounds; the median price was $1,302 per pound.
The first two weeks of the year saw Colorados Spot Index settle below last years annual low
rate, but composite prices in the state have risen in each week this month. This week, the states
Spot price rose almost 4% to reach $1,430 per pound. This weeks composite rate is identical to
the one observed in the week ending December 23rd, the end of a period in which Colorados
Spot hovered consistently around this level for almost a month and a half.

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Greenhouse pricing has experienced significant week-over-week fluctuations on a couple of

occasions since mid-December. These can be explained in part by the vast discrepancy in what
can constitute a greenhouse. We have noted previously that greenhouses can range from
hand-made structures cobbled together from simple materials like conduit and tarp, to
multi-million dollar, technologically equipped, climate-controlled affairs that run on schedules
akin to indoor facilities. In the latter case, the flower produced can often pass for indoor in terms
of its aesthetic appearance, while also enjoying enhanced cannabinoid and terpene content by
virtue of its exposure to sunlight. Additionally, some greenhouse operators in Colorado are still
fairly new to their facilities, relatively and absolutely speaking, and initial output can be
inconsistent in terms of quality as cultivators learn the idiosyncrasies of a new building and its
systems, as well as the response of the plants to natural light compared to artificial lamps.
Denver Environmental Health (DEH) officials late last week announced 2017s first recall of
cannabis and associated products, which were produced by Green Man Cannabis. The recall is
wide-ranging and applies to all flower and derived products originating from the operations
three cultivation licenses. A statement posted on the companys social media sites from founder
Christian Hagaseth asserts, We believe the plants became compromised from pesticide residue
in the building, not application. We are now convinced residues remained, unknown to us, in the
buildings ductwork, paint and flooring and circulating air tainted the plants. The statement
goes on to say that all plants currently in the facility are to be destroyed, but Green Man
Cannabis retail locations will remain open and obtain inventory from the wholesale market.
Hagaseths statement goes on to tell of plans to completely renovate and deep clean their
facilities in order to get rid of pesticide residue contamination, which is apparently from
applications made years prior, a costly endeavor.
If true, Hagaseths statement implies that legacy contamination from lingering pesticide
residues could be present in many Colorado cultivation facilities, as it is widely acknowledged
that most of the states growers were employing restricted-use pesticides improperly prior to
enforcement on the issue that commenced in 2015. Again, assuming that Hagaseths statement is
accurate, such widespread contamination could result in additional product being removed from
circulation and expensive renovations of cultivation facilities. Additionally, workers exposed to
such residues for a period of years may develop negative health impacts, leading to the potential
for future liability claims.
As noted, this was the first pesticide enforcement action in Colorado in 2017. In the second half
of 2016, DEH announced only three such recalls, while no state enforcement actions were made
public during that period, a stark departure from the flurry of recalls and pesticide advisories

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issued from March 2015 through June 2016. In regard to state-level pesticide enforcement, Mitch
Yergert, Director of the Plant Industry Division at the Colorado Department of Agriculture
(CDA), stated to our analysts in a phone call that the agency continues to conduct investigations
and that those inquiries remain primarily complaint-driven, with complaints originating from
DEH and MED inspections, as well as workers in cultivation facilities, among other sources.
Yergert also stated that such complaints have slowed down recently, explaining the drop off in
the number of announced enforcement actions in the second half of 2016. As we have noted in
the past, recalls and plant or product holds during investigations generally to not affect the
statewide market as a whole, but the sudden removal or release of product due to the imposition
or lifting of a hold can skew pricing in localized networks of businesses.

