Debt Transaction Chart
Viridian publishes weekly data and analysis on debt capital raises in the Cannabis/CBD/Psychedelic industries. This data includes information about the company issuing debt (public/private, state/country location), deal size, deal structure, pricing, warrants, and credit data.
Debt Commentary
- Debt accounted for 97% of trailing 8-week capital raises. The ratio may go down if companies are able to utilize favorable regulatory-induced stock price increases to complete equity issues. However, equity pricing has remained stubbornly low while the cannabis debt capital markets have reopened.
- The Week’s Debt Transactions
- On July 16, 2025, Glass House Brands completed a $77.5 million refinancing of its outstanding Series A & B Preferred Stocks.
- The new issue is a perpetual convertible preferred with a 12% dividend rate paid quarterly.
- The issue is convertible into common shares at $9 per share (a 66.7% premium to the price at issuance).
- We consider this to be a mezzanine debt financing due to the high cash dividend rate for at least five years. Glass House cannot redeem the issue for at least five years and only then if the 60 day VWAP of the stock is over $12, the average daily volume exceeds one million shares, and the shares are trading on a major U.S. Exchange. Other factors argue for more equity-like treatment: unlike the old preferreds, there is no escalation of dividend rates, and the issue doesn’t PIK upward in amount, and there are no mandatory redemption rights for holders. Similarly, the consequences for missed payments are virtually nothing—no board seats or voting rights, etc.
- The large premium conversion price limits the Black-Scholes value of the option, and as a result, we calculate an effective cost of 14.82%.
- Glass House is ranked #6/30 in the Viridian Credit Tracker model, benefiting from the 3rd lowest total liabilities-to-market cap ratio of the group. The fact that #4-ranked Cresco is trading at 12.75% on a senior secured basis suggests that Glass House achieved solid execution in pricing its preferred stock.
- On July 16, 2025, High Tide Inc. (HITI: Nasdaq)(HITI: TSX) closed on a US$21.9 million convertible units financing from Cronos Group.
- The issue has a five-year maturity, a 4% coupon. and was issued with a 16% original issue discount (OID).
- The issue is secured by a third priority lien, behind approximately a C$10M 1st lien and a C$15M second lien.
- The company can redeem the issue at face value at any time.
- The bond is convertible at $3.07 (a 27.3% premium to the closing price). Importantly, the bond is only convertible upon mutual agreement between High Tide and Cronos. The unusual structuring suggests that Cronos is approaching this investment strategically, rather than purely as an investment. The conversion feature could be viewed as an anti-takeover mechanism rather than a standard conversion option. High Tide can always prevent a conversion by redeeming the bond at face amount.
- Additionally, Cronos received 50% warrant coverage in 5-year warrants at an 18.5% exercise premium.
- The OID and additional warrants combine to raise the effective cost of the transaction to 11.37%. Note that we have not assigned any value to the conversion option in our calculation, as the holder does not have the option to convert without mutual agreement.
- This effective cost is an excellent deal for HITI. Few U.S. MSOs, including only GTI, Trulieve, Vireo, and Verano, trade below that, and all of them have first-priority liens.
- High Tide places sixth in a ranking of U.S. and Canadian cultivation and retail companies in the Viridian Capital Credit Tracker Model. HITI ranks #3 on leverage, #8 on liquidity, #9 on Profitability and #9 on size.
Viridian publishes weekly insights on debt capital raises in the Cannabis/CBD/Psychedelic industries. These insights typically highlight the most interesting/meaningful debt transactions of that week, and commentary on market conditions, debt deal structures, and lenders.