Professional Documents
Culture Documents
Benchmark+Report+ +02+november+2021 Canxchange
Benchmark+Report+ +02+november+2021 Canxchange
November 2021
10 Market Insight
26 Canxchange Overview
27 Disclaimer
November 2021
Page 02
New Canxchange Platform
New Functionalities
Production & distribution procurement contracts
Micropayments
Page 03
Note from the Editors
The Green Economy and the Role Cannabis Can Play for the
Sector
The Green Economy is one of the most important topics of the 21st century. This really changes our
approach at a global level on how we use but also allocate resources for our goods and services
consumption. We often hear about the Green Economy but we do not necessarily know the definition of
this concept. According to the United Nations Environment Program (UNEP); a green economy is:
“defined as low carbon, resource efficient and socially inclusive. In a green economy, growth in
employment and income are driven by public and private investment into such economic activities,
infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and
resource efficiency, and prevention of the loss of biodiversity and ecosystem services.” Contrary to the
industrial and post-industrial revolution approach of the XIXth and XXth century, in a green economy,
performance is not only assessed by the return on capital but also takes many other factors into account
especially the ones related to our environmental and social footprint.
The Green Economy cover many sectors; Karl Burkart from the One Earth NGO has identified six main
sectors:
Renewable energy
Green buildings
Sustainable transports
Water management
Waste management
Land management
One of the important principles for the green economy is to provide a macro-economic approach to
sustainable economic growth with a central focus on investments, employment and skills for
developing and developed countries.
The Cannabis industry could be a centerpiece of this economic revolution, for many different reasons.
Indeed, our sector of activity already applies sustainable practices with strict waste management
practices, offering green and reusable packaging, contributing to regenerative farming practices and
being part of environmental sustainability initiatives, promoting outdoor growing and the use of
renewable energies with low carbon impact and provide negative carbon products such as hempcrete.
Beyond the environmental and economic benefits, the cannabis sector being part of the Green
economy movement is an opportunity to create and transfer skills, to promote social and gender equity;
and to provide a way of making a living to economically distressed areas where it is needed.
For this Benchmark Report, we give the reader the opportunity to learn more about the Green Economy
and especially how the cannabis industry could play a role in this new paradigm, thanks to the insightful
collaboration with Laura Herschlag, Co-founder of TEQA Capita. Needless to say, you will also find the
headings you are familiar with such as market & price analysis, our Farmers Sentiment Index and our
trading tips fresh out from the field.
Page 04
Canxchange® Farmers
Sentiment Index
This dependency led the Canxchange Data & Research Lab to create indexes and benchmarks
in order to gauge the health of our market and get a deeper understanding of the market
participant's perception on the industry outlook.
We recently started our research efforts by introducing Canxchange® Benchmark Prices (CBP)
and the Canxchange® Farmers Sentiment Index (CFSI). A number of other indicators will
follow and be published in the coming months.
CFSI Methodology
The Canxchange research team have spent weeks surveying over 100 hemp farms and
cooperatives across Europe. The survey has helped us measure 5 fundamental factors to better
understand the outlook for the region's cultivation activity:
Each fundamental factor is scored with a different weight depending on their level of
importance. Surface planted and production investments are the most important factors
where cultivation yields have a lower weight in the index calculation.
The CFSI is a base 100 index, with low to high extremes ranging from 75 to 125. 100 shows
neutral confidence, 125 shows a highly optimistic sentiment and 75 shows a highly pessimistic
sentiment. For more guidance, the reader can refer to the diagram on page 07..
Page 05
Canxchange® Farmers
Sentiment Index
88 FAIRLY PESSIMISTIC
75 HIGHLY PESSIMISTIC
It is important to note that we did not just use the fundamental factors in our calculations. We
have also created a derivative approach in order to not only show the overall snapshot of the
Farmer's Sentiment but also a segregation by farms/cooperatives size:
<500 hectares
>500<1000 hectares
>1000 hectares
Page 06
Canxchange® Farmers
Sentiment Index
111.7
108.72 FAIRLY OPTIMISTIC FAIRLY OPTIMISTIC
104.08
100 NEITHER OPTIMISTIC OR PESSIMISTIC NEITHER OPTIMISTIC OR PESSIMISTIC
2.67% LESS CONFIDENCE THAN IN JULY 2021 2.36% LESS CONFIDENCE THAN IN JULY 2021
1.82% MORE CONFIDENCE THAN IN JULY 2021 2.57% MORE CONFIDENCE THAN IN JULY 2021
Page 07
Canxchange® Farmers
Sentiment Index
Comments & Analysis
Overall we can see that the farms surveyed are fairly optimistic. With an index score of 108.72,
the anticipation for the industry segment is still quite positive but the sentiment is shifting
down compared to the July ‘21 Index. This slight shift of sentiment towards the south is
explained by global degraded conditions (energy, logistics and labour costs and/or shortage).