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OREGON
Transactions ranged from 1 to 10 pounds
Oregon transaction specifics are shown in the accompanying table and charts; all prices are
Transaction Stats in Oregon have been all over the place in recent weeks, perhaps reflecting the
uncertain availability of product, as well as the lull that can take place between harvests as new
producers get on their feet and work to develop regular schedules. This week saw the nearly total
marginalization of greenhouse flower, both in terms of relative frequency of deals and relative
volume. The relative frequency of trades for warehouse product increased by 20%, while the

15
share of the total observed weight moved made up by such flower more than doubled compared
to last week, accounting for nearly all of the observed volume that changed hands.
Outdoor deals ranged from 0.5 to 1 pounds; the median price was $1,300 per pound.
All Greenhouse deals were for 0.5 pound lots; the median price was $2,200 per pound.
Indoor deals spanned from 0.5 to 10 pounds; the median price was $2,600 per pound.
Oregons state Spot Index continued the dramatic upswing that commenced last week, jumping
17% to settle at $2,254 per pound. While prices for indoor and greenhouse product were both up,
much of the overall rate increase can be attributed to the fact that higher-priced
warehouse-grown flower accounted for over 90% of the observed weight moved, pushing the
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states Spot toward the rates observed for that particular grow type. This weeks
volume-weighted average price for indoor product of $2,321 per pound would have been the
third-highest in all of 2016. As alluded to above, new producers can take some time to establish a
consistent harvest schedule that allows for predictable production, a situation undoubtedly being
experienced by some newly-minted licensees. Additionally, retail shop owners are also working
to anticipate demand in a young market with new products and purchase limits. Though many of
the states current retailers ran medical dispensaries previously and sold to the general public
under the states early recreational sales program, adult-use consumers were at the time limited
to smaller amounts of flower, as well as low-dose extract and edible products.
The Oregon Department of Revenue (ODOR) this week released sales tax figures that were
remitted in December, correlating generally with November sales. The sales tax is collected from
the end consumer on their retail purchases. ODOR previously released tax collection data last
month, which we discussed in our report for December 16th, that covered receipts through
November for October sales. At the time, we noted that the data showed November tax receipts
(for October sales) were down 17.5% from Octobers tax receipts (for September sales). The
significant dropoff in retail sales activity was due to the supply bottleneck and consequent
shortage that resulted from the implementation of Oregons strict new testing policies, which
went into effect on October 1, 2016.
The most recent tax receipts from December show that retail sales in Oregon continued to slow
down further in November. In December, cannabis retailers remitted about $5.65 million in
taxes, down 12.7% from Novembers tax receipts, which amounted to about $6.46 million. This
data corresponds to reports from market participants that wholesale activity has shrunk overall
since the imposition of the new testing requirements, as product - particularly extracts, edibles,
and other infused products - can be scarce, suppressing retail demand. Furthermore, the falling
retail sales figures are likely due largely to the rarity of the aforementioned products in
November, as processors struggled to get their production approved according to the states
lengthy and expensive protocols.
From the states tax data, which shows just over $60 million remitted between February and
December 2016, it may be extrapolated that adult-use cannabis sales in Oregon from January
through November of last year were roughly $240 million. An exact figure cannot be deduced
from the receipts, as OLCC-licensed retailers that opened in October charged a sales tax of 17%,
while OHA-registered dispensaries that sold to the adult-use market throughout all of 2016 were
required to levy a 25% sales tax. However, the vast majority of sales made in the period under
discussion were taxed at the 25% rate.

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WASHINGTON
Prices ranged from $1,100 to $2,000 per pound
Washington transaction specifics are shown in the accompanying table and charts; all prices are
Washington States market this week saw increases in the relative deals and volume of indoor
flower traded. The relative frequency of transactions for warehouse product was up 18%
week-over-week, with most of the corresponding loss being felt by deals for outdoor flower. The
relative volume of indoor product was up 9% compared to last week and accounted for over a
third of all observed weight moved, rather than just over a quarter. Overall, each individual grow

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type in Washington this week exerted comparable influence on the states composite
volume-weighted average.
Outdoor deals spanned from 15 to 100 pounds; the median price was $1,300 per pound.
Indoor deals spanned from 1 to 40 pounds; the median price was $1,525 per pound.
Washington States Spot Index recovered from last weeks just under 8% decline, rising by 8.4%
this week to reach $1,384 per pound. As was the case two weeks ago, this weeks composite rate

