OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS

Credit Tracker By Industry Sector

Credit Tracker By Sector

Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.

Week ended 10/20/2023

Credit quality in the cultivation & retail sector continues to be a concern. The median free cash flow adjusted current ratio of the 94 companies is now 0.59x, indicating that more than ½ will likely need additional financing during the next twelve months. Thirty-two companies have sell-side analyst coverage, and the median debt/ 2024 EBITDA for the group is 2.95x, a level that may be sustainable post 280e but is too high with current taxes. The third quartile statistic of 4.3x indicates that 25% of the group has leverage that will be difficult to support even in a post-280e environment. (See our weekly Viridian Insights for further explanation). Still, we expect that companies will be able to extend their debt maturities and reduce leverage through small equity issues. We advise companies to “average up” rather than waiting for ideal pricing.

Week ended 10/20/2023

Credit quality in the cultivation & retail sector continues to be a concern. The median free cash flow adjusted current ratio of the 94 companies is now 0.59x, indicating that more than ½ will likely need additional financing during the next twelve months. Thirty-two companies have sell-side analyst coverage, and the median debt/ 2024 EBITDA for the group is 2.95x, a level that may be sustainable post 280e but is too high with current taxes. The third quartile statistic of 4.3x indicates that 25% of the group has leverage that will be difficult to support even in a post-280e environment. (See our weekly Viridian Insights for further explanation). Still, we expect that companies will be able to extend their debt maturities and reduce leverage through small equity issues. We advise companies to “average up” rather than waiting for ideal pricing.

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