Although these factors impact the whole production and supply chain of our industry, small
production units (less than <500 ha) continue to suffer the most from this situation. (104.06
Index vs 106.6 in July ‘21)
According to our survey, smaller farms anticipate a grim outlook for 2022, with high levels of
stocks, and a fairly low confidence in the sales prospects. At the same time, mid and large
production units see the market with a different outlook for next year. Their confidence index
have increase by at least 20% from the previous surveyed period (medium: 112.1 / large: 119.8)
and this could be explained the by following factors:
Diversification
Larger production units may have a diversified product mix (industrial, seeds, flowers,...) and a
wider client portfolio.
Segmentation
Larger production units could work on different segments of the market. On the bottom end
of the market, they can easily reach economies of scale to compress costs and on the top end
of the market, they have the resources to produce high quality products with higher added
margin.
According to our analysis and survey's, we anticipate a global demand increase for cannabis
based products but the whole market spectrum may not develop at the same pace or benefit
from the same growth opportunities. It is still a bit too early to get a full understanding of
products that will be available post harvesting season. Unfortunately, we tend to think that this
sentiment difference between smaller and bigger production units will remain (exceptions
obviously exist), but this is one of our mission's at Canxchange, to provide markets access and
opportunities, whether they are small or big farming operations, we offer solutions to help
market professionals overcome their business challenges.
Geographical breakdown of products
provenance
Page 08
Canxchange Benchmark
Methodology
The Canxchange Data Analysis Approach
The core concept in data analysis is not only to have access to the resulting numerical value, it
is also important to understand the reasoning behind the figures, how and why the publisher
followed its path in building the data report. Our data analysts spent months observing the
market and client transactional behaviours as well as interacting with hundreds of market
participants and stakeholders. These observations helped us better understand key market
metrics with regards to questions the industry has about supply, demand and price.
01 We proceed with a data cleaning and make sure that we isolate non relevant
occurences (outliers database errors).
02 Then we standardise the data to make sure each component is comparable and
interchangeable. We retained for that stage the methodology of calculating the
weighted average 1% price potency of each product.
03 As we assume that the price sellers charge will also be subject to the quantity they offer,
we also take into account the relative quantity of kg/L for an order, in respect to the total
kg/L for that product line.
04 The 1% price potency of that specific order is then multiplied by the relative quantity in
order to give us the relative price, with respect to the total quantity.
05 The sum of the relative price of all orders then gives us the final CBP value.
The Canxchange Benchmark Price (CBP) is one of the tools we provide our customers with in
order to share an accurate calculation of the natural price expected by wholesalers.
For each product we also adjust the CBP into different kg/L categories, in order to account for
outliers (ex. CBD Whole flower categories: <100kg, 100-1’000kg, >1’000kg)
Page 09
Market Insight
Isolates
After some months a price stability in the €400-€500/kg depending on quantity the price
competition has kicked in again and we are seeing offers being adjusted to the mid €300's per
kilo on orders above 25kg. It seems that the oversupply is still abundant and the downward
price pressure has not given way just yet. We do expect this trend to continue into the year
end and it could exert some more pressure pushing prices to the low 300's on larger orders.
Over all this will push out the weaker competition who are not producing at competitive levels
and leave only the stronger players. As soon as this flush out takes place we expect to see the
price rise and remain at a more healthy level of €500/kg. That being said, there are players who
are not giving in to the price war and continue to price their product at €500-€600/kg putting
a big emphasis on the quality they provide. How long they are able to resist the price pressure
remains to be seen. Interesting to see also that rare cannabinoid isolates have also seen a
massive downward price pressure from a period of price stability that they experienced for
almost a year. CBC and THCv isolates have almost halved in price in the last couple of months.
It seems that this is a move driven more by growth of their popularity and healthy competition
environment rather than oversupply issues.
Seeds
The new harvest in Russia is under way and will be ready in the next couple of weeks.
Indications from the producers is that the harvest is average in terms of size which comes in
line with the expectations from EU farmers who also expect an average year in terms of
production volume. With this in mind prices are slowly starting to creep higher. Last year on
larger volumes producers were willing to accept €0.9-€1.00/kg but with demand higher this
year it seems that we are starting at the €1.25/kg level with the new harvest. European harvest
is still a few months away and we are likely to see the same outcome in price movements with
asking prices from non organic seeds closer to the €2/kg mark and EU organic likely reaching
the €2.5/kg mark. Harvest updates will be more apparent in early December.