19
has nearly returned to the pricing seen prior to fall harvest supplies coming to market in earnest,
namely the rate of $1,405 per pound observed in the week ending October 14th.
Both sun-fueled grow types experienced price increases. Rates for greenhouse flower exceeded
the $1,400 per pound threshold for the first time since October 14th of last year. Still, outdoor
product saw the larger price rise. Rates for field-grown flower spiked this week by almost 20%,
climbing to $1,239 per pound, the highest price observed for product of this grow type since
August 26th of last year. This weeks price recovery experienced by outdoor flower erased last
weeks steep decline and continued the trend of generally rising rates that commenced after the
establishment of last years annual low price on December 16th.
Conversely, rates for warehouse product have generally been on the decline since late December
and fell below the $1,500 per pound threshold this week. The state Liquor and Cannabis Boards
(LCBs) Weekly Report for January 25th points to increased production from the states indoor
producers compared to last year, as the harvest season is of course now behind us. So far this
month, state data shows that Washington cultivators have harvested 18,330 pounds of flower.
That figure is already up 12.6% compared to January 2016s harvest volume of 16,276 pounds,
demonstrating the expansion of existing licenses and new ones coming online in the interim.
However, the ultimate year-over-year increase is likely to be significantly less than the over
330% rise in harvest volume when comparing figures from January 2016 to those of January
2015, when the market was only about six months old.
On the other hand, it appears that demand in Washington State is plateauing, and even shrinking
in terms of dollars. Average Daily Sales (ADS) have been declining generally since reaching
their peak in September of last year, when that month saw ADS of about $4.65 million. January
2017s ADS stand currently at about $4.33 million, an almost 7% decrease from last years high.
However, it should be noted that while sales increased by 1.8% between November and
December last year - due entirely to the additional day possessed by December - the amount of
usable marijuana sold swelled by 9.9% in the same span, indicating that retail prices are falling
and consumers are getting more bang for their buck in Washingtons legal cannabis market.

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MICHIGAN
Down 0.04%, or $1, from $2,231 per pound last week
Michigan transaction specifics are shown in the accompanying table and chart; all prices are

21
NEVADA
Nevada transaction specifics are shown in the accompanying chart; all prices are volume
weighted averages.

22
ARIZONA
Arizona transaction specifics are shown in the accompanying table and chart; all prices are

23
The Arizona Department of Health Services (ADHS), which oversees the states medical
cannabis program, recently released their monthly report for December 2016, which also
includes aggregate data for the entire year. Patient growth was strong, increasing by just over
28% over the course of the year, from 89,255 in January to 114,439 in December. The volume of
product retailed increased at an even greater rate, rising 55% from the 3,934 pounds that were
retailed in January to the 6,104 pounds sold by the states dispensaries in December. A total of
58,623 pounds were retailed by Arizona medical cannabis operations in 2016.
Arizona issued 31 new licenses for medical cannabis businesses in October of last year, adding
to the 99 that were already operational. Dispensaries in Arizona are vertically integrated, but not
all grow their own supply, with some choosing instead to buy from those that do. While the
states voters in November rejected a ballot initiative that would have legalized cannabis for
adult-use, the states medical market will likely continue to expand as the new licensees become
operational, with some undoubtedly working to become producers themselves. Indeed, the
Phoenix New Times reported this week that Canadian Bioceutical Corporation entered into a
deal to effectively acquire two Arizona medical cannabis businesses, with plans to expand
production by investing in a new cultivation facility. By law, Arizona medical cannabis
dispensaries are supposed to be non-profit entities, but many are actually operated by for-profit
management companies.

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OTHER MARKETS
NEW MEXICO
Average deal size was 7 pounds
WASHINGTON D.C.
Simple average price was $2,867
Median price was $2,650
ILLINOIS
CONNECTICUT

25
RHODE ISLAND
Transactions ranged from 1 to 2.5 pounds
NEW HAMPSHIRE
VERMONT
MAINE

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February Forward closes up $25 at

$1,650 per pound. Forward
arrangements represented 5% of overall
market activity this week. The average
forward deal was 14 pounds. The
proportion of forward deals for outdoor,
greenhouse, and indoor grown flower
represented 26%, 37%, and 37% of
forward arrangements, respectively.
The average forward deal size for
monthly delivery for outdoor,
greenhouse, and indoor grown flower
was 25 pounds, 11 pounds, and 8
pounds, respectively.
The February Forward represents a premium of 0.5% relative to the current U.S. Spot Index of
$1,641. The premium or discount to the U.S. Spot Index are illustrated in the table below.
CALIFORNIA
In our report for January 6th, we noted the possibility of a ban on commercial cannabis
cultivation being implemented in Calaveras County. A group had submitted a citizen-initiated
petition to do so and signatures were being reviewed. If the signatures were deemed to be
legitimate, the countys Board of Supervisors would have the option of implementing the
proposed measure outright, or putting the issue to the voters.
This week, the Calaveras Enterprise reported that the supervisors decided to send the issue to the
voters and will hold a mail-in election in May to determine whether or not commercial growing
operations will be allowed in the county. This puts the over 700 cultivators that applied for
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commercial production permits under an urgency ordinance issued last year in limbo. If the
measure is approved and commercial cultivation banned, then preparations made for the coming
season, which should begin prior to May, will be for nothing. County Planning Director Peter
Maurer stated in a separate Enterprise report that legal commercial cultivation would have to
cease immediately were a ban to be imposed, curtailing the production of hundreds of farmers
from reaching market, or at least limiting it to some degree via the threat of enforcement.
Southwest of rural Calaveras County, in Alameda County, which includes the cities of Oakland
and Berkeley, officials have developed a draft ordinance for a pilot program to regulate
commercial cannabis activity in the jurisdiction, according to the Bay Area News Group. The
report states that the first phase of the ordinance, as currently written, would allow two
dispensaries in good standing to add cultivation operations to their businesses. While two farms
will of course not affect statewide supply volume or dynamics, it speaks to the continuing
separation of the states hazy, semi-legal market into legitimate and illicit players. Statewide
licensing does not yet exist, but operators shooting for that goal will seek to conform to their
local regulations, including obtaining product legally. In cases such as this one, and in other
cities and counties, the legal supply chain is being defined and separated from the general one.
COLORADO
Colorado Springs is looking to officially cap its sizeable medical cannabis market, according to
the Colorado Springs Independent. The Independents report states that a draft ordinance would
limit the number of medical cannabis businesses in the city to 211, the amount currently
licensed, beginning in late May of this year. Colorado Springs officials imposed a moratorium on
new medical cannabis operations in November 2015, then renewed it for an additional 12 months
in May of last year, meaning that new businesses have not been able to set up shop anyway for
the past 14 months or so. Adult-use cannabis businesses are not permitted in Colorado Springs or
El Paso County at large, in which the Springs are located.
Though playing host to a population of less than half a million residents - which, incidentally, is
over four times the population of Boulder or Pueblo - Colorado Springs boasts a sizeable medical
cannabis market and could presumably foster significant general commerce as well, if the ban on
adult-use businesses were lifted. As of June 2016, El Paso County trailed only Denver and
Pueblo Counties in terms of plants cultivated, according to the MEDs 2016 mid-year update.