Page07
Page 10
Market Insight
Shives
Information from the French producers is that the new harvest will be ready for sale in the
next few months. The demand has been growing aggressively, specifically from the animal
bedding and construction market. The French are finding it difficult to commit to new
customers as they are not sure if they will be able to even meet demand from existing long
term customers. It remains to be seen in the next couple of months how the new harvest will
look but given the general expectation demand is higher than supply and hence prices are
slowly starting to move higher in the high €600's per ton of 98%+ cleanliness shives.
Oils
A very similar story to isolates and distillates with pressure on the prices of bulk material. As in
the rare cannabinoid market, the downward price pressure is not exponential but more
gradual which again points to the fact that it is coming from natural competition reasons
rather than over supply. A relatively new product on the market, THC free Crude Oil, has
grabbed the attention of a few players from the extraction and pharmaceutical industries.
Products coming from the US have lower pricing at the moment but it seems that the
equilibrium price will soon be reached and EU produced Crude will start to converge towards
US pricing. A slight premium on EU produced products will be acceptable due to easier
logistics solutions and lower risks of customs seizures.
Flowers
As with all hemp raw materials the flower market is also experiencing an oversupply and
natural competition. Being one of the raw materials that doesn't require extraction machinery
to produce there are a lot of players who have entered that space due to lower capital intensity
required to produce them. Because of this, the market has seen a significant downward price
pressure. Specifically, on the outdoor flower with prices falling to around €300-€350/kg from
around €500/kg which was the price 6 months ago. Interesting to see that the indoor prices
have been slightly less susceptible to the downward pressure as high quality indoor growing
facilities that are able to produce large volumes are a lot rarer. Prices have experienced a small
price decrease to around €1300-€1700/kg from €1600-€2000/kg where they were 6 months
ago. In this space the balance between oversupply and healthy competition seems a bit more
balanced than in the isolates market.
Distillates
The distillate market continues to remain popular amongst the vape producing community. In
the distillate market the prices have experienced a bit of downward pressure with competition
from various players in the market running high for a share of the market. In recent weeks we
have seen a few sellers emerge with 50% market price discounts. We believe that we will see
the same trend that we saw in the isolate market where over supply forced people to liquidate
stock at very low prices which doesn't mean that these low prices are here to stay. Due to
lower popularity of distillate as an extract compared to isolate we believe that these lower
prices will be more sporadic and the trend of seeing them will dry up a lot faster than it will in
the isolates market.
Page 11
Product Data & Analysis
14 CBD Oil
15 CBD Isolates
16 CBG Isolates
17 CBN Isolates
18 Seeds (Non-cultivation)
19 Water Solubles
Page 12
CBD Hemp Biomass
€/KG
Geographical Breakdown
Distribution across Europe
Northern Europe
3.2% Central Europe
12.9%
Southern Europe
32.3%
Eastern Europe
51.6%
Page 13
CBD Oil
€/L
Geographical Breakdown
Global Distribution
North America
4%
Northern Europe
Central Europe 25%
21%
Western Europe
8%
Page 14
CBD Isolates
€0
July November
€/KG
Geographical Breakdown
Global Distribution
Central Europe
16.7%
Western Europe
33.3%
Page 15
CBG Isolates
€ 0
July November
€/KG
Geographical Breakdown
Global Distribution
Central Europe
27.3%
North America
45.5%
Eastern Europe
9.1%
Western Europe
18.2%
Page 16
CBN Isolates
€/KG
Geographical Breakdown
Global Distribution
Central Europe
14.3%
Southern Europe
28.6%
Page 17
Seeds (Non-cultivation)
1.76
Average sell order mass: 36,768.18 kg
Lowest sell order mass: 2,650 kg €1
Highest sell order mass: 100,000 kg
€0
April July November
€/KG
Geographical Breakdown
Distribution across Europe
Southern Europe Western Europe
18% 18%
Eastern Europe
64%
Page 18
Water Solubles
€ 0
July November
€/KG
Geographical Breakdown
Global Distribution
North America
16.7%
Central Europe
83.3%
Page 19
Whole Flowers (Outdoor)
Geographical Breakdown
Distribution across Europe
Western Europe
6%
Northern Europe
22%
Eastern Europe
11%
Southern Europe
61%
Page 20
Whole Flowers (Indoor)
Geographical Breakdown
Distribution across Europe
Western Europe Northern Europe
7.9% 7.9%
Eastern Europe
22.6%
Southern Europe
61.6%
Page 21
Whole Flowers (Greenhouse)
Geographical Breakdown
Global Distribution
North America
22%
Eastern Europe
11%
Southern Europe
67%
Page 22
Industry Leader Spotlight
Laura Herschlag
Co-founder of TEQA Capital.
Her company brings together expertise,
experience, and an extensive network of
investors and entrepreneurs in the
cannabis industry.