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OREGON
Oregons adult-use market is gaining steam as more retailers come online, according to Casey
Houlihan, Executive Director of the Oregon Retailers of Cannabis Association (ORCA).
According to data from the state Liquor Control Commission (OLCC), which oversees the
adult-use market, 298 retail licenses are active as of January 25th, a dramatic increase from the
less than 150 that were active at the end of 2016. Houlihan notes that even with more shops
online, product shortages are being alleviated and shelves are better-stocked than they were in
previous weeks. However, he warns that pricing can still be volatile and unpredictable. As in any
legal cannabis market, high retail prices can send customers seeking out product from alternative
channels and decrease legal sales. As stated, supply is loosening in Oregons market, but it will
still take time for prices to decline and increased stability to arrive to the developing adult-use
system.
Early long-term forecasts from the state Department of Agriculture (ODA) indicate that early
spring may not be favorable for those looking to grow under the sun. The ODAs Seasonal
Climate Forecast calls for lower than average temperatures across most of southern Oregon, as
well as higher than average precipitation, especially west of the Cascade Mountains and in the
High Plateau region in the south-central part of the state. For the states sun growers, this will be
the first full year in operation, as the initial production licenses for Oregons adult-use system
were issued by the OLCC beginning in May of last year. Overall, production should increase
greatly compared to last year, but there will of course be a learning curve, particularly for those
navigating the weather outdoors or in simple greenhouses.
WASHINGTON
Currently, Washington is the only state with a legal adult-use cannabis market that does not
allow residents over 21 to grow their own plants. That could change this year, as the
Spokesman-Review reports that two measures introduced into the state House of Representatives
would permit home-growing by the general public. According to the Spokesman, one bill would
allow only six plants per household, while another would permit adults to cultivate six plants
each, with a maximum of twelve per residence. The report notes that some citizens testifying in
support of the bill are seeking particular varieties of cannabis for therapeutic purposes that they
are unable to locate in the states retail stores. Unsurprisingly, this indicates that some patients
that previously patronized Washingtons unregulated medical cannabis dispensaries - which were
forced to close in July last year - have not transitioned to the single licensed system that currently
encompasses the states legal cannabis market. Those that enroll in the states patient registry are
allowed to grow a few plants at home and even form small collectives with the proper

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registration, but many have reportedly been hesitant to register due to concerns about privacy,
among other issues.
We noted above, in the Spot Index commentary for Washington State, that demand appears to
have peaked based on sales figures over the course of recent months. The ability of individuals to
cultivate their own plants for personal supply and sharing with friends could put a larger dent in
demand, particularly in a market where many have little confidence that the states quality
assurance and safety testing is effective at screening out contaminated product, or even
measuring potency levels accurately. A Seattle Weekly report from early last month cast doubt
that new testing rules proposed by the state at the time - discussed in our report for December 9th
- would result in more accurate test results for THC and other cannabinoids, as labs appear to be
inflating such scores in order to attract business. Flower with high THC test results tends to sell
the fastest and for higher prices in adult-use cannabis markets, despite increasing
acknowledgment that terpenes and other compounds play just as large of a role in the ultimate
effects of the product.
NEVADA
Cannabis Public Media this week covered the Nevada Tax Commissions first meeting of 2017,
in which a timeline for an early recreational sales program was discussed. According to the
report, Deonne Contine, Executive Director of the Nevada Department of Taxation, stated that
temporary regulations were currently being formulated, along with legislation, that would allow
adults over 21 years of age to shop in the states existing medical cannabis dispensaries. Contine
hopes to have the regulations adopted by April or May, and to begin accepting applications from
medical cannabis operations to register for the early sales program in June, with the possibility
that permits under the program could be issued as early as July 1st.
The adoption of an early recreational sales program in Oregon in October 2015 boosted demand
in that state, causing composite wholesale rates to rise 12% in the leadup to the programs
opening, as dispensaries accelerated buying to meet the anticipated increase in customers. A
similar program in Nevada would likely be a boon to the states 56 dispensaries, 45 of which are
operating in Clark County, where Las Vegas is located. Las Vegas draws in excess of 40 million
tourists annually, many of whom travel to the gaudy city in the desert to engage in behavior that
they might not otherwise, which could of course include partaking in cannabis, should it be
available.
Currently, Nevadas medical cannabis market serves 25,358 patients (as of the end of 2016), as
well as those from out-of-state with valid medical cannabis ID cards issued by a legitimate

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government agency (the use of simple medical recommendations from a physician that are
sufficient in California were cracked down upon last year). As such, the implementation of early
adult-use sales would expand the market greatly and should drive up demand significantly from
what is now being experienced by buyers and sellers. We will continue to cover Nevadas
apparent march toward the implementation of early recreational sales, as it could potentially be
one of the most dramatic pricing stories of 2017.
LEGALIZATION UPDATE
MASSACHUSETTS
Late last week, the Boston Globe reported that state Senator Jason Lewis had filed a series of
bills that could dramatically limit numerous aspects of the adult-use legalization initiative
approved by Massachusetts voters in November. As the bills are still in their very early stages
and will be subject to debate and amendment, we will not ruminate in detail on every aspect of
each one. However, it is worth noting that one bill - SD.1820 - would vastly increase the ability
of local governments to ban adult-use cannabis operations in their jurisdictions. Under the
current law put in place by the adult-use legalization measure, municipalities must receive voter
approval if they want to place moratoriums on one or more types of cannabis businesses, as well
as if they want to place a cap on the number of cannabis retailers that is fewer than 20% of the
number of alcohol retailers in the jurisdiction.
SD.1820 states that, A municipal government may vote to prohibit the location of marijuana
establishments or to prohibit certain types of marijuana establishments within the borders of the
municipality by a majority vote of the governing body. Prior to any vote of the municipal
government, the body shall hold not less than 1 public hearing and shall notify the residents of
the municipality appropriately. An additional clause in the bill notes that a local government
may adopt ordinances to limit the number of marijuana establishments within the municipality.
Despite a patient count of over 30,000, Massachusetts medical cannabis program has been one
of the most sluggish in the country to develop. Only three new dispensaries opened in 2016,
raising the statewide total to just nine, according to the state Department of Health and Human
Services. Many have attributed the lack of growth in the states program to high hurdles that
medical cannabis businesses must clear in order to gain local government approval. If
municipalities in Massachusetts are given increased power to block cannabis businesses from
setting up shop in their jurisdictions, then the states adult-use market may be as slow to develop
as its medical one. The Globe report notes that Lewis proposals concerning cannabis
legalization are significant, as he is considered the state legislatures primary authority on the
subject.

31
ARKANSAS
Two bills related to the successful amendment to legalize medical cannabis in Arkansas were
signed this week by Governor Asa Hutchinson, according to KUAR, the NPR affiliate in Little
Rock. One bill will provide more time for lawmakers to develop regulations for the program,
increasing the window to 180 days after the November election from the 120-day timeframe
specified in the amendment. Accordingly, Arkansas legislators now have until May, rather than
March, to formulate guidelines for the states first experiment with legal cannabis.
The second bill could help to facilitate patients gaining medical cannabis recommendations. The
amendments original language required physicians making such recommendations to attest in
writing that the potential health benefits of cannabis would supercede the possible risks; the new
bill removes this stipulation, however, and doctors now have only to specify that a patient has a
qualifying condition. Physicians expressed discomfort with the original language of the
amendment, due to the lack of conclusive research into the potential implications of cannabis
use.
Content is provided as is. New Leaf Data Services, LLC., makes no guarantees or warranties as to the accuracy, completeness, timeliness
or results to be obtained from accessing and using Cannabis Benchmarks data. This publication may not be duplicated, distributed or stored
in a retrieval system, in whole or in part, in any form or by any means, without prior written permission and consent of New Leaf Data
Services, LLC.
1-888-502-7298 | www.CannabisBenchmarks.com | support@CannabisBenchmarks.com

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Premium Weekly Report Published on 27 January 2017

U.S. Cannabis Spot Index up 2.9% to

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Deal sizes for indoor flower ranged from 0.3 to 50 pounds.

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