Operating in Israel and Switzerland, they
connect investors with unique
opportunities in agritech, health tech, and
cannabis tech.
Laura is also a climate change/circular
economy activist and a food/agri/health &
wellness innovation scout.
https://www.teqacapital.com
We spoke with Laura Herschlag, who has been active in the cannabis industry since 2015, to
get her thoughts on the opportunity for hemp to be a key element of a green economy and
the various challenges it currently faces.
Canxchange: There is a long-standing stigma linking hemp to marijuana that has made it
difficult for professional audiences working in sustainability to consider hemp when
working towards tackling the climate crisis. Do you think professionals are starting to
consider hemp as a powerful, scalable, asset in this space and have we seen any real
progress in recent years?
Laura: Hemp has been grown continuously in Asia and Europe for hundreds of years. In
December 2018, the industry got a major breakthrough when the US government passed the
Farm Bill, federally legalizing hemp cultivation. Hemp is considered a carbon negative crop
which means that growing hemp pulls more CO2 out of the air than it releases. It also
nourishes the soil returning important nutrients that have been stripped away by industrial
agriculture. The use of biomaterials, such as hemp, kenaf, and bamboo, are becoming a staple
in many industries including automotive, textiles, and construction.
Page 23
08
Industry Leader Spotlight
Canxchange: Many sectors still seem to be in the dark with regards to the green benefits of
hemp. What current efforts are being made in terms of hemp education awareness across
the various industries?
Laura: Hemp advocates have established industry associations and lobby groups to promote
the use of hemp as a sustainable solution. These include the European Industrial Hemp
Association (EIHA). Global Hemp Association, and Hemp Industries Association. There is a lot of
information available through webinars, conferences, publications, online courses, and
websites. One of the biggest obstacles to wide scale implementation of hemp, and other
biomaterials, is the regulatory bodies. Developing new standards in various industries that will
enable incorporating hemp is essential for hemp to achieve widespread adoption. For
instance, the construction industry International Code Council (ICC) and the American Society
for Testing and Materials (ASTM) have yet to publish guidelines for the use of hempcrete in
construction.
Canxchange: What companies or sectors have done a good job at embracing hemp in
capacity that is in line with a shift towards a green economy?
Laura: The fastest growing segment in the hemp industry is undoubtedly health and wellness
nutraceutical and dermaceutical products incorporating CBD, hemp oil and hemp hearts.
These products have to comply with stringent pesticide and fungicide restrictions so hemp
grown for these uses has an overall positive impact on sustainability. Other initiatives, such as
the use of hemp and other biomaterials in the automobile industry, are very encouraging.
However, other than the health and wellness industry, there isn’t a wide scale adoption of
hemp. One trend that will be a catalyst for hemp is the transition of big corporations from CSR
(Corporate Social Responsibility) to ESG (Environmental, Social & Governance). ESG moves the
environment and sustainability into the spotlight of corporate responsibility and provides a
metric based framework to assess compliance. Public companies are publishing their
roadmaps to net zero production. Even without specifying the use of hemp in their processes it
is clear that as companies increasingly commit to net zero, hemp will have an important role to
play.
24
Page 08
Industry Leader Spotlight
Canxchange: What are the key areas that need to be addressed in the industry in order to
ethically move in the right direction?
Laura: First and foremost, as I mentioned earlier, regulations are a crucial factor in driving use
of hemp in various industries. Creating new standards, enforcing oversight, and keeping
companies accountable are actions that have to be undertaken by regulatory bodies. A
second area that needs to be addressed is investment in technology innovation to make hemp
an attractive alternative to traditional materials. For instance, hempcrete lacks weight bearing
properties so either wood or concrete are still needed for the structure in buildings built using
hempcrete. Government incentives help to reduce risk for entrepreneurs and investors. Hemp
can easily replace a majority of the plastics in the world but new production facilities need to
be built and existing factories need to be retrofitted. Economic incentives would go a long way
to driving progress in the industry. One more area that has a significant impact on the
environment but is often overlooked, is the use of electricity in greenhouse and indoor
cannabis growing facilities. These facilities, because of the need for lighting, heating, and
dehumidification, consume extraordinary amounts of energy. Using alternative energy
sources, such as roof top solar panels, would offset some of the environmental impact of
cannabis production.
Page 25
08
About Canxchange
Page 26
Disclaimer
Any opinions and/or views expressed do not necessarily reflect the opinions and/or views of
Canxchange Ltd or any of its affiliates. This presentation may contain forward-looking
statements which involve risks, uncertainties and assumptions that are difficult to predict.
These statements are not guarantees of future performance and actual outcomes and results
may differ materially from what is expressed or implied in any forward-looking statement.
Page